Australia and the United Kingdom (UK) signed a landmark Free Trade Agreement (FTA) on Friday that will reduce tariffs worth $13.8 billion on Australian goods and promote greater economic cooperation between both countries. This is the first trade deal to be finalised from scratch since Brexit.
The deal was signed by Australian Minister for Trade, Tourism, and Investment Dan Tehan and British Secretary of State for International Trade Anne-Marie Trevelyan in a virtual ceremony. The deal was agreed in principle back in June by British Prime Minister (PM) Boris Johnson and his Australian counterpart Scott Morrison. The deal will now be presented in the UK Parliament for a period of scrutiny.
Australia today signed a landmark free trade agreement with the United Kingdom that will make 🇦🇺 exports to the 🇬🇧 cheaper, create new opportunities and further strengthen the special relationship between our two countries.https://t.co/bEGWbrESyK pic.twitter.com/zLGYLu2tNW
— Dan Tehan (@DanTehanWannon) December 17, 2021
The FTA will remove tariffs on over 99% of Australian exports to the UK. The taxes are believed to be around $6.6 billion. Likewise, the deal eliminates most tariffs on British exports, unlocking $13.86 billion of additional trade, boosting the British economy, and increasing wages.
As per the official statement released by the British government, the agreement will create new business opportunities and includes legal protections for British investors, while also providing them with wider access to Australian markets and granting investors from both countries guaranteed access to each other’s government procurement markets.
Speaking at a press conference, Morrison hailed the new deal and highlighted the possible growth of Australian exports. He said, “When we came to government, 27% of our trade was covered by these pro-export agreements for Australia, just 27%.” “We now have 75% of our trade covered by these pro-export agreements that give Australian exporters that opportunity,” he added.
Morrison also said that Australian farmers and wine producers would benefit from the agreement, as it expands tariff-free quotas over the next ten years, after which they will be removed altogether. As per the statement released by Tehan’s office, the agreement removes $43 million in annual customs duties on Australian wine. Apart from this, tariff-free quotas on beef, sheep meat, and sugar exports will be expanded and phased out after some years. Australian farmers, too, have gained greater access to British markets and over 65 million consumers.
The agreement will no doubt also be welcomed by young people who want to travel for a working holiday programme. Under the new deal, young people working in the UK and Australia will be able to stay in the other country for up to three years. The upper age eligibility to participate in the working holiday programme has also been raised from 30 to 35 years. Furthermore, Morrison said, “Australian job seekers can compete on an equal footing with EU nationals in the UK for the first time in more than 40 years.”
In addition, Australian businesses will now have the guaranteed right to bid for a greater variety of UK government contracts in a procurement market worth an estimated half-a-trillion dollars annually. Likewise, UK businesses will be encouraged to invest in Australia and establish regional headquarters in the country to leverage the local network. These measures are further supported by the fact that British service suppliers, including architects, scientists, researchers, lawyers and accountants, will now be able to work in Australia with easy access to visas without being subjected to the country’s skilled occupation list.
Furthermore, Australian households and businesses can expect savings of around $200 million a year, as tariffs on British imports into Australia, such as cars, whiskey, cosmetics, biscuits, and confectionery, will be phased out within five years.
Under the agreement, both parties also committed to reducing emissions by 26-28% by 2030. The deal’s final text reaffirms both countries’ commitments under the Paris Agreement. The text states: “Parties emphasise that efforts to address climate change require collective and urgent action, and acknowledge the role of global trade and investment in these efforts.”
The Morrison government hopes to implement the agreement by July 1, 2022. The deal is also likely to boost the UK’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), one of the largest free trade agreements in the world.