Australia and the United Kingdom have formally signed a free trade agreement (FTA) that promises to create more jobs and business opportunities for Australians.
The agreement, which was reached in principle in June, is expected to increase trade by more than $10 billion per year. It is also the first FTA signed by the United Kingdom since its exit from the European Union earlier this year.
The agreement will make it easier for Australians to live and work in the United Kingdom and remove tariffs on various products, including lamb, beef, sugar, and dairy.
Australia’s service companies and professionals will benefit from new commitments that make operating in the U.K. market easier. This includes supporting mutual recognition of professional qualifications and providing more certainty for skilled professionals entering the U.K. labour market.
More information about the FTA can be found here: UK-Australia free trade deal: Which industry will benefit the most?
A perfect opportunity for SMEs
The Australian British Chamber of Commerce, the peak Australia-UK business group, welcomed the FTA’s terms and intent and encouraged businesses to take advantage of it.
“The removal of tariffs on 99 per cent of Australian goods exported to the U.K. (worth $9.2 billion) is the most visible positive example,” David McCredie OBE, the Australian British Chamber of Commerce CEO, said.
“While tariffs are understandably important, cross-sector provisions that will allow a wide variety of businesses to trade more freely, such as provisions to enable people mobility, digital trade, and investment, maybe just as important.
“The already vibrant services sectors, which generate nearly 70 per cent of Australian GDP and employ 80 per cent of Australians, will benefit the most, and the UK is Australia’s third-largest services trading partner.”
David also said that digital trade was another priority area. Those changes will have far-reaching impacts in most sectors, particularly with the liberalisation of data flows, e-trade and the commitment to establish cross-border digital identity frameworks.
“The investment provisions will make it easier for capital to flow both ways, with FIRB thresholds for UK-originated investment raised and requirements eased for Australian companies expanding into the U.K.,” he said.
Big win for Australian agriculture
The Australia-United Kingdom Free Trade Agreement opens new doors for Australian farmers.
The trade agreement will guarantee tariff-free, quota-free access to the U.K. market for all Australian agricultural products after a 15-year phase-in period.
Minister for Agriculture and Northern Australia David Littleproud noted that many sectors, including wine, seafood, rice, and horticulture, will gain immediately from new market diversification opportunities and reduced trade costs.
“New commercially significant up-front quotas for beef, sheep meat, sugar and dairy will also provide immediate benefits for our farming communities.
“The FTA will also cover a variety of measures critical for the further development of Australian agriculture, including improved investment arrangements and enhanced trade in manufactured goods and services.
“It also establishes closer cooperation on biosecurity, animal welfare and antimicrobial resistance that will not impact Australia’s standards or right to regulate in these critical areas.”
Commenting on the news of an Australia-UK trade agreement, National Farmers Federation CEO Tony Mahar said, “Australian and U.K. farmers share a commitment to meeting the highest standards when it comes to caring for their land and their livestock, and that commitment shows in the quality of our produce.
“U.K. customers will benefit from the increased availability of high-quality Australian products on their supermarket shelves, alongside their homegrown options.”
The trade agreement will also facilitate much-needed agricultural labour mobility between the U.K. and Australia, creating new opportunities for Australian farmers to meet their skilled labour needs.
“The U.K. deal creates new opportunities for Australian farmers as we work towards growing industry output to $100 billion by 2030,” Mr Mahar said.
The complete removal of tariffs on all agricultural items within ten years will allow Australia’s exports to continue to grow strongly in the future.
According to government data:
- Australia’s agricultural commerce with the United Kingdom was valued at $823 million in 2020-21, with wine ($514 million), lamb and mutton ($77 million), beef and veal ($11 million), pulses ($15 million), wool ($8 million), and nuts ($7 million) among the top exports.
- In 2020-2021, total exports to the United Kingdom reached an all-time high. Exports of Australian agriculture, forestry, and fisheries to the United Kingdom climbed by $182 million from the previous year ($641 million to $823 million).