Financial Times (16/02/2019) - Australia’s trade minister has said his country is ready to sign a fast-tracked trade agreement with the UK in the event of a no-deal Brexit, but poured cold water on Britain’s ambition to join the Trans-Pacific Partnership regional bloc.

Simon Birmingham said Canberra was preparing for all eventualities in a bid to reduce disruption for business, just weeks before Britain is scheduled to leave the EU on March 29. Some Australian groups have already registered their alarm at the prospect of no-deal, with IFM Investors suggesting a proposed £500m investment in Stansted airport could be at stake.

“If we face a no-deal scenario then we would be urging and encouraging the UK to negotiate and finalise an agreement as quickly as possible,” Mr Birmingham told the Financial Times. “I would absolutely hope that we would conclude negotiations this year.”

An informal British-Australian working group has been meeting for around 18 months to prepare for a possible trade deal. But formal negotiations cannot begin until the UK has left the EU and may prove difficult over issues such as agriculture, where Canberra wants much-expanded access to the British market.

The talks could be much more complicated than the UK’s bid to roll over its current trading terms with countries that already have trade accords with the EU — such as Japan.

At present, London is racing to renegotiate those EU deals with the rest of the world ahead of March 29. But, despite concluding an agreement with Switzerland this week, the UK has only finalised a small percentage of the deals it needs to roll over.

Any Australia-Britain trade agreement would not only start from scratch compared with such deals but could also in large part depend on what kind of relationship the UK is seeking with Brussels in the longer term.

“Businesses around the world would like to know what is going to transpire for the future — especially those who use the UK as a hub for business into Europe,” said Mr Birmingham.

He also warned that UK ambitions to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership — a multilateral trade deal involving 11 Pacific nations, including Australia — are unlikely to be realised in the short-to-medium term due to the need to bed down that agreement and the UK’s distant geographical location.

Liam Fox, UK international trade secretary, has repeatedly set out the goal of joining the TPP.

“Obviously it’s a statement of fact that the UK is not within the Pacific,” Mr Birmingham said. “Some of the other TPP members would think that there are some nations within the Asia Pacific region who might be earlier starters in terms of coming in.”

There are growing concerns in Canberra that a chaotic no-deal Brexit could disrupt trade and investment flows between Australia, the UK and Europe. While UK prime minister Theresa May says she wants an agreement with Brussels in place by March 29, she has refused to rule out no-deal and lost a symbolic parliamentary vote on her Brexit strategy on Thursday, highlighting the difficulty of approving any agreement.

IFM Investors, which owns 36 per cent of the Manchester airport Group, has already said it would “re-evaluate” the £500m investment into the group’s Stansted airport in the event of no-deal.

“We are also [investing] £1bn into Manchester [airport] and we may need to curtail some of that investment in the event of a no deal,” Christian Seymour, IFM’s head of infrastructure in Europe, said this month. “We are hoping the outcome won’t be a no-deal because a no-deal would be quite destructive.”

Macquarie Group, the Australian investment bank, also recently warned it had begun to implement contingency plans for a no-deal Brexit. Two other financial institutions, Commonwealth Bank of Australia and Westpac, are still waiting to receive banking licences from Dutch and German regulators respectively, as EU authorities struggle to process a glut of applications from companies seeking to expand their presence in mainland Europe because of Brexit.

Australia has already signed technical agreements with the UK to ensure the free flow of goods such as wine, medical devices and other manufactured goods after Britain leaves the EU. But a no-deal Brexit would cause disruption for Australian exports because of uncertainty over what rules would apply to sales to the UK.

“We are far from the only ones in this position but that would put greater urgency on seeing a new trade agreement signed and sealed as quickly as possible,” said Mr Birmingham.

He added: “Australia definitely seeks a comprehensive agreement that is inclusive of goods as well as services.”

The UK is Canberra’s fifth-largest trading partner — with two-way trade valued at A$27bn ($19bn) — and the second-biggest foreign investor in Australia, after the US. Many Australian businesses, such as Macquarie and Westpac, use London as their European headquarters. Australia’s main goods exports to the UK are gold, lead and wine. One in every five imported bottles of wine consumed in the UK is from Australia.

In turn, Britain is a big tourism destination for Australians and a financial services market for Australian companies.

Brexit supporters have often set out the goals of a trade deal with Australia, emphasising the historical ties with the Commonwealth country. A report co-authored by Bob Seely, a UK Conservative MP, called this month for a common travel area between the UK, Australia, Canada and New Zealand.

Mr Birmingham said there were opportunities to extend labour mobility but such a wide-ranging proposal was unlikely to be acceptable.

“Yes, we facilitate travel for work, that is necessary, high value and that aids the exchange of trade and investment. But we also respect the importance of creating labour market opportunities for our own people too,” he said.

Additional reporting by Josephine Cumbo, Josh Spero and Chris Flood.

Read more at https://www.ft.com/content/ac8918d8-30e0-11e9-8744-e7016697f225