Free trade agreements have become increasingly significant as countries seek to establish economic partnerships and expand their markets. The Australia-UK Free Trade Agreement represents a groundbreaking step in economic cooperation and presents Australian businesses with more opportunities to expand their presence in the UK. In this blog post, we’ll explore the key outcomes of this trade deal and how it opens doors for Australian businesses to enter the UK market.
What’s the deal?
The Australia-UK Free Trade Agreement (A-UKFTA) was signed on 17 December 2021. The A-UKFTA came into force on 31 May 2023 following the UK’s confirmation that it had completed its domestic processes on 30 May 2023.
This agreement is hailed as Australia’s most ambitious free trade agreement with any country (other than New Zealand). This historic deal means that both countries will benefit from stronger diversification and economic recovery, as well as export and employment opportunities.
What’s happening between the UK and Australia?
The total trade in goods and services for both exports and imports between the UK and Australia was worth £18.7 billion in the four quarters to the end of Q2 2023 [1]. UK exports to Australia amounted to £13.7 billion, while UK imports from Australia totalled £5.1 billion. In just 12 months, this represents a 25% increase!
How does the A-UK FTA impact businesses?
Tariff removal and increased market access
Under the A-UKFTA, Australia’s exporters stand to benefit with more than 99% of Australian goods by value entering the UK duty-free. The agreement has resulted in improved goods access to the markets of both countries.
The will be a removal of tariffs on the following goods:
- Australian wine
- short and medium-grain rice
- honey
- nuts
- olive oil
- most seafood
- most fruits and vegetables
- most processed foods.
In addition, there will be duty-free transitional quotas and removal of tariffs from 5 to 10 years for the following goods:
- beef
- sheep meat
- sugar and dairy.
Intellectual Property Protection
Australia will join the multilateral Hague Agreement on Industrial Designs. This means that Australian designers would be able to protect their original creations overseas. In the UK and Australia, artists will receive royalties on the resale of their original artwork. This will include Australia’s indigenous art sector.
Enhanced opportunities for the Services Sectors
The UK is Australia’s second largest services trading partner, with two-way trade worth $11.7 billion during 2021-22 [2]. Australia and the UK have agreed to establish a strong platform to expand bilateral services trade. Both countries will open their markets to a wider array of services such as financial and legal.
Australian financial service suppliers now have increased opportunities to provide financial services into the UK market. The agreement has also included specific obligations on transparency relating to financial services regulations, and rules allowing business to transfer information across borders.
Australian lawyers will be able to provide legal advice in foreign and international law in the UK, including in arbitration, mediation, and conciliation proceedings.
Reducing barriers through digital trade
Both Australia and the UK are committed to enabling cross-border data flows and avoiding unjustified data localisation. Trade administration documents, contracts, and signatures will be accepted electronically.
The A-UKFTA is a landmark agreement that signifies an exciting phase in the economic relationship between our two nations. Australian businesses now have an excellent opportunity to expand into the UK market. If you’re an Australian business ready to enter the UK market, let’s have a chat. We’re an international growth agency helping scaleups to expand in the UK market across different verticals.
References:
[1] Department for Business and Trade – australia-trade-and-investment-factsheet-2023-11-01
[2] https://www.dfat.gov.au/trade/agreements/negotiations/aukfta/australia-uk-fta-negotiations-fact-sheet
