The UK has agreed the outline of a trade deal with Australia, Downing Street has said, with a 15-year cap on tariff-free imports in place following concerns from UK farmers about a potential flood of cheaper beef and lamb imports.
The deal will be of limited importance to the UK economy – it is forecast to increase GDP by only 0.02% over 15 years – but is symbolically significant to Boris Johnson as the first post-Brexit trade deal that was not largely rolled over from an existing agreement.
The main elements of the agreement were sealed by Johnson and the Australian prime minister, Scott Morrison, over dinner at Downing Street on Monday. However, for now any details remain limited, with an agreement in principle due “in the coming days”.
The deal will also include an element so UK nationals under 35 can travel and work more freely in Australia.
No 10 said the reductions in tariffs would save UK households up to £34m a year, about £1.20 per household.
Farmers’ groups will closely examine the details of the agreement following concerns about the impact of imports from much larger-scale Australian meat farmers on UK producers.
The protection for UK farmers is described as involving “tariff rate quotas and other safeguards”, with no other details given.
Speaking later at Downing Street, Johnson promised that the deal “will benefit British farmers”.
He said: “It will be good news for British car manufacturers, it will be good news for British services, for British financial services and it will be good news for the agricultural sector on both sides.
“Here, we had to negotiate very hard and I want everybody to understand that this is a sensitive sector for both sides and we’ve got a deal that runs over 15 years and contains the strongest possible provisions for animal welfare.
“But I think it is a good deal and I think it’s one that will benefit British farmers and British consumers as well.”
Farming tariffs was the cause of a hiccup in negotiations, with a reported cabinet split over how long any block on tariff-free meat imports should last.
It was widely reported that Liz Truss, the international trade secretary, had wanted to ensure the deal went ahead, but faced stiff resistance from George Eustice, the agriculture secretary, and Michael Gove, the Cabinet Office minister, over any potential impact on domestic farmers, including those in Scotland and Wales.
The hope in government was that the Australia deal could have been finalised before last weekend’s G7 summit in Cornwall, which Morrison attended as a guest, but this was not achieved.
In a statement, Truss said the deal “shows what we can achieve as a sovereign trading nation – it is a fundamentally liberalising agreement that removes tariffs on all British goods, opens new opportunities for our services providers and tech firms, and makes it easier for our people to travel and work together”.
Truss said it “paves the way” for the UK to potentially join the Trans-Pacific Partnership trade area, which connects 11 countries including Australia, New Zealand, Malaysia, Vietnam, Canada and Chile.
Total trade between the UK and Australia was worth £13.9bn combined in 2020, Downing Street said.