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Will free-trade agreements between Australia and the UK happen after Brexit?

by Anita Poppi SA FIN | 02 Apr 2019
Plans for free-trade agreements between Australia and the UK were underway within months of the vote for Brexit in 2016.

And the prospect of the booming relationship between the two countries continuing is much more likely than bickering British politicians ever agreeing on the split from the EU.

With $500bn worth of UK investments in Australia and $366bn worth of business going in the opposite direction though, it’s understandable why the two countries have such a strong reason for having tariff-free trade.

The fact that London is still seen as one of the most important financial centres in the world was another of the reasons why the whole Brexit brouhaha was downplayed during our latest webinar.

Two UK business stalwarts joined FINSIA managing director Chris Whitehead to try to fathom out the seemingly impossible - with hundreds of members turning in. 

Behind-the-scenes negotiations are clearly well underway.

Australian British Chamber of Commerce’s CEO David McCredie said: “If the UK leaves - with or without a deal - then Australia and New Zealand are able individually to do a free-trade agreement."

“It’s the same as Australia has with Indonesia, which was signed only a week or so ago, but also with China, Korea, Japan, and the US. We’ve got a number of these in play."

“Now there's some caveats around that. We need to know what the future relationship between the UK and the EU, we need to understand what that will look like."

“What that means is it's a wait and see game still for Australia.”

But the importance of the links is easy to understand with even a cursory look at the numbers.

“The UK is Australia's seventh largest trading partner, the two-way trade is 28 billion every year,” he added. 

“More importantly, they're the second largest investor here in Australia. So behind the US, the UK is the second largest investor in Australia, $500 billion dollars worth of stock here in Australia, and we have $366 billion of stock in the UK as well, so it's a very important relationship."

“It's our second favourite destination for our investment after the US, and certainly the big super funds, and banks, and others that I speak to don't actually see that going away."

“The investment story is still strong in the UK. It's the number one destination in Europe for foreign investment, and whilst there will be some movements for some activities within banks, I actually have a bit more of bullish view I think on the opportunities post-Brexit.

“I think the UK's real milestone, and the real killer that underpins it is, that there's more than 500 international banks in the UK, in London."

“Whilst they may tinker with their arrangements around Europe, I think that will continue to be the case. When you get that international investment and international investors in one place that's where you can get deals done."

“The people to people links that happen in London because it's relatively easy to jump the Tube if you need to and pop across town, or get a lovely London black cab, as we're now seeing springing up around Australia as well, or make other arrangements."

“A few months after the vote, I accompanied then Trade Minister Steven Ciobo to London. He signed a trade working group agreement with the UK, which has meant that over the last two and a bit years, Australia and the UK have started discussions on what might be a future free-trade agreement."

“They (the UK) also outlined at that time that they had three priority markets they were looking at, they being Australia, New Zealand and the US.”

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