Australian Trade Minister offers Britain Brexit trade boost as talks begin on future deal

Australian Trade Minister Steven Ciobo has said that his Government is already in preliminary discussions with the British Government over a landmark post-Brexit free trade agreement (FTA).

But the Queensland MP admitted that “an Australia-UK negotiation of a FTA may be a few years off” whilst the UK disengages with the EU.

Speaking at Asia House on Tuesday, Mr Ciobo said: “Obviously since the Brexit vote, our focus is also now on Britain and preliminary discussions are taking place. I had some today,” he said referring to a meeting earlier that day with UK International Trade Secretary Liam Fox.

“Prime Ministers Turnbull and May have already said they are committed to pursuing a free trade agreement so that when Britain leaves the EU, we have very open markets between our countries. I think you will find us optimal trade negotiating partners,” he said.

He said the fact he had come to London was “indicative of the strong goodwill between the UK and Australia” and “demonstrates the significance of the potential of doing a deal.”

Australia and the UK have “super strong bonds,” he added, mentioning the common ancestry, shared values and familiar legal systems.

UK-Australia FTA high on agenda

“I think it’s going to take two and a half years minimum for the UK to exit the EU but we would like to strike a deal as soon as possible,” he said.

“We have to remember it’s only been a couple of months since the Brexit vote so there is a lot of work that needs to be done on the UK side. When I met Liam Fox he said it was his second day in his new office. There is a lot of work which needs to go into his department which did not even exist before. But it [a UK-Australia FTA] is high on our agenda,” he added.

Australian Trade Minister Steven Ciobo said that the Department of Foreign Affairs & Trade has offered to lend some of its trade negotiators to the British Government to help negotiate UK trade deals post-Brexit. Photo by George Torode

He said he had offered Mr Fox “resourcing of trade negotiators” and would aim to work to any requests Australia received from their UK friends in this regard.

Mr Ciobo hinted that financial services may form part of a free trade deal with the UK.

Two-way services trade between Australia and the UK totalled close to £6 billion in 2015.

Australia is the eighth top source of new foreign direct investment in the UK and the UK is the second largest investor in Australia, after the USA.

Mr Ciobo made the speech during an official trip to Europe to meet his European counterparts. Apart from London, Mr Ciobo is visiting Berlin, Rome and Brussels.

Australia-EU FTA more advanced

But in his speech Mr Ciobo said Australia was at more advanced stages in its talks with the EU over an Australia-EU FTA than it was with the UK.

“Your processes to disengage with the EU will take will take years – years of potential liberalisation we can’t afford to let slip. None of our competitors will.

“So we’re working on an Australia-EU FTA, which will prepare the way for our own agreement in years to come.

“The best deals are those done quickly and our talks with the EU are more advanced,” he added.

“Whilst we wait for the UK to be in a position to formally negotiate, Australia is working towards a comprehensive, high-quality free trade agreement with the EU,” he explained.

He said the Australia-EU FTA scoping study was underway which would be concluded by the end of this year.

Australia hopes to start formal negotiations with the EU in the first half of 2017.

Mr Ciobo met the EU Trade Commissioner Cecilia Malmström on Thursday to check that Australia and the EU are both “on board.”

“How long the Australia-EU FTA will take I am not sure,” he said. “But there are lots of sensitivities with regards to agriculture on the European side, which we don’t have as we are quite bullish on our agricultural exports,” he said. “Plus 2017 will be election years for both France and Germany,” he added.

But the Minister for Trade, Tourism and Investment said there was no point in going into any deal saying it would take a decade, so he hoped the Australia-EU FTA would happen “as soon as possible.”

Australian Trade Minister Steven Ciobo (right) told Chief Executive of Asia House Michael Lawrence (left) that Australia hoped to start formal negotiations on an Australia-EU FTA in the first half of 2017 and that preliminary discussions had started on a UK-Australia FTA. Photo by George Torode

He said the economic blowback to Australia of Brexit was “largely confined to what’s happening in Asia.”

“We are recognised as an Asian country now. That has been a material change in the past two decades,” he said.

Australia’s deepening ties with Asia

Ahead of FTAs with the EU and the UK, a FTA with Indonesia owing its population of 250m, expanding middle class and geographical proximity, was Australia’s top priority, he said. “We are already at a mature stage in our talks with Indonesia,” he said. “And we have just formally recommenced negotiations.” The two countries are hoping to seal the FTA next year.

As Australia transitions from a capital-intensive mining economy to a broader-based export economy, the Australian Government is keen to deepen its trade and investment relationships overseas.

In the past two years Australia has signed a flurry of trade deals with China, Japan and Korea.

Negotiations with India and the Gulf states are in progress and Mr Ciobo said Australia would also be looking to strike deals with Latin America, Hong Kong and Taiwan.

Australia is a signatory to the Trans-Pacific Partnership and is negotiating with ASEAN and others to strike a Regional Comprehensive Economic Partnership.

Mr Ciobo said: “A central component of our plan for growth is to keep striking win-win deals with overseas markets, increasing flows of goods, services and investment to our mutual enrichment.

“Australia’s economy benefits very strongly from Asian growth – that link is potentially a very significant asset for UK and EU interests looking to springboard into Asia.”

He said Australian businesses were gearing up to contribute more to the rapidly rising living standards in Asia.

“Australian agriculture and agribusinesses are already the most interconnected in Asia. The potential is just as great for Australia to grow as a bases for services exports,” he added.

He said the rise of Asia also meant the time was ripe for development of Australia’s north and the potential was very significant.

“In financial services, healthcare, water and waste and architecture, Australia has the linkages and expertise that will help build and shape the Asia of tomorrow. All this makes Australia an ideal entry point for UK and EU businesses,” he said.

‘Brexit provides opportunities’

Mr Ciobo also said he felt “a different energy on the streets” in Britain and saw a “Britain ready to embrace the new political reality with great optimism, pragmatism and enthusiasm.”

And he said he had noted what Theresa May had said at the G20 Summit in China – that the British Government will make Britain a great trading nation by forging new trade deals around the world.

“Brexit certainly does provide opportunities for Britain. You may now decide on your own global trade policy,” he said.

The speech took place after Mr Ciobo briefed Asia House corporate members. Corporate members represented at the briefing included NATS, Zaiwalla & Co LLP, Eversheds, Nikkei, Arup, Jardines, Diageo, BAE Systems, Mitsui & Co, HSBC, Linklaters and Rio Tinto.

naomi.canton@asiahouse.co.uk

To read more stories about Brexit and its impact on the UK and Asia click here.

To find out about more events that form part of the Asia House Brexit Series, a series of programmes on Brexit to advise and inform our members on the way to navigate the extraordinary shift in the economic and political landscape, click here.

To read the full speech that Mr Ciobo made at Asia House click here.