The decision to leave the EU has given the UK the opportunity to strike new trade deals with other countries around the globe.
In fact one of the key points peddled by vote leave was that the UK would be free to create trade deals with emerging economies like China and India as well as to strengthen trade with the commonwealth (Mainly Australia, Canada and New Zealand).
Australia has been the first major country to express desire for a free trade deal with the UK. The Australian Prime Minister, Malcolm Turnbull, has publicly stated his desire for a future AU-UK trade deal. But as the UK cannot sign any new trade deals whilst we remain a member of the EU we will have to wait perhaps two and a half years to begin properly negotiating a deal. Preliminary (informal) talks have however already taken place.
This could be a problem as two and a half years is a long time in politics, especially Australian politics. Australia has had five prime ministers since 2007, four of which came after 2010. To put that into perspective the UK has had five prime ministers in the last 19 years, and two since 2010. As such it would be unwise to count chickens here as the political will in Australia for a free trade deal may evaporate before we get a chance to actually leave the EU, although this is unlikely.
The main reason for the interest in free trade is that the UK is the fifth largest economy in the world and a net importer due to its strong currency as well as being a large foreign direct investor, in fact the UK is the second largest investor into Australia. Additionally the main imports into Australia from the UK are medicines and pharmaceuticals, scientific instruments, clothing accessories and electrical machinery which would be a lot easier for Australia to purchase without tariffs. As a result Australia is very likely to economically benefit from a UK trade deal.
Should a free trade deal go through it could be immensely beneficial to the UK because Australia is the gateway to Asia. The same way the UK was the world’s entry point to Europe. As a result the UK would find it easier to sell goods to Asia which could benefit our manufacturers. That’s not to say that the UK won’t suffer should EU negotiations not go in our favour.
Overall this looks like a promising development for the UK. With the political will in Australia likely to remain due to the economic reasons, a free trade deal seems likely. However no deal can be negotiated or ratified until the UK leaves the EU, so any deal likely wouldn’t come into force for a year after we leave the EU at a minimum. A key issue however is that the UK does not have enough trade negotiators as we have not had to create trade deals since becoming an EU member. As a result our diplomatic resources will be stretched and considering China and India are much larger and more prosperous economies the UK may have to divert resources to them instead. For the moment however let’s just hope that trade deals with other major economies start cropping up, as we have the world’s largest single market to replace.