Barton Deakin Brief: Australia-UK Free Trade Agreement
17 December 2021
Australia and the United Kingdom have agreed to a Free Trade Agreement (FTA). This is the first freestanding free trade deal that the UK has agreed to since Brexit. The Australia-United Kingdom Free Trade Agreement (A-UKFTA) was signed virtually on 17 December 2021 by the Hon Dan Tehan MP, Minister for Trade, Tourism and Investment and the Rt Hon Anne-Marie Trevelyan MP, Secretary of State for International Trade.
Australia and the UK launched negotiations for an FTA on 17 June 2020. Following Minister for Trade Dan Tehan’s visit to the UK on 22 and 23 April, the two countries agreed to strive for an agreement by the time of the G7 Summit.
In June 2021, Australian Prime Minister Scott Morrison and UK Prime Minister Boris Johnson agreed in principle to the agreement. Today, the agreement was signed and, once passed into law, will see free trade between the two countries following a 15-year transition period.
The A-UKFTA will be tabled in both of Australia’s Houses of Federal Parliament, with a National Interest Analysis, and will be considered by the Joint Standing Committee on Treaties (JSCOT).
Australian producers and farmers will receive a significant boost by getting greater access to the UK market. Exporters will benefit from immediate elimination of tariffs on over 99 per cent of Australian goods exports to the UK, valued at around $9.2 billion.
Whisky and Wine
Whisky and wine will be able to enter the UK duty free when the agreement enters into force. Around $43 million in annual customs duties will be removed from Australian wine.
Short- and medium-grain milled rice will be able to enter the UK duty free when the agreement enters into force.
Beef tariffs will be eliminated after ten years. During the transition period, Australia will have immediate access to a duty-free quota of 35,000 tonnes, rising in equal instalments to 110,000 tonnes in year 10. In the five years that follow, a safeguard mechanism will be triggered when imports exceed a volume threshold, rising in equal instalments of 175,000 tonnes. A tariff safeguard duty of 20 per cent then applies for the rest of the calendar year.
Sheep meat tariffs will be eliminated after ten years. During the transition period, Australia will have immediate access to a duty-free quota of 25,000 tonnes. This will increase in equal instalments over ten years and will have increased to 75,000 tonnes. In the subsequent five years a safeguard will apply on sheep meat imports exceeding a further volume threshold rising in equal instalments to 125,000 tonnes, levying a tariff safeguard duty of 20 per cent for the rest of the calendar year.
Sugar tariffs will be eliminated over eight years. During the transition period, Australia will have immediate access to a duty-free quota of 80,000 tonnes, rising by 20,000 tonnes each year to 220,000 tonnes.
Dairy tariffs will be eliminated over five years. During the transition period, Australia will have immediate access to a duty-free quota for cheese of 24,000 tonnes, rising in equal instalments to 48,000 tonnes in year five. Australia will also have immediate access to a duty-free quota for non-cheese dairy of 20,000 tonnes.
Working Holiday Visa Holders
Working Holiday Visa holders in the UK will get expanded rights and will be able to stay for three years with an increased cut off age of 35.
Mutual Recognition of Qualifications
Professionals will benefit from provisions to support mutual recognition of qualifications and greater certainty for skilled professionals entering the UK labour market.
Australian businesses will have the guaranteed right to bid for a greater variety of UK government contracts in a procurement market.
Tariffs on cars and the UK’s other main exports will be removed immediately.