UK-Australia Free Trade Agreement

The importance of the UK-Australia Free Trade Agreement

As the UK forges a new dynamic role in the world, the UK government’s ambition is to secure free trade agreements (FTAs) with countries covering 80% of UK trade by the end of 2022. These FTAs benefit the whole of the UK and drive growth for businesses of all sizes across different sectors of the economy.

The UK-Australia FTA is the UK’s first deal created from scratch since leaving the EU and highlights the government ambition for future deals. The deal is expected to unlock £10.4 billion of additional trade, boosting the UK economy and increasing wages, while eliminating tariffs on UK exports to Australia. As a result, over £4 billion of UK exports will no longer be subject to tariffs.

FTAs promote trade and investment and help secure access to new markets by creating competitive advantage for UK exporters.  The UK-Australia deal for example has been tailored to the UK economy, with ambitious provisions in areas where the UK is a world leader, such as digital and tech.  The UK service sector will also have increased access to Australian markets, with enhanced mobility provisions and greater mutual recognition of professional qualifications (MRPQs), making it easier for UK professionals to operate and deliver services.

This agreement will create new opportunities for businesses in both the UK and Australia – ambitious FTAs are a key step in Seizing the Moment and building a more competitive, dynamic and future-focused economy.

Unpicking the details of the agreement: goods, services, mobility and innovation

There are plenty of opportunities in the UK-Australia Free Trade Agreement: from UK firms accessing an additional £10 billion worth of Australian public sector contracts per year, to changes in visa conditions, or the removal of tariffs on all UK exports.

The deal will remove tariffs on £4.3 billion of British goods exports, making it easier for UK businesses to sell products to Australia – contributing to the Levelling Up agenda. For example, the removal of tariffs of up to 5% on Scotch Whiskey and car manufacturers will help lift exports from Scotland, the North East and Midlands.

Likewise, the UK will decrease duties on some Australian exports in a staggered approach whilst maintaining certain safeguards on agricultural products.

Australia is a top destination for UK services exports, another key element of this agreement that will benefit UK firms. In 2002, £5.4bn worth of services was exported to Australia and this FTA will unlock further exports. The UK’s world-leading services sector will underpin the future of UK economic growth so getting more firms to export is crucial.

A best practice framework is also being created to enhance dual movement of professionals – cutting costs and allowing businesses to retain talent and have a presence in both countries. The deal is set to boost mobility with firms now being able to sponsor foreign employees without preference for local residents, and visas will be accessible for service suppliers for particular sectors.

Finally, the deal includes the world’s first innovation chapter, creating further opportunities for your business. Plans to improve the facilitation of free flow of data will spur digital trade and support firms to capitalise on the industries of the future from AI to low-carbon technologies. The exemption on data localisation laws will also remove the need for UK firms to house servers in Australia and will help maintain the UK’s high data protection standards.

What next?

This deal is a key gateway into the fast-growing Indo-Pacific region and will boost the UK’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific (CPTPP), one of the largest free trade areas in the world, covering £8.4 trillion of GDP and 11 Pacific nations from Australia to Mexico.

The CBI will continue to work with government to ensure that the voice of your business is represented on this deal and future trade deals. We are keen to hear your views on this FTA, and if you plan to export to Australia following the agreement.

Speak to Hemita for more information on this trade deal, or to learn how you can contribute to our current and future work on free trade agreements and wider international policy.