Negotiations on a UK-Australia free trade agreement began in June 2020 and have reached agreement in principle just a year later.
The final text of the FTA will be released once both governments have undertaken legal reviews of the wording, but we know the deal is broad in scope from the announcements both governments have made today - and will offer unprecedented market access in many areas.
The UK government said the FTA is a “fundamentally liberalising agreement that removes tariffs on all British goods, opens new opportunities for our services providers and tech firms, and makes it easier for our people to travel and work together”.
So what’s in the deal?
- Goods: removal of tariffs on almost all exported British goods – which amounted to £4.3 billion last year. It looks like the manufacturing and food & drink sectors will particularly benefit. UK tariffs and quotas on imports of agricultural goods will also be removed, but this will be phased over a 15-year period.
- Services: 56% of UK exports to Australia are actually services, and the new FTA will include provisions to support the supply of services cross-border, including an agreement to enable UK lawyers to practice in Australia under home qualifications.
- Mobility: the agreement sets new rules to make business travel easier, including a scheme for UK nationals aged up to 35 to travel and work in Australia for up to three years. There will also be improved terms on the temporary movement of skilled professionals and Australian firms will no longer be required to prioritise their own citizens when hiring.
- Digital and data: the UK government is calling the new FTA the “gold standard deal” for digital trade, which will facilitate the free flow of data and is accompanied by the world’s first ever innovation chapter – we’ll have to wait for more detail on what makes the gold the standard here.
- Procurement: the FTA will give UK businesses greater access to Australian government contracts, in what the UK has stated is ‘the most substantial level of access Australia has ever granted in a free trade agreement’.
- SMEs: the agreement includes interesting provisions to support small and medium sized businesses, such as simplified clearance processes and easier access to information about each country’s regulatory requirements. These non-tariff barriers are too often a greater hurdle for exporters than the modest rates of duty that can be applied to their goods.
The deal is also believed to include modern rules of origin, customs facilitations, intellectual property rules and some measures to help enable the recognition of qualifications.
What should I be doing now?
While the text of the agreement hasn’t yet been released and still needs to be debated in Parliament, we do now have a good sense of the direction of travel. Businesses can begin to consider how to best to take advantage of the opportunities the new FTA brings.
Whether you’re in goods or services, large or small, you should evaluate your operations and supply chain which takes place —or could be taking place—within the UK-Australia trade corridor. This FTA could fundamentally change your competitive position, and if you see a growth market, you should start to make plans to be in it now.
For support in assessing your trade and investment priorities, Deloitte’s specialists are on hand to help.