Brexit: Opportunities for trade and investment
Welcome to the latest edition of business envoy.
This edition focuses on the Brexit referendum outcome in the United Kingdom and its likely implications for Australia's trade, investment and tourism interests.
The UK decision has generated considerable uncertainty in the financial markets and in the real economy. However, while there will be challenges, the opportunities for Australia are significant.
Australia makes an attractive trading partner; we're an open, innovative and pro-trade country with a stable, reliable and prosperous economy. We share a unique bond with the UK forged not only through a shared history but also through the values we hold in common.
Prime Minister Malcolm Turnbull has made clear that Australia is interested in concluding a free trade agreement with the UK when the time is right.
A key question to be resolved is what will be the UK's longer term relationship with the EU. There are a number of options and all of them have implications for the UK's trade and wider economic relations with partner nations.
During my recent visit to London, I discussed these matters with senior ministers in the UK Government, including my counterpart the Secretary of State for International Trade, Dr Liam Fox.
We agreed to establish a bilateral Trade Working Group that will focus on scoping out the parameters of a future FTA.
I am optimistic that the UK Government is as committed as we are to putting in place the most trade liberalising, market-oriented policies that will create a positive environment for the growth of our trade, investment and tourism relationship. I am particularly keen to attract further productive UK investment to Australia. UK businesses have $76 billion in direct investments in Australia, and when portfolio and other investment is included, this figure is close to $500 billion. I believe there is considerable scope to expand our investment linkages that will generate growth and employment opportunities.
My visit to the UK was also a valuable opportunity to discuss ways in which our strong people-to-people links might be strengthened, including exploring opportunities for Australians seeking to live and work in the UK for limited periods.
In tourism terms, there were almost 700,000 British visitors to Australia last year. Collectively, they spent almost $4 billion here. The UK Office for National Statistics reports that over 600,000 Australians visited the UK in 2015-16. Between them, these Australians spent more than one billion pounds – or more than A$2 billion.
At the same time as pursuing new opportunities with the UK, Australia continues to prioritise a comprehensive, high-quality free trade agreement with the European Union. This was our goal before June 23 – and it remains a major priority after June 23.
Australia will remain a committed partner to both the European Union and to Britain. We are confident Britain and the EU will find a new way of working together that promotes more prosperity for both, and security for all.
The EU, as a bloc and as currently constituted, is the world's second largest economy, Australia's second largest goods and services trading partner, and our largest source of foreign investment.
In my discussions in Brussels with the European Commissioner for Trade, Cecilia Malmström, and in my address to the European Parliament, I underscored Australia's commitment to moving expeditiously to free trade negotiations. It has been more than 20 years since Australia's trade access to the EU market was updated. An FTA promises to go a long way toward levelling the playing field for Australian business in the lucrative, but often challenging, EU market.
We will be looking to build on our very close and effective partnerships with both the EU and UK to make them even stronger building on our immense people-to-people, cultural and historical links. We benefit substantially from our trade, investment, tourism, education, and work and travel arrangements. We will work to make sure these mutual benefits grow, building on these opportunities for an even closer economic relationship.