''This is a big moment': UK trade secretary keen to revamp Australian work visas' Bevan Shields, The SMH
London: Australia and the United Kingdom will revamp visa requirements for professional workers and young travellers under a new deal that also paves the way for Britain to become an unlikely member of the Trans-Pacific Partnership trade agreement within three years.
International Trade Secretary Liz Truss - a close ally of Prime Minister Boris Johnson responsible for striking a cluster of post-Brexit economic deals - said making it easier for Australians to live and work in Britain and vice-versa would be critical to growing the services sector, which is the backbone of both economies.
Secretary of State for International Trade Liz Truss is trying to strike free-trade agreements with Australia, the United States and Japan. CREDIT:ALEX ELLINGHAUSEN
Truss also used an interview with The Sydney Morning Herald and The Age to condemn protectionism, arguing free trade will prove "very helpful to the recovery of the global economy and putting up barriers will do the exact opposite".
"One of the really important things we can do as we recover from coronavirus is fight the protectionist rhetoric and instincts of some nations, and this is another area where Australia and the UK are very, very aligned," she said.
Australia and Britain on Wednesday night approved the start of formal negotiations, with the aim of creating a deal that lowers the cost of trade, stimulates billions of dollars in investment and allows professional services firms based in one country to compete in the other.
Truss did not rule out asking for a so-called free-movement system which would allow Brits to travel to Australia without a visa and vice-versa, however that option is highly unlikely even though she is believed to personally support the concept and Johnson has previously argued for it publicly.
Instead, negotiators will focus on rewriting certain visa restrictions to let more people move between each country for work.
"We haven't started negotiations yet so I'm not going to forecast what's going to happen in those negotiations, but there are of course areas like business travel that are specifically looked at in these trade negotiations and we do want to be ambitious overall," Truss said.
Negotiators aim to redesign some existing visa rules to encourage the movement of more highly skilled workers between both countries. The deal would also mean a raft of professional qualifications gained in one country would be recognised in the other.
The Youth Mobility Visa, which allows young Australians to spend up to two years working in the UK, could also be tweaked to give more graduates the chance to spend time in Britain before turning 30. The visa's expiry period could be extended, or people may be able to use it more than once, depending on their employment status.
Trade Minister Simon Birmingham said the Morrison government "absolutely" wanted the deal to permit "highly skilled professionals to move with relative ease".
"Australian and Brits have a long history of successfully working in and travelling across each other's countries and I hope this agreement can help to inspire new generations to continue that right of passage," he said.
Britain is particularly eager to secure a quick win because it would allow Johnson's government to mount a case that leaving the EU has allowed the country to pursue its own economic independence.
"The UK is on the threshold of an entirely new relationship with the rest of the world," Truss said. "This is a big moment for the UK."
The UK must seal new free-trade terms with major economies - starting with the United States, Japan and Australia - as it leaves the European Union by the end of the year. The deals will help Britain's growth but not cancel out the significant economic costs of leaving the EU.
British government documents show a trade deal with Australia could lift UK GDP by 0.02 per cent, or £500 million ($911 million). Exports to Australia are expected to increase by between 3.6 and 7.4 per cent. Canberra is yet to conduct its own impact modelling but British forecasts suggest GDP in Australia could grow by up to £700 million ($1270 million) under a tariff-free deal.
Services industries such as banking, education and tourism could enjoy the biggest financial benefits from a trade deal. The UK is already our third-largest services partner with trade worth about $15.2 billion last financial year. Overall, the UK is Australia’s seventh-largest trading partner, with two-way trade valued at $30.3 billion in 2018-19.
Johnson's government was legally prevented from negotiating with Australia ahead of Britain's formal departure from the EU in January this year. However an agreement should not take long to finalise because both sides have been informally talking for two years and are largely familiar with each other's positions.
Birmingham said he was confident an Australia-UK deal could be struck by the end of the year, although Truss declined to commit to the same.
The UK has set out plans to prioritise access for high-skilled workers from around the world in its post-Brexit points-based immigration system, while putting an end to a reliance on "cheap labour from Europe".
Truss said Britain was in "active discussion" with all 11 members of the so-called Comprehensive Progressive Trans-Pacific Partnership, the mega trade agreement salvaged by the Turnbull government after US President Donald Trump withdrew American involvement in the bloc.
The prospect of Britain joining the Pacific Rim deal has raised eyebrows in the region given its geographic location in the North Atlantic.
"It is perhaps a slight stretch of the definition of Pacific, I would agree," Truss said. "The [TPP] currently covers 13 per cent of global GDP. If you add in the UK it would cover 16 per cent and we think that is a very good opportunity for us to reach out more broadly into Pacific markets."
She said striking bilateral deals with Australia, Japan and New Zealand would help smooth the way for the UK's accession to the trade partnership.
Joining could help Johnson achieve his election manifesto pledge of covering 80 per cent of UK trade with post-Brexit free-trade deals within three years.
Birmingham also echoed Truss in arguing free trade should be embraced as the global economy rebuilds from the shock of COVID-19.
"The symbolism and ongoing policy benefits of nailing an ambitious agreement now is probably more important than it has been for years," he said.
"I think in striking this deal and standing by our ambitions at this time, we will be providing a boost to confidence in our own countries but also an example to others to not be tempted by the lure of protectionism."
Australia's high commissioner to the UK George Brandis welcomed the start of negotiations: "In Liz Truss the UK has a fierce advocate and Australia an ally in advocating for free trade globally."
Bevan Shields is the Europe correspondent for The Sydney Morning Herald and The Age.