Revealed: How the UK-Australia deal was struck

20 June 2021

11:00 AM

20 June 2021

11:00 AM

The UK’s first bespoke trade deal agreed since leaving the EU was finalised with Australia over two dinners. One took place in the garden of the residence of the Australian High Commissioner to the UK, where guests were fed Australian lamb. The other in Downing Street where Welsh lamb was on the menu.They were menu choices that pointed both to what the deal would achieve – zero tariffs, including on agricultural goods – and the main point of contention in a negotiation that has spanned nearly a year since talks began last June.

In that time, there has been a Cabinet row over protectionism on Australian meat imports and a diplomatic incident that nearly hampered the talks. There were also claims that the final agreement – which government analysis says will boost UK GDP by 0.02 per cent after 15 years – doesn’t amount to much at all.

However, with that figure from static analysis rather than a forecast, ministers are more optimistic about the impact the deal will have on the economy. What’s more, the importance of the deal to the government goes beyond its contents. Now concluded, figures on both sides of the negotiating deal put the final agreement down to personal ties and political will.

Depending on who you speak to, the deal was ‘always going to happen’ or ‘a small triumph over government chaos’. It’s now being talked up in government as a basis for future deals with countries like New Zealand and Mexico. ‘The first one was always going to be a learning experience,’ says a figure on the UK side.

It’s in part for this reason that a deal was first struck with Australia. As partners go, there are few countries that the UK – especially this government – has closer ties with. When the High Commissioner George Brandis QC gathered a high-powered crowd in the Stoke Lodge garden for a dinner in honour of Australian PM Scott Morrison on Sunday night, he told those assembled that what united them all was that they were great friends of Australia.

Such good friends, in fact, that it was hard to work out who was even on which side. Was Isaac Levido – the Australian strategist who ran Johnson’s 2019 election campaign – there for his home country or the UK? Cabinet ministers in attendance were International Trade Secretary Liz Truss, Home Secretary Priti Patel, Business Secretary Kwasi Kwarteng and Jacob Rees-Mogg. ‘It was the free traders of the Cabinet,’ says one attendee.

The guest of honour Scott Morrison used his brief speech to the crowd to praise the strength of the relationship. Having just come from Cornwall for the G7 where he met with Joe Biden alongside Johnson, he spoke of his own ties to the UK – his ancestor was cast out of Cornwall for stealing and sent to Australia. Morrison said what links the UK and Australia is their work as defenders of liberal democracy.  It’s this connection that meant the Australia deal ought to have been one of the easiest to strike. Aides put the fact it got over the line down to personal relationships.

Yet there was a point when relations were at risk of souring fast. UK officials say the moment where the talks really stepped up a gear was when Truss’s counterpart Dan Tehan travelled to London in late April with his team for negotiations. But the talks began in confusion due to a diplomatic disaster.

On the eve of the talks, supposed allies of Truss briefed to the Daily Telegraph that Tehan was ‘inexperienced compared to Liz’ and needed to ‘show that he can play at this level’. They claimed Truss planned to ‘sit him down in the Locarno Room [in the Foreign Office] in an uncomfortable chair, so he has to deal with her directly for nine hours’.

To say the remarks landed badly would be an understatement. They led to a media storm both in the UK and in Oz. A source close to the Australian government says they were ‘deeply offended by the comments’. The negotiations only got back on track as quickly as they did because Truss apologised within 24 hours of the comments being made public.It was helped by the fact that hard chairs aside, Truss and Tehan have a friendly relationship.

With carefully picked takeaways each night, the UK also ate a side of humble pie. Aides stayed late discussing details over Vietnamese food and fish and chips from Westminster’s Laughing Halibut on the final night.It’s in these ‘very direct’ talks that the UK side managed to get movement both on mobility – allowing easier travel for Brits to Australia both for leisure and work – while the Australians pressed on the need for tariff-free access on agriculture.

It’s this aspect of the deal that has proved the most controversial politically. The following month, a Cabinet row broke out as Environment Secretary George Eustice and Cabinet Office minister Michael Gove – who have earned the nickname ‘Waitrose protectionists’ – grew concerned over what tariff-free access for Australian farmers would mean for the British agricultural sector. It confused Australian officials who view the EU as the bigger threat to UK farmers.There were warnings in the media of the market being flooded with cheap meat – and UK farmers (particularly in Scotland and Wales) being put out of business.

The National Farmers Union were quick to go on the attack. However, the scale of opposition actually had the reverse effect on Boris Johnson. The Prime Minister decided that the protectionists had overplayed their hand – if you couldn’t do a deal with Australia, who could you do a deal with?

Some of their concerns were heard, however; a cap on tariff-free imports for fifteen years was put in place. The Australian side pushed for this to be shortened, but in the end took the view that the most important thing was the end point rather than the time it took to get there.

While the Stoke Lodge dinner moved things on – with Truss sat next to Morrison for the three course meal – it was the Downing Street meal the following night that saw the deal get over the line. It was an intimate dinner. Morrison attended along with Brandis and their National Security adviser Michelle Chan, who raised the issue of China over dinner – Australia had a strong trading relationship with China but since Australia called for an independent inquiry into the origins of Covid, they have been slapping tariffs on Australian goods.

On the UK side, it was Boris Johnson, a senior No. 10 civil servant and Brexit minister David Frost. Frost had already met with Brandis in advance at Carbis Bay during the G7. While Frost’s in-tray is currently filled with issues resulting from the Northern Ireland protocol, he describes himself as the minister for the opportunities of Brexit. His presence reveals how Downing Street view the deal as significant to their post-Brexit plans. Over dinner, calculations were thrashed out on the back of a piece of an envelope. It worked. The next day a deal was announced – along with an exchange of gifts that included a vegemite surfboard for Johnson, a range of chutneys and seaweed beauty products for his wife Carrie.

Did either side give anything else away? On climate change, the Australians signed up to various commitments on the environment – a standard part of UK deals going forward. However, there is scepticism over how constricting these parts are. Instead, some on the UK side are frustrated they had to spend capital on these clauses when it could have been used to push more on other issues.But to the UK government, the deal is important for reasons that go beyond improvements on travel and access for digital services.

The UK-Australia deal will undoubtedly serve as a template for future UK trade deals – making it far more important than its own direct economic impact.

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