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Unpacking the UK’s potential ‘Australia style’ Brexit deal.

With the Coronavirus pandemic overshadowing the world’s news this year, updates on Brexit and the UK’s exit deal have been somewhat cast aside from public view.

However, news was released last week that in Boris Johnson’s ongoing negotiations for a UK exit deal, the EU refused to agree on his proposed ‘Canada style’ trade deal. Now, the proposed deal will be ‘more like Australia’s’.

But what does this mean for the UK? In 2017, Australia signed a deal with the EU which outlines their cooperation agreement when it comes to trade, foreign policy and security, development and humanitarian issues. This means that Australia’s deal with the EU is not a simple trade agreement, but is a number of terms which acts as a “statement of intent”, rather than a concrete deal.

With this in mind, the UK’s intended Australia style deal can be seen as a slightly more sweetened term for what it possible is: no deal.

An Australia style deal for the UK would be one which did not offer a free trade agreement with the EU. Trade would still be possible with the EU, but with tariffs. Under the current rules, there are no tariffs when it comes to transferring goods between the UK and EU.

With tariffs, that would mean there would be 10% additional costs on cars and up to 30% on milk, cheese and some meat. These extra costs would most likely be paid by the customer, meaning with this deal, prices of essential and non-essential items in the UK could see a rise.

If a Canada style deal with the EU could have been secured, the UK may have been able to benefit from reduced tariffs. In Canada, 98% of the items imported from the EU are tariff free. It seems, however, that this deal could not be agreed by the EU and Boris Johnson.

According to Johnson, the EU are providing less generous terms, which, under the circumstances, seems to be expected.

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