Australia – United Kingdom Trade Deal : Free Trade Agreement
Keywords- Australia, UK , Trade
Author: Riya Kashyap
Introduction
The UK has secured a trade deal with Australia eliminating tariffs on all UK goods and boosting jobs and businesses across the country. PM Boris Johnson & Australian PM Scott Morrison agreed to the main elements of the deal after a discussion of 5 years. The leaders reaffirmed the enduring partnership between the UK and Australia during their discussion. They agreed to work closely together on defence, technology collaboration and tackling climate change including through a future Clean Tech Partnership.
The new Free Trade Agreement (hereinafter referred as FTA) means iconic British products. Like: cars, Scotch whisky, biscuits and ceramics will be cheaper to sell into Australia. Boosting UK industries that employ 3.5 million people across the country. The UK-Australia trade relationship was worth £13.9 billion last year and is set to grow under the deal. Creating opportunities for businesses and producers in every part of the UK. British farmers will be protected by a cap on tariff-free imports for 15 years, using tariff rate quotas & other safeguards. The tariff rate quotas & other safeguards, protects the British farmers through a cap on tariff-free imports for 15 years. Under the agreement, Britishers under the age of 35 will be able to travel and work in Australia more freely. Which would open exciting opportunities for young people.
The new FTA opens fantastic opportunities for British businesses and consumers, as well as young people. Who wish to work and live on the other side of the world. The free trade deal will eliminate tariffs on Australian favourites like Jacob’s Creek and Hardy’s wines, swimwear and confectionery. Boosting choice for British consumers and saving households up to £34 million a year.
Benefits to UK
It will provide benefits across the whole of the United Kingdom, including:
- Scotland exported £126m of beverages to Australia in 2020; this deal will help distillers by removing tariffs of up to 5% on Scotch Whisky.
- Wale has exported more than 450 businesses Australia last year. Which will benefit the life science companies as well as chemical manufacturers in particular.
- 90% of all exports from Northern Ireland to Australia are machinery and manufacturing goods – used extensively in Australia’s mining, quarrying and recycling sectors. The tariffs will be removed and procedures of custom will be simplified under the new FTA.
- Car manufacturers in the Midlands and north of England will see tariffs of up to 5% cut, boosting demand for their exports.
An FTA with Australia is also a gateway into the fast-growing Indo-Pacific region covering £9 trillion of GDP & 11 Pacific nations from Australia to Mexico. The deal’s ambitious commitments on market access for services professionals, cutting-edge digital provisions and reduced barriers to investment will benefit the UK’s service sector. The UK exported £5.4 billion worth of services, including £1.4bn of insurance and pension services & £780m of financial services, to Australia in 2020. Red tape and bureaucracy will be torn down for more than 13,000 small and medium-sized businesses across the UK; who already export goods to Australia, with quicker export times.
UK- Australia Agreement
This Agreement is as significant for its historic symbolism as it is for its direct trade benefits, as it marks the first Agreement to have been negotiated from scratch in the post-Brexit era for the British Government and further deepens the bilateral relationship between the two nations. The UK has entered into many other Free Trade Agreements since leaving the EU legal framework, but all of them until now have been continuity agreements, mirroring to a very large extent the corresponding EU agreement with that country from which the UK had previously benefited as an EU Member State. This Australian agreement, by contrast, has no EU parallel and therefore represents a tangible post-Brexit milestone for the “global Britain ” concept.
In the coming days and months, the details of the Agreement in Principle will become clearer. It is expected that the actual Agreement in Principle document will be in excess of 1200 pages, so there is clearly much detail to come. This is an important step in clearing the way for a smooth accession by UK to Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). It is one of the largest economic zones in the world, which the UK has formally requested to join and of which Australia is a key member.
The Agreement is due to come into effect in 2022. Dentons Trade & Regulatory partners in the UK and Australia have prepared a summary of what we have learned until now. The Agreement key benefits is to Australia and British businesses and consumers.
Impact of the Agreement
FTA paves way for UK’s potential accession to CPTPP, part of a broader geopolitical move by UK to focus on Asia-Pacific region. The CPTPP is a ‘deep’ trade agreement that is more about the governance arrangements for transnational trade in the region. It is a preferential trade agreement that distinguishes rules for those who are and are not members of the CPTPP. It is an important step towards rules-based regulatory control of global value chains, the importance of which continues to grow. Without the provisions of this FTA, however; levelling the playing field as between the UK and existing members of the CPTPP. The UK’s entry into the CPTPP would be much more difficult.
The FTA is the right deal for Australia and the UK; with greater access to a range of high-quality products made in both countries. It also provides greater access for businesses and workers; all of which will drive economic growth and job creation in both countries. Australian producers and farmers will receive a significant boost by getting greater access to the UK market. Australian consumers will benefit from cheaper products. With all tariffs eliminated within five years, and tariffs on cars, whisky, and the UK’s other main exports eliminated immediately.
The two countries will now finalise the text and carry out the domestic processes. Which requires enabling signature and the subsequent entry into force of the FT. This FTA is therefore significant as recognising global nature of trade and the rules that apply to that global trade.
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