U.K., Australia Seal Most of Trade Deal in Boost for Johnson

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The U.K. and Australia have agreed to most of a free-trade agreement, with a deal between the countries now expected in June.

“We have made major breakthroughs over the past few days and an agreement is now in sight,” International Trade Secretary Liz Truss said in a statement Friday. “We will spend the next few weeks ironing out details and resolving outstanding issues, with a view to reaching a deal by June.”

The U.K. has been seeking new trade pacts since its exit from the European Union, and an accord with Australia has been one of its top priorities. Though the economic impact from a deal is expected to be modest -- a 0.02% boost to U.K. GDP over 15 years -- it’s a political boost for Prime Minister Boris Johnson, who wants to demonstrate any post-Brexit upsides.

Britain is also in talks with the U.S. and New Zealand, plus it wishes to join an 11-country pact which includes Singapore, Malaysia and Japan. The U.K. is hoping renegotiated trading relationships will offset the negative consequences of quitting the EU’s single market and customs union, which is expected to leave Britain’s economy 4% smaller than it would’ve been compared to staying in the EU, according to the Office for Budget Responsibility.

Australia is the U.K.’s 20th-largest trading partner globally and total trade between the two countries was worth 18.8 billion pounds ($26 billion) in 2019. Through a trade accord, Britain is hoping to benefit from reduced tariffs on products like Scotch whisky, clothing and cars. Australia, meanwhile, is hoping to boost exports of services and agricultural products to the U.K.

“It is a fundamentally liberalizing agreement that will support jobs across the country and help us emerge stronger from the pandemic,” Truss said.

©2021 Bloomberg L.P.

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