What is an 'Australia-style' relationship with the EU and would Boris Johnson go through with it?

Negotiations between the UK and the EU have made little progress in recent days.

With talks between the UK and the EU still in deadlock at the final hour, ministers have been warning the country may have to prepare to exit the transition period without a formal trade deal.

If a deal can not be reached with the EU soon then the UK faces the prospect of leaving the transition period on January 1 without a formal arrangement, with many labeling it a "no-deal" exit.

The government has chosen to describe leaving the transition period and the future trading relationship as an "Australia solution."

Boris Johnson talked to European Commission president Ursula von der Leyen over the weekend.

Although different ministers including Boris Johnson have described it differently it essentially suggests the UK will be trading with the EU in the same way Australia does - but what does that mean?

Is an Australia model no-deal in another name?

Essentially, yes. Australia does not have a formal trade agreement with the European Union and does most of its trading on World Trade Organisation (WTO) terms.

Australia and the EU do have some agreements in specific areas that help facilitate the movement of some goods between the two.

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

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

The UK and EU could quickly sign similar agreements in certain areas and both sides would be keen to, particularly in areas like policing and counter-terrorism.

Brexit trade talks - the sticking points at a glance:- Fishing rights: The UK wants total control over its own fishing waters after the Brexit transition period ends, with a 12 mile exclusion zone around the British Isles banning all foreign vessels. The EU wants the UK to stick to the Common Fisheries Policy, an EU agreement which gives member nations the rights to fish in European waters - more here.

- Level Playing Field: This is a concept all EU nations agree to, which ensures member nations cannot undercut others by setting their own rules on issues such as the environment, taxation and state aid. The EU says a zero-tariff trade deal is dependent on the UK agreeing to a level playing field. The UK disagrees, saying a fundamental aspect of Brexit is that the UK will be able to set its own rules.

- Governance of a deal: It's likely that any trade deal will eventually result in disputes. The EU wants the European Court of Justice to be the final authority in ruling over disputes. The UK says the ECJ should have no role and final decisions should be made by a bespoke arbiter.

But these side deals would not come close to covering all the aspects found in a usual trade agreement.

Critics of the government point out the trade relationship between Australia and the EU only makes up a tiny amount of their total trade and does not compare to the UK where Europe is by far its largest trading partner.

The cross-Channel trade between the UK and EU is also far more varied and includes many complex manufactured goods - which are harder to regulate - compared with Australia’s exports which are focused on raw materials.

Despite their relatively small trading relationship, Australia has been trying to negotiate a free trade deal with the EU since 2018.

What would happen if the UK trade with the EU on WTO terms?

The prime minister has said the UK will "thrive" even if we can't reach a deal with the EU, and while this may be true in the long term his own government has conceded it would have dire consequences in the short term.

Michel Barnier has been ordered back to the negotiating table. Credit: PA

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.

Under the rules of the WTO, no country can charge different tariffs for different nations unless they specifically sign their own trade agreement.

This is often what is meant when politicians say "trading on WTO terms".

The EU has tariffs on practically all goods, which the UK did not have to pay when it was a member of the bloc.

For example, according to the Institute of the Government, the EU has a 10% tariff on cars - a large export of the UK to the EU.

This means the UK would have to pay the same tariffs on imports that all of the nations that do not have a trade agreement with the EU already do, and the EU could not lower them just for the UK.

Britain’s Office for Budget Responsibility (OBR) has forecasted a no-trade deal would wipe an extra 2% off British economic output in 2021 while driving up inflation, unemployment and public borrowing.

No deal is very unpopular with many in the UK.

ITV Political Editor Robert Peston has seen the government's planning for the "reasonable worst-case scenario" if the UK cannot find a deal with the EU.

The document predicts a very difficult three months for the UK.

Among the things the document predicts could happen are:

  • The import of medicines would be reduced by 60-80% for three months and would cause shortages in the UK healthcare system.

  • A huge uptick in illegal fishing as no formal fishing arrangement would be in place

  • Protests across the country taking up a significant amount of police resources.

  • Reduced food supply availability particularly for fresh goods.

  • Queues of up to 7,000 lorries in Kent that would take two days to clear.

  • A "reduction in capability to tackle crime and terrorism".

At the start of the document, it highlights that it does not cover "an extreme or absolute worst-case scenario" rather a "challenging manifestation of the risk in question".

Would Boris Johnson actually go through with it?

Mr Johnson won the Conservative leadership contest on a mandate for a harder Brexit, he then won a massive majority in a landside election from a similar position.

To be seen to concede to EU demands could harm his standing with many hardcore Brexit supporters that listen to Nigel Farage's demands for a no-deal as much as they listen to Mr Johnson.

He also faces the threat of the European Research Group, the group of Brexiteer Conservative MPs that proved fatal to Theresa May's time in Number 10, they are keen to ensure the UK has their definition of independence realised.

However, the prime minister has an immeasurably stronger position in parliament than Ms May did and could head off a large rebellion over any deal he reached with the EU even if Keir Starmer's Labour Party voted against it.

Ending the transition period without a deal is also deeply unpopular among many in the UK.

Recent polls by Kantar and YouGov have shown no more than a fifth of voters prefer leaving without a deal, with more than 60% saying they wanted one.

An Opinium poll on December 4 showed more people preferred rejoining the EU (25%) over leaving without a deal (17%) - with most respondents saying they wanted a trade deal.

Leaving without a deal would also likely inflame the already vocal Scottish independence voices and provide more fuel to the second referendum argument.

Internationally, not only would it likely harm relations with the EU but US President-elect Joe Biden has made it clear anything that could put up a hard border in Ireland - which leaving without a deal would do - is unacceptable to the US.