On 24 March the Australia-United Kingdom (UK) Free Trade Agreement (FTA) received Royal Assent, meaning it will enter into force imminently, after the two countries exchange diplomatic notes agreeing on a commencement date.
This FTA is historic. It is the UK’s first new trade deal signed after Brexit. Anne-Marie Trevelyan, the UK’s previous Secretary of State for International Trade, predicted the FTA will lead to “The Golden Age of Commerce” between the two countries, when she visited Adelaide in September 2022, before jokingly adding “When Boris Johnson found out about this agreement, he said Australia will send us Tim Tams and we will send them Penguin Bars!”
The FTA is expected to eliminate tariffs on over 99% of Australian goods exports to the UK, valued at around $9.2 billion. Australia currently exports gold, lead and wine to the UK and imports food and drink (particularly biscuits, whisky, gin, cheese and salmon).
There is also hope that the FTA will alleviate Australia’s well-documented labour shortages, by raising the age entitlement from 30 to 35 for UK citizens visiting Australia on three-year working holiday visas. At the same time, Australian professionals gain access to the UK jobs market on par with EU nationals, and Australian businesses will gain entry the UK’s procurement market, worth an estimated half a trillion dollars annually.
Most importantly, the FTA will help Australia diversify its trade. Despite continually thawing relations with China, many Australian exporters are still reeling from high tariffs imposed by the Chinese government throughout 2020. As a result, in the year to January 2022 South Australian exports to China were down by 43%. The UK, on the other hand, was Australia’s fifth-largest goods trading partner in 2020 and is expected to build on this through the FTA.
Hopes that the volume of Australia’s wine exports to the UK will increase because of the new agreement may sour though. Although the FTA will remove approximately $43m in annual customs duties on Australian wine exports, new British taxes may mean the UK market will actually be less lucrative for Australian vineyards. In August, the duty on wine sold in the UK will increase with inflation and the new alcohol duty régime will come into force. This means Australian wine will be hit with a 20% tax hike.
Overall exports to the UK are expected to increase once the new agreement comes into force. At the South Australian Business Chamber we saw a significant rise in enquiries when the Australia-India Economic Cooperation and Trade Agreement was implemented last December. In January, for example, we issued certificates of origin for India for almost $126 million worth of goods, including almonds, grain, copper, wine, wool and electronics.
To speak to the South Australian Business Chamber about export document certification to the UK or our other international services including migration and translation, please contact Maggie Li, Manager International Services on 08 8300 0000 or visit our website.
