Late yesterday, there was a major announcement – Australia and the UK had agreed on a free trade deal. It’s a pretty big deal, because this trade deal will be the UK’s first major trade deal since leaving the EU (remember Brexit?).
What’s a trade agreement?
It’s exactly what the term implies: a deal between states concerning their trade relationships. It can either be bilateral (two countries) or multilateral (multiple countries). Trade agreements work to reduce barriers to international trade, including tariffs.
What’s a tariff?
A tariff is a tax levied on an imported good. Economists agree that the main purpose of a tariff nowadays is to protect particular domestic industries from foreign competition, and to raise revenue ($$).
UK-Australia trade deal
That takes us back to the UK-Australia trade deal. Historically, Australian farmers have found it difficult to export goods to the UK – that’s because the UK was part of the European Union, which has an extremely complex set of tariffs, regulations and quotas. Under this agreement, tariffs and quotas for some farming goods will be lifted over the next 15 years, making it substantially easier for farmers to export goods. From what we know, it may not be good news for British farmers, who could find it more difficult to compete with cheaper mass produced goods from Australia (we’ll find out if there are any special measures to protect British farmers when the full draft of the agreement is released). As Scott Morrison was walking to the place of the announcement, British journalists could be heard yelling “are you going to kill British farms, Prime Minister?”
It’s important to note the trade deal doesn’t just address farming goods though, it also tries to make it easier for people to move between the two countries. The deal will increase the working holiday visa age limit from 30 to 35 and give Aussies and Brits a total of three years to live and work in each other’s countries. The new agreement will also mean a variety of professional qualifications gained in one country will be recognised in the other.
Let us know if you want us to dive into any of the particulars on this major UK-Australia milestone @thedailyaus.