Tony Abbott Has A Plan For Britain's Post Brexit Future

But it could leave everyone wanting special treatment.

04/10/2016 11:19 AM AEDT | Updated 04/10/2016 6:50 PM AEDT
Former Prime Minister Tony Abbott wants Australia to have a "no exceptions" free trade deal with a post-Brexit Britain.

Jetsetting former Prime Minister Tony Abbott wants Australia on the front foot with a post-Brexit UK, proposing a "no exceptions" free trade deal that some experts warn could set Australia back in future trade talks.

Speaking in Britain on Monday, Abbott proposed Australia and Britain should sign a comprehensive free trade agreement, which would include the abolition of tariffs and quotas on all goods traded between the two countries.

"There should be no tariffs or quotas whatsoever on any goods traded between our two countries — there should be no exceptions, no carve-outs, nothing," The Australian quoted Abbott as saying on Monday.

Abbott reportedly wants the deal -- which would also include the "full recognition of each country's credentials and standards" -- negotiated now, and it would come into force when Britain formally leaves the European Union.


But a "no exceptions" free trade agreement with Britain could make future trade negotiations harder, said associate professor Mark Melatos, from Sydney University's School of Economics.

Of course, in principle, it's nice to say yes let's have free trade between the UK and Australia, but there are impacts on other negotiations of concern here.Associate Professor Mark Melatos

He said the Brexit vote had already put Britain at a negotiating disadvantage, with just two years to replace existing European Union trade agreements with "something else" once Article 50 -- which triggers the exit from the European Union -- is implemented.

Even if that comes to pass, Prof. Melatos said Australia should wait.

"Any concessions we grant the UK for an open slather agreement immediately will become a starting negotiating position with any other country we try to form a trade agreement with. They'll come to us and say 'oh, well, you gave the UK this. Give us the same,'" he said.

"I think a comment like the one that was made here by Tony Abbott seems to ignore the fact that bi-lateral agreements aren't concluded in isolation. They're part of a multi-lateral trade system, and so any deal you do with a country, everybody knows about it. They're going to use that as leverage in their own negotiations."

Australians always have a warm and fuzzy feeling, I think, when they're talking about the UK -- except when they're playing cricket or rugby or something. But when it comes down to it... cultural issues don't really figure much in trade negotiations like that. Associate Professor Mark Melatos

Australia has been negotiating a Comprehensive Economic Cooperation Agreement (CECA), or Free Trade Agreement, with India since 2011 -- negotiations it had hoped could be knocked over in a year, but which were recently described by Australian trade minister Steve Ciobo as "complicated" .

In June 2015, then Prime Minister Abbott signed what he termed a "history making" free trade deal between Australia and China, ending a decade of negotiations on the subject.

Australian National University trade expert, Dr Andrew Stoeckel said Abbott's proposed free trade agreement between Britain and Australia is feasible.

"Given the cultural heritage, the legal system, the Westminster heritage, it should be pretty straight forward to negotiate," he said, citing the existing trade agreements between Australia and New Zealand as a potential model.

But he said agricultural standards between the two nations could be a major sticking point in future negotiations. He said the agreement might take inspiration from Australia and New Zealand's relatively open trade arrangements.

But he sees potential road blocks coming from Europes' agricultural agreements and protections.

"There is a fair bit of protections for farmers throughout Europe, and in Australia and New Zealand, far less protections on agriculture," he said.

The gains from trade come from getting barriers to your own market down, because getting barriers to your own market down is what causes competition.Dr Andrew Stoeckel

Under the Australia-New Zealand Closer Economic Relations Trade Agreement, all tariffs and quantitative import or export restrictions on trade in goods originating in the Free Trade Area are prohibited.

There is also a mutual recognition of goods and occupations, which removes technical barriers to trade and impediments to the movement of skilled personnel between jurisdictions.

In 2014, two-way investment between Australia and New Zealand is worth more than $130 billion.

Australia has concluded free trade agreements (FTAs) with: China, Japan, The Republic of Korea, New Zealand, Singapore, United States, Thailand, Chile, the ASEAN–Australia–New Zealand Free Trade Area, and Malaysia.

FTA's under negotiation: India, Indonesia, Gulf Cooperation Council, the ASEAN focussed Regional Comprehensive Economic Partnership and Pacer Plus, a regional trade and economic integration agreement with the Pacific Forum.

Stoeckel -- who works at ANU's Centre for Applied Macroeconomic Analysis Crawford School of Public Policy -- told HuffPost Australia that Britain has plenty of other potential post-Brexit trading partners, such as the U.S.

"It's not life and death for them in terms of that (EU) single market," he said.

"People overstate that. People think the gains from trade come from access to another market. The gains from trade come from getting barriers to your own market down, because getting barriers to your own market down is what causes competition."

Getty Images
Foreign Minister Julie Bishop met with her British counterpart, Boris Johnson, in early September. Bishop said she was optimistic that a future bilateral trade deal with the UK would allow more Australians to travel and work in Britain.

Australia and Britain are already laying the groundwork for a potential fast-tracked, post-Brexit free trade deal.

But uncertainty remains, and much of the focus of the Brexit debate is focused on European market access and the free movement of workers.

Abbott's hopes of a "no exceptions" deal may have already been dashed, with British Home Secretary Amber Rudd saying she has no plans to increase the UK's intake of Australian migrants.

Abbott on Monday also backtracked on his previous opposition to Britain's decision to leave the European Union, telling a British audience "now that it's happened, I'm quietly thrilled."

The former PM on Tuesday declared he also has a new role on the advisory board of the Ramsay Centre for Western Civilisation, which "seeks to promote a more widespread study and understanding of the Western canon."

Abbott's comments come as Britain's Prime Minister, Theresa May, called for patience as her government negotiates its exit from the European Union. She said negotiations will formally begin by the end of March 2017.

That means the UK would leave the EU by mid-2019.

More On This Topic