‘Be careful what you wish for’: Boris Johnson warned of ‘Australia-style’ Brexit trade deal | Brexit

As the December 31 deadline for a Brexit trade deal with the EU approaches, Boris Johnson has again warned the UK to be on the lookout for an “Australia-style” deal. It sounds like something that two countries that depend on international trade might reasonably want to embark on, but what would it really mean?

What did Boris Johnson say?

The UK prime minister says it is a “great possibility” that the “Australia option” is where Britain ends up.

“Now is the time for the public and businesses to prepare for January 1, because believe me there will be changes either way,” Johnson said on Thursday night UK time.

“There will be a change, be it a Canadian-style deal or an Australia-style deal, but we certainly now need to make the proper preparations for that Australian solution.”

In October, Johnson claimed that due to the EU’s stubborn intransigence he had to conclude that the “Canada-style” trade deal he was seeking was not going to be successfully negotiated without a “fundamental” change in Brussels’ negotiating position.

What is an ‘Australia-style’ trade agreement?

Australia deals with the EU mainly under the standard rules of the World Trade Organization (WTO), which means that a variety of tariffs, quota restrictions and customs controls apply to many traded goods, although it has spent two years trying to negotiate a more favorable Free Trade Agreement. There are also some unique agreements between Australia and the EU, such as concessions on the import of wine, which would not apply under an agreement between the UK and the EU without further negotiations.

Downing Street began using the term “Australia style” earlier this year as a more acceptable abbreviation for a no-deal Brexit.

Carl Bildt, co-chair of the European Council on Foreign Relations, said on Twitter that Johnson “probably thinks it sounds better that way.”

“Someone should tell you that Australia is really busy negotiating a trade deal with the EU.”

How is Australia’s business relationship with Europe?

On Thursday, former Australian Prime Minister Malcolm Turnbull described it as unsatisfactory during a BBC question time appearance, citing very high barriers to agricultural exports in particular.

“Be careful what you wish for,” Turnbull said.

“Australia’s relationship with the EU is not one from a trade point of view … that Britain would want, frankly.”

The EU is Australia’s third largest trading partner, third largest services export market and third source of foreign investment, but NAFTA negotiations show that the Australian government feels it could extract much more value from its European trade.

Whats Next?

The “Canada-style” deal, as Johnson calls it, which would have entailed reduced tariffs on imports and quotas, appears doomed from his most recent comments.

Now it seems to have turned to selling the benefits of the deal “Australia-style” (or not having a deal, indeed).

“Now it is a great possibility, a great possibility, that we have a solution that looks more like an Australian relationship with the EU than a Canadian relationship with the EU,” he said Thursday.

“That doesn’t mean it’s a bad thing, there are a lot of ways, like I said, that we can turn that to both sides of the conversation, there are a lot of opportunities for the UK.”

The significant difference between Australia and the UK in relation to existing trade with the EU is the volume and type of goods traded.

Australia markets around 11% of its products in Europe, most of which are raw materials, while the UK markets more than half of its products, including a much wider range of items.

The impact of the relatively unfavorable conditions that exist between trading partners under WTO rules will therefore have a much greater impact in the UK than in Australia.