AUS
NZ
UK
CA
USA
IND
Summary
- The deals have the potential to boost Britain’s exports by £1 billion
- Australia can fulfil mineral requirements of many UK firms
- Similar negotiations already on with US, Japan, EU, Malaysia and Singapore, post Brexit
The United Kingdom is embarking upon trade talks with Australia and New Zealand this week to arrive at a deal that could give a boost of £1 billion to the country’s exports. The trade talks which will take place via videoconferencing are amongst a series of such negotiations that the United Kingdom has initiated in recent months with countries ranging from the United States to Japan and European Union to South Asian countries of Malaysia and Singapore. Through these trade deals, the United Kingdom expects that its foreign trade will get enough boost and generate competitiveness that will more than compensate for the economic setback it has sustained by walking away from the European Union.
The British trade minister Liz Truss, while commenting on the impending trade talks, described Australia and New Zealand as old friends and that both countries are UK’s top priority among all the trade negotiations it’s is holding right now. It is to be noted here that the United Kingdom has been busy with trade negotiations during the past couple of the months despite the coronavirus lockdown with the United States and the European Union, again via the video conferencing route.
Both Australia and New Zealand have lineages in the United Kingdom. Both countries are part of the British Commonwealth of countries and still have Queen Elizabeth as their head of state. Culturally also both these countries are similar to the United Kingdom as British Expatriates make up for the majority of both the country's population. Given such strong historical relations, the United Kingdom expects trade negotiations will be more convenient and fruitful with them compared to other countries. Several of Australia's largest companies are dual-listed on the London Stock Exchange and the Australian Stock Exchange, and London still remains the most favorite fundraising destinations for Australian companies who want to venture out of Australia for funds. Australia is also a major exporter of minerals and can fulfil the raw material requirements of many of the basic commodity manufacturers in the United Kingdom. Moreover, both Australia and New Zealand are countries who have so far achieved significant success over their fight against the coronavirus pandemic, and the United Kingdom will be comfortable allowing people and goods from those countries as they will have relatively less risk of carrying the infection.
After the Boris Johnson government took over in December 2019, the United Kingdom has initiated intense parleys with a number of countries to secure trade deals. Australia, New Zealand, former British colonies in South Asia, Japan and the United States of America are on the country's priority list. With each of the above countries, the United Kingdom enjoys deep diplomatic and historical ties, and currently offers opportunities that far exceed what it enjoyed while being a member of the European Union. While being a part of the Union, United Kingdom had only limited scope to engage with wide-ranging trade negotiations with these countries. However, now that it is not part of the Union, it can adopt a suitable trade strategy with each country and optimize the economic advantage from each one of them.
Boris Johnson and his party have been strong supporters of the United Kingdom breaking away from the European Union. They believed that the European Union was hindering its economic growth, and that the United Kingdom was much better placed to spearhead its own development than in the company of European Union. The number of trade negotiations that the country has been able to enter into is a testament of that. Boris Johnson had promised that when his government would take over, he will initiate an expansionary economic policy which will increase the country’s engagement with the rest of the world and would bring about increased growth and employment in the country and would put it in an upward trajectory emulated by only a few select advanced economies of the world.
The coronavirus pandemic has brought about such devastation to the economy of the United Kingdom as has not been witnessed in more than a hundred years. The Office of Budget responsibility has predicted that the real GDP of the country is set to shrink by 12.8 per cent this year. On the health authorities side, still, a lot of work needs to be done before the pandemic can be brought into control. At this time, more than 298,000 people have been infected by this virus in the country with nearly 42,000 already having succumbed to it.
It is important, thus that the United Kingdom should have a robust plan to jumpstart the economy when the dust settles on the pandemic. The country will obviously be looking at trading partners to boost up its exports so as to consolidate its international standing as soon as possible. Among the countries who have for the past few months been fighting the pandemic, both Australia and New Zealand have achieved tremendous success. These two countries are even planning to open air traffic between themselves, which is a big sign of confidence that they are ready to resume international trade. Both these countries will provide the United Kingdom with a quick route to resume international air operations as well as importing and exporting of goods with less hassle. Currently, this possibility does not exist with either the neighbors of the United Kingdom or its old trusted strategic ally the United States of America, who are currently in deep battle to contain the virus in their countries.
There is one challenge, however, that UK might face in resuming international trade with its newly formed trade allies, and it is to ensure the safety of the citizens of these countries who visit UK. Britain is still amongst the top five most affected countries by the coronavirus pandemic and poses risk of coronavirus infections to rest of the world. The UK government can very well face queries from both Australia and New Zealand in this regard when the trade negotiations begin between them in the next few days.
