Australia's trade minister has said his country is ready to sign a fast-tracked trade agreement with the UK in the event of a no-deal Brexit, but poured cold water on Britain's ambition to join the Trans-Pacific Partnership regional bloc.
Simon Birmingham said Canberra was preparing for all eventualities in a bid to reduce disruption for business, just weeks before Britain is scheduled to leave the European Union on March 29th. Some Australian groups have already registered their alarm at the prospect of no deal, with IFM Investors suggesting a proposed £500m investment in Stansted airport could be at stake.
"If we face a no-deal scenario then we would be urging and encouraging the UK to negotiate and finalise an agreement as quickly as possible," Mr Birmingham told the Financial Times. "I would absolutely hope that we would conclude negotiations this year."
An informal British-Australian working group has been meeting for around 18 months to prepare for a possible trade deal. But formal negotiations cannot begin until the UK has left the EU and may prove difficult over issues such as agriculture, where Canberra wants much-expanded access to the British market.
The talks could be much more complicated than the UK's bid to roll over its current trading terms with countries that already have trade accords with the EU - such as Japan.
At present, London is racing to renegotiate those EU deals with the rest of the world ahead of March 29th. But, despite concluding an agreement with Switzerland this week, the UK has only finalised a small percentage of the deals it needs to roll over.
Any Australia-Britain trade agreement would not only start from scratch compared with such deals but could also, in large part, depend on what kind of relationship the UK is seeking with Brussels in the longer term.
"Businesses around the world would like to know what is going to transpire for the future – especially those who use the UK as a hub for business into Europe, " said Mr Birmingham.
He also warned that UK ambitions to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – a multilateral trade deal involving 11 Pacific nations, including Australia – are unlikely to be realised in the short-to-medium term due to the need to bed down that agreement and the UK’s distant geographical location.
Liam Fox, UK international trade secretary, has repeatedly set out the goal of joining the TPP.
“Obviously it’s a statement of fact that the UK is not within the Pacific,” Mr Birmingham said. “Some of the other TPP members would think that there are some nations within the Asia-Pacific region who might be earlier starters in terms of coming in.”
There are growing concerns in Canberra that a chaotic no-deal Brexit could disrupt trade and investment flows between Australia, the UK and Europe. While UK prime minister Theresa May says she wants an agreement with Brussels in place by March 29th, she has refused to rule out no deal and lost a symbolic parliamentary vote on her Brexit strategy on Thursday, highlighting the difficulty of approving any agreement.
IFM Investors, which owns 36 per cent of the Manchester airport group, has already said it would re-evaluate the £500m investment into the group’s Stansted airport in the event of no-deal.
Macquarie Group, the Australian investment bank, also recently warned it had begun to implement contingency plans for a no-deal Brexit. Two other financial institutions, Commonwealth Bank of Australia and Westpac, are still waiting to receive banking licences from Dutch and German regulators respectively, as EU authorities struggle to process a glut of applications from companies seeking to expand their presence in mainland Europe because of Brexit.
Australia has already signed technical agreements with the UK to ensure the free flow of goods such as wine, medical devices and other manufactured goods after the UK leaves the EU. But a no-deal Brexit would cause disruption for Australian exports because of uncertainty over what rules would apply to sales to the UK. – Copyright The Financial Times Limited 2019