The long-awaited Australia-United Kingdom Free Trade Agreement (A‑UK FTA) entered into force on 31 May. Hot on the heels of the Australia-India Economic Cooperation and Trade Agreement (ECTA), this FTA is another opportunity for South Australian businesses to diversify. This is important because although Australia’s trade relationship with China is slowly stabilising, Foreign Affairs Minister Penny Wong cautioned that “the reality is neither country is going back to where we were 15 years ago.”
The UK is the world’s sixth-largest economy and has a market of over 68 million people. South Australian businesses have exported over $380 million worth of goods to the UK in the year ending March 2023 and two-way trade between Australia and the UK was worth $10 billion in 2022.
Effective Wednesday 31 May, Australian businesses now have improved access to the UK’s market, with the agreement eliminating tariffs on 99% of goods including wine; short and medium-grain rice; honey; nuts; olive oil; most seafood; most fruits and vegetables; and most processed foods. There will also be duty-free transitional quotas and removal of tariffs after 8 to 10 years on beef, sheep meat, sugar and dairy. Unfortunately, the removal of approximately $43 million in annual customs duties on Australian wine exports comes with a caveat. On 1 August, the UK will increase alcohol duties, meaning wine will be hit with a 20% tax hike.
Additionally, the A‑UK FTA includes provision for UK citizens to live and work in Australia, under the Innovation and Early Careers Skills Exchange Pilot (IECSEP) as well as an extension of the working holiday arrangement to 3 years (from the current 3 years) for British backpackers wanting to come to Australia. The South Australian Business Chamber hopes this will help with ongoing labour shortages.
With the UK and India trade agreements out of the way, the Federal Government will now prioritise a trade deal with the European Union (EU), which could unlock a market of 500 million people. Thus far negotiations have been difficult due to Geographical Indications, which would prevent Australian businesses from using names like ‘feta’,‘parmesan’,‘kalamata’ and ‘kransky’.
For more information on the A‑UK FTA, please see the Australian Government’s Free Trade Agreement Portal. And if you need information about export document certification to the UK or any other international services including migration and translation, please contact Maggie Li, the South Australian Business Chamber’s Manager of International Services on 08 8300 0000 or visit our website.
