UK on brink of Australia deal

UK on brink of Australia deal

The UK and Australia are expected to finalise a bilateral trade agreement during talks at the upcoming G7 summit in Cornwall.

The expected deal is a core but controversial component of the UK government’s post-Brexit Global Britain strategy and follows on from successful negotiations with Canada.

Despite facing a variety of criticism, the Prime Minister insists that the pact will catalyse export opportunities for UK businesses and complement his regional development agenda.

Australia is the UK’s 14th largest export market overall – worth £12 billion in 2019 – and its leading trading partner within the Commonwealth.

The government has also announced that it will commence talks with the CPTPP trans-Pacific trade bloc within weeks.

Concerns

Many in the UK farming industry oppose the removal of tariffs on Australian meat products, warning that domestic producers will be disadvantaged by cheaper produce in a sector already beset by precarious profit margins and subsidised business models.

England’s post-Brexit agricultural policy aims to reduce reliance on direct payments to farmers with a more commercially-focused framework, but with so many small agri-businesses already stretched thin, many are concerned about being squeezed out.

Devolved farming policies in the rest of the UK differ but place a similar emphasis on boosting the competitive capabilities of suppliers in the sector.

The Welsh First Minister has expressed fears about the economic and community impact of the putative deal, while his Scottish counterpart has said that her administration has been excluded from the negotiations.

Meanwhile, the Scotch Whisky industry is expected to benefit from the removal of the 5% export tariff, with Australia currently constituting it’s 8th largest export market. Despite this, the Scottish Government insists that the UK’s Brexit policy has damaged distilleries by dampening demand from European markets.

Additionally, Australian health and safety practices are proving contentious, with the RSPCA condemning an array of troublesome animal welfare and hygiene standards that could creep into UK supply chains.

Overall, questions persist as to whether the concept of Global Britain is robust strategic policy, or little more than jingoistic window-dressing concealing a desperate pitch for new business after burning bridges closer to home.

Indeed, news of financial woes at the British Council and ongoing budgetary cutbacks at the Foreign and Commonwealth Office suggest that the administrative structures tasked with manifesting Global Britain may not be in the best of health.

Competition

With so much of the wider economy undermined by the pandemic, the case for sector-specific protectionism is facing pushback: most companies operate in a highly competitive marketplace where tight margins and pesky competitors are the norm.

It is vital to nurture small enterprise and keep struggling firms afloat where possible, but shifting market sands will inevitably contribute to some of the least agile suppliers shutting up shop.

Brexit has already prompted a rethink of UK public procurement policy, with a much greater emphasis to be placed – at least theoretically – on smart purchasing that gives a leg up to local supply chains and drives regional development.

Much of the government’s rhetoric around the deal has the same ring to it, but motivational speaking from ministers cannot obscure the fact that transitioning to a new trade regime can, at best, be a net positive and not a panacea.

Mitigating the systemically brutal free market for up-and-coming companies and third sector innovators is central to government policy, but grand strategy – even if sound – can only succeed with suitably tailored tactics on the ground.

International trade policy will be viewed by many through the prism of the political and cultural schism of Brexit, but businesses across the UK share an imperative to seek new revenue streams, secure more value and continuously improve their offer.

For firms scraping by in tumultuous times, turning a profit is paramount and business models that create crippling losses may ultimately be consigned to the scrapyard.

As for accusations of empty patriotic posturing, the Royal Navy’s planned deployment to the Asia-Pacific region later this year – as well as the government’s much maligned commitment to the construction of a new Royal Yacht – may be representative of a dated but not necessarily ineffective marketing strategy.

Partially a geopolitical signal to the Chinese government and other Asian nations, this bout of literal showboating is also a seaborne merchandising stall for Brand Britain in a growing market: the UK’s military and security-related exports to Asia tripled from 2% of the total in 2018 to 6% in 2019.

Collaboration

Bombastic sales pitches can be crucial in crowded markets where generic voices are drowned out: sometimes shouting about your brand is a necessity.

But in order to be heard above the din, businesses across every industry are well advised to nurture a network of partners with synergistic strategies and complementary capabilities. With a chorus of voices, you can make a lot of noise.

Cooperative models – whether they be ad hoc alignments, formal consortia or strategic alliances – can be of huge value to ambitious business and all the more important in the coming years of market realignment and technological change.

This is especially applicable to smaller firms and community organisations that offer world-class services while facing barriers to market access due to their size and the dominance of larger rivals: as noted by the Tenderhood’s Moira Devereaux recently, combining a keen competitive eye with a collaborative business model is a powerful leveller for SMEs.

Creating connections with like-minded professionals and firms is a key tech-based challenge being taken on by the Tenderhood with its Supplier Social Network, one of a number of advancements the company has made to help existing and aspiring public contractors match their capabilities with suitable opportunities and partners.

Private sector fixes for common commercial blind spots are always welcome, but the most important collaborator for UK businesses is the government itself: as with attempts to reform UK public procurement, top-down reorganization leaves a lot of blanks to be filled in on an operational level.

UK meat exporters, for example, are already suffering from increased costs due to post-Brexit red tape: duplication of effort and inefficient processes are the sorts of mundane impediments that must be minimised if companies – not least those in the agricultural industry and SMEs more generally – are to compete to the best of their ability both domestically and in the global market.

John Cutt Reporter for The TenderHood

John Cutt is a storyteller and researcher with extensive commercial experience in public sector tendering and procurement.

His services include creative and technical copywriting, SEO, social media management and brand consultancy.

Disclaimer: all views expressed are the authors opinion unless expressly stated as factual

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