Australia and New Zealand open doors to UK trade

The UK’s first post-Brexit trade deals – with Australia and New Zealand – came into force today, even as a highly-prized agreement with the US remains elusive.

The deals mean all tariffs on UK goods exports to Australia and New Zealand have been removed, access to these markets for services unlocked, and red tape slashed for digital trade and work visas.

Kemi Badenoch, the business and trade secretary, hailed it as a “historic moment” despite criticism, including from within the government’s own ranks, that the deals hand an advantage to Antipodean farmers at the expense of their British counterparts.

Tory MP George Eustice, an enthusiastic Brexiteer who was environment secretary when the deals were signed in December 2021, told the Commons in November that the Australia agreement “gave away far too much for far too little” and “was not actually a very good deal for Britain”.

The government’s own calculations estimate that the new deals will make a negligible long-term contribution to the British economy, increasing GDP by just 0.11 per cent a year – or £3.1bn – by 2035. On the other side of the ledger, the National Farmers’ Union has warned that the deals could cost the industry up to £150m.

The UK has struck more than 70 trade agreements since leaving the EU – but big-ticket deals with major players like the US haven’t yet materialised.

Rishi Sunak is due to hold talks with Joe Biden in Washington next week. Just the opportunity, you might think, for the PM to work his tech-bro charm and get the ball rolling on a deal. After all, Sunak’s Windsor Framework agreement to settle trading arrangements in Northern Ireland has negated a major source of tension between London and Washington.

But Downing Street said on Tuesday that the PM would not try to secure a trade agreement on his visit to the States. The concession reflects an acceptance within the Sunak government that a trade deal with the US – which those optimistic about the UK’s post-Brexit future once hailed as one of the biggest potential dividends from leaving the EU – is looking further away than ever.

US-UK talks were thrown off course by the pandemic and sticking points such as whether to allow US agricultural products into the UK market. Biden has made clear that reviving negotiations is not a priority for his administration.

All is not lost, however. The UK has already agreed closer trade partnerships with North Carolina, South Carolina and Indiana. A Downing Street spokesman confirmed yesterday that Utah, Texas, California and Oklahoma are next in the crosshairs.

Individual US states don’t have the power to strike full trade deals with foreign nations, and any agreements the UK makes with them to cut trade barriers and boost economic cooperation are likely to be “memoranda of understanding.”

Still, with the door firmly shut on a comprehensive deal with Washington for the time being, this piecemeal approach looks like the best option on the table. 

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