Ministers believe that they are on track to sign within weeks the first fully-fledged, post-Brexit trade deal with Australia that will mean tariffs between the two countries being slashed.
Under the deal being finalised, the UK will agree to a zero-tariff, zero-quota access for Australian agricultural exports. In return Australia will remove tariffs on products such as Scotch whisky and cars as well as giving greater access to UK services companies.
A tentative agreement is understood to have been pencilled in for the week after the G7 summit in Cornwall from June 11 to 13.
Scott Morrison, the prime minister of Australia, will join the gathering of western leaders and is expected to stay on for bilateral talks, when both sides hope that an agreement can be announced.
“We are not rushing a deal,” a Whitehall source said. “If it takes longer then so be it, but we are hopeful that something can be concluded soon. We are getting close but nothing is finalised.”
In a further move it was announced yesterday that the UK is to start formal accession talks to enter into the Comprehensive Trans-Pacific Partnership that links economies in Asia, the Pacific and Canada in a free-trade bloc.
Liz Truss, the trade secretary, has prioritised membership of the group, which includes fast-growing economies such as Mexico, Malaysia and Vietnam along with established allies such as Japan, Australia and New Zealand.
Most elements of the new trade deal are understood to have been agreed, with the last sticking point being the length of any transition period before tariff-free access is granted to Australian farmers.
The UK side is understood to want a period of ten to 15 years before full tariff-free access is granted to give farmers time to prepare for increased competition. Australia is pushing for a shorter time, however, with one source suggesting that it would not settle for longer than ten years.
The Department for Trade said that an agreement with Australia would be the first in a series of “next generation” deals that would slash tariffs on British exports, boosting trade and investment in industries such as services, low carbon technology and digital trade.
“A UK-Australia trade agreement would be significant for Scotch whisky and the Union,” Truss said. “Part of the promise of leaving the EU was striking deals with countries beyond Europe, opening new opportunities for iconic British goods like Scotch overseas.
“I am fighting hard to get these tariffs cut and secure a deal that benefits producers in Scotland and helps the whole of the UK.”
Critics say that the economic impact of an Australian trade deal would be minimal. The government’s estimates suggest that it would add 0.01 per cent to 0.02 per cent to gross domestic product over 15 years.
The UK exported about £4.5 billion worth of goods to Australia in the year to March compared with £139 billion to the EU and £45 billion exported to the US. The combined export of goods and services accounted for 1.7 per cent of the UK’s total last year, making Australia the 14th largest UK export destination.