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Deal or no deal?

UK prepares for Australia-style trade deal with the EU

As the UK settles into the reality of greater coronavirus restrictions, thoughts of the fast-concluding trade negotiations with the European Union aren’t really on the top of most people’s minds.

But the reality is that come December 31, the UK will be out of its one-year transition period, and unless a deal is concluded fast, the UK will have to resort to the World Trade Organization (WTO) rules to trade with the EU. Such a move is being described as an Australia-type deal.

The idea of moving into a Canada-style trade agreement with the European Union is fast diminishing and Prime Minister Boris Johnson is playing hard ball, talking up the possibility of leaving with no deal.

Prime Minister Boris Johnson

Earlier today ,Johnson said he was willing to keep the door open to more Brexit talks — but added that the UK slam it shut unless the EU offers “fundamental change” in its approach.

“From the outset we were nothing but clear that we wanted nothing more complicated than Canada-style arrangement based on friendship and free trade,” Johnson said in televised remarks.

But he said a Canada-style free trade agreement was looking unlikely, and accused the EU of failing to negotiate seriously during the last several months.

Johnson was responding to EU demands at summit talks yesterday that he give ground on certain key sticking points.

“They want the continued ability to control our legislative freedom, our fisheries, in a way that is obviously unacceptable to an independent country,” Johnson said.

“Unless there is some fundamental change of approach” from the EU, Britain’s favoured approach for an all-encompassing deal was out, Johnson said.

“And so with high hearts and complete confidence we will prepare to embrace the alternative,” he said.

As a result, the UK should “get ready” to operate on stripped-down WTO rules from January similar to the relationship that Australia has with the EU.

“And we can do it, because we always knew that there would be change on January 1 whatever type of relationship we had,” Johnson said, noting arrangements in place in areas such as social security, aviation and nuclear cooperation.

“And we will prosper mightily as an independent free-trading nation, controlling our own borders, our fisheries, and setting our own laws.”

The London Stock Exchange

Meanwhile, the British pound fell below US$1.29 in response to Johnson’s comments, which in turn saw the London stock market increase by 1.3 percent, thanks to a weaker pound working to the advantage of those multinationals earning US dollars.

“In the meantime, the government will of course be focussing on tackling COVID and building back better so that 2021 is a year of recovery and renewal”, Johnson promised.

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