Academic suggests Australia complete FTA with UK first before EU

Even if 25 Australian stocks with large UK operations could be hit by Brexit, according to Credit Suisse, the negative impact of the victory of the “Leave” votes is short term. An Australian academic says Brexit still presents an opportunity for more liberal trade in the long run.

Alan Oxley, chair of the APEC Study Centre at the RMIT University, suggests that in the light of Brexit, Australia – which is currently negotiating a Free Trade Agreement (FTA) with the European Union (EU) – place the negotiations on a very slow track. The expert on international trade law, economics and Asian regional development suggested that Canberra complete first an FTA with UK, reports The Conversation.

Among the advantages of doing that are it would be faster and easier to negotiate with the UK, Australia’s eighth biggest two-way trading partner, than with the EU and it would have higher chances of producing better access for Australian services businesses to the UK market.

Had Britons opted to remain with EU, UK would be required to follow EU common position. Oxley notes that greater German restriction on foreign services suppliers makes the EU position less liberal. Half of Australia’s trade with UK are services.

He notes that Australia’s latest FTAs and Trans-Pacific Partnership Agreement focus on the removal of restrictions on foreign services business, such as accountancy and banking. However, trade liberalisation focuses on cutting trade barriers, mostly tariff on global products which are already low, while world trade on services is growing and currently accounts for one-fifth of total trade.

Oxley says once UK is outside EU, London would have positive influence in enhancing global efforts to open the services market. The EU is Australia’s largest export market valued at almost $10 billion in 2014, but since 2008, the number of Aussies working in the UK has gone down by 40 percent.

Ben Wellings, lecturer in politics and international relations at Monash University, says while there is no strong indication UK would welcome an FTA with Australia, nevertheless, he expects these ties to be reinforced as the UK seeks trade agreements and political support from traditional allies, reports HCOnline.

VIDEO: Opening of FTA negotiations with Australia and New Zealand, European Union