Brexit trade deal: What is the 'Australia option' as Boris Johnson says to prepare for no deal with EU?

Boris Johnson has said the UK could end up having a relationship with the EU after Brexit that is much more like the one Australia has with the bloc than Canada does.

Boris Johnson is welcomed by European Commission President Ursula von der Leyen in the Berlaymont building at the EU headquarters in Brussels

Here is a look at what an Australia-style arrangement with the EU could be like.

– What does the Prime Minister mean by an “Australian relationship”?

The Down Under relationship talked up by the Prime Minister is Downing Street language for a no-deal outcome with the UK’s largest trading partner.

Australia does not have a free trade agreement with the Brussels bloc, so the bulk of its trade is carried out on World Trade Organisation (WTO) terms.

– What would the likely economic impact be?

If the UK followed suit at the end of the transition period on January 1, following WTO rules would mean tariffs being placed on many goods traded between the UK and the EU, with the addition of some quota restrictions and customs checks.

It should be noted also that the UK and the EU trade far more with each other than Europe and Australia do and cross-Channel trade is a more varied range of mainly complex manufactured goods, compared with Australia’s exports which are focused on raw materials.

The UK, for example, trades more than half of its goods into Europe, compared with just 11% for the southern hemisphere country.

– Could mini sector deals still be on the cards under Australian-like relations?

While Australia does not have a free trade agreement in place with Brussels, it does have a series of agreements on trade and other areas.

Mr Johnson’s previous comments about being willing to discuss the “practicalities” on how aviation, road haulage and nuclear co-operation would work after the year is over seemed to suggest he too would be open to a series of mini-agreements to soften the no-deal landing.

For instance, Australia has agreements with the EU on the peaceful use of nuclear energy and scientific co-operation.

The pair also have a “mutual recognition agreement” so there is acceptance of each other’s safety certificates and product markings.

The capital Canberra, meanwhile, negotiated an agreement on the trade of wine, a huge Australian export, in 2008.

Other arrangements are also in place to help combat crime and terrorism and to allow the exchange of classified information.

– Is Australia happy with not having a free trade deal with the EU?

Critics of Mr Johnson have highlighted that while his administration has been espousing the virtues of trading with Brussels on similar terms to Australia, the Commonwealth nation is in the process of attempting to negotiate better arrangements with the EU.

Carl Bildt, co-chairman of the European Council on Foreign Relations, previously tweeted: “Prime Minister Boris Johnson talks about an Australia situation which he means no-deal with the EU.

“He probably thinks it sounds better like that. Someone should tell him that Australia is actually busy negotiating a trade deal with the EU.”

Australia has been striving for a comprehensive free trade agreement with the EU since July 2018.

– What is a Canada-style agreement?

The 2016 agreement with Canada was described by the EU as the most ambitious it had signed with a third country.

It abolished tariffs on the majority of goods traded between the two sides, although some food products such as chicken and eggs are not covered.

Services are only partially covered and it does not include the financial services sector, which is crucial to the UK economy.

Border controls remain, but the agreement encourages the use of advanced electronic checking to speed customs clearances.

Because it is not a single market or a customs union, both sides are free to negotiate deals with other countries.

Boris Johnson had said he wanted Britain to have a Canada-style free trade agreement, but if that could not be agreed the UK would establish a trading relationship with the EU more like that which Australia has.

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