Brexit: What is an Australia-style trade deal and what could it mean for the UK? | UK News

Boris Johnson has claimed the EU has refused to agree to the “Canada-style” trade deal he wanted for the UK so it will now be “more like Australia’s”.

Sky News looks at what that could mean for the UK’s future relationship with the EU.

What deal does Australia have with the EU?

Australia and the EU signed a “framework agreement” in 2017, building on an agreement signed a decade before which establishes a general principle of co-operation on areas including trade, foreign policy and security, development and humanitarian issues.

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Minister says UK will trade with EU ‘on Australian terms’

This means they do not have an actual trade agreement – it is not as substantial or committal as that and is essentially a statement of good intent ahead of a concrete deal being made.

Some critics have said using the term “Australia-style” arrangement is simply a more palatable way of saying “no deal”.

Business Secretary Alok Sharma confirmed this by saying the difference between an Australia-style deal and no deal is “a question of semantics”.

While they work towards a deal, the EU and Australia operate mainly on World Trade Organisation (WTO) rules, with large tariffs on imports and exports.

When it comes to customs, Australia and the EU have pledged to “examine possibilities to simplify customs procedures”.

On trade, the agreement commits both sides to try to reduce the “technical barriers to trade” – but with tariffs.

They have a specific wine trade agreement, which came into force in 2010, which safeguards the EU’s wine labelling regime and gives full protection to EU geographical indications so Australian wine producers cannot use names such as Champagne, port and sherry.

And the two sides have reached an agreement to allow Australia to participate in EU crisis management operations.

EU passenger name records are also transferred to Australian border authorities to help combat crime and terrorism under the agreement.

What would an Australia-style deal look like for the UK?

There would not be a free trade agreement with the EU.

The UK would have to abide by WTO rules, so tariffs would be imposed on goods coming into the UK from the EU and vice versa.

At the moment, there are no tariffs on goods moving between the UK and the EU – a big difference to Australia which has always had tariffs with the EU.

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PM: ‘Time to prepare for no-deal’

With tariffs, that would mean there would be 10% additional costs on cars and up to 30% on milk, cheese and some meat.

Shops would inevitably pass that price onto the customer, while some companies have said they would move out of the UK as they rely on frictionless trading relationships.

The UK has a large services market and under an Australia-style deal it would lose any preferential access to EU markets.

Why does Boris Johnson say the EU will

What is an Australia-style trade deal and what could it mean for the UK?

Boris Johnson has claimed the EU has refused to agree to the “Canada-style” trade deal he wanted for the UK so it will now be “more like Australia’s”.

Sky News looks at what that could mean for the UK’s future relationship with the EU.

What deal does Australia have with the EU?

Australia and the EU signed a “framework agreement” in 2017, building on an agreement signed a decade before which establishes a general principle of co-operation on areas including trade, foreign policy and security, development and humanitarian issues.

This means they do not have an actual trade agreement – it is not as substantial or committal as that and is essentially a statement of good intent ahead of a concrete deal being made.

Some critics have said using the term “Australia-style” arrangement is simply a more palatable way of saying “no deal”.

Business Secretary Alok Sharma confirmed this by saying the difference between an Australia-style deal and no deal is “a question of semantics”.

While they work towards a deal, the EU and Australia operate mainly on World Trade Organisation (WTO) rules, with large tariffs on imports and exports.

When it comes to customs, Australia and the EU have pledged to “examine possibilities to simplify customs procedures”.

On trade, the agreement commits both sides to try to reduce the “technical barriers to trade” – but with tariffs.

They have a specific wine trade agreement, which came into force in 2010, which safeguards the EU’s wine labelling regime and gives full protection to EU geographical indications so Australian wine producers cannot use names such as Champagne, port and sherry.

And the two sides have reached an agreement to allow Australia to participate in EU crisis management operations.

EU passenger name records are also transferred to Australian border authorities to help combat crime and terrorism under the agreement.

What would an Australia-style deal look like for the UK?

There would not be a free trade agreement with the EU.

The UK would have to abide by WTO rules, so tariffs would be imposed on goods coming into the UK from the EU and vice versa.

At the moment, there are no tariffs on goods moving between the UK and the EU – a big difference to Australia which has always had tariffs with the EU.

With tariffs, that would mean there would be 10% additional costs on cars and up to 30% on milk, cheese and some meat.

Shops would inevitably pass that price onto the customer, while some companies have said they would move out of the UK as they rely on frictionless trading relationships.

The UK has a large services market and under an Australia-style deal it would lose any preferential access to EU markets.

Why does Boris Johnson say the EU will not agree to a Canada-style deal?

The EU’s trade deal with Canada includes checks on imports and exports that currently do not exist between the UK and the EU, so there would be a lot more

What did Boris Johnson mean by an Australia-style system of trade? | Politics

What has Boris Johnson said?

The prime minister claimed that due to the stubborn intransigence of the EU he had to conclude that the “Canada-style” trade deal that he was seeking was not going to be successfully negotiated without a “fundamental” change in Brussels’ negotiating position. He said it was therefore important that business prepare to trade with the EU on the basis of “arrangements that are more like Australia’s, based on simple principles of global free trade”.

What is a Canada-style trade deal?

The EU has a trade deal with Canada called the comprehensive economic and trade agreement (Ceta). It is the type of arrangement that Michel Barnier said four years ago would be possible at the start of the Brexit talks if the UK wished to leave the single market and customs union.

There would be checks on imports and exports and a great deal more red tape for businesses as the UK would be outside the EU rule book. But such a deal does involve reducing tariffs, or taxes, on imports and quotas – the amount of a product that can be exported without extra charges.


Boris Johnson tells UK to expect Australia-style trade deal with EU – video

What the UK and EU have been attempting to negotiate is something more than that enjoyed by Canada, however. Both sides say they want a “zero tariff, zero quota” agreement by the end of the year.

The Ceta deal gets close to doing that – 98% of products are tariff-free, but they do remain on poultry, meat and eggs, for example. Quotas also remain on some goods.

“If they actually wanted a Canada-style deal they should have extended the transition period and then we could have gone through all the products and put tariffs and quotas in place in return for lower demands on maintaining EU standards,” said one exasperated EU official.

Why does Boris Johnson say this is now off the table?

Because Downing Street says the EU is offering less generous terms than are included in the Ceta deal. There are various examples including the length of stay for short-term business visitors and the lack of sector-specific provisions for key industries with particular technical barriers such as motor vehicles, medicinal products, organics and chemicals.

The UK rightly says the demands on level playing field provisions also go beyond anything contained in the Ceta deal. These include non-regression from EU standards, with the raising of that baseline together over time, and a UK commitment to follow the bloc’s state aid, or domestic subsidy, rules. The EU has said the sheer level of trade between the UK and the EU means it needs to be vigilant in maintaining fair competition. It has also watered down its original demands on standards and state aid, but not enough, as far as Downing Street is concerned.

What are Australia-style arrangements?

Downing Street started using the term at the beginning of the year as a more palatable shorthand for a no-deal. The