The Australia-United Kingdom Free Trade Agreement (A-UKFTA) is a significant milestone in the strengthening of trade ties between the two nations, making the UK one of Australia’s biggest trading partners.
On 17 December 2021, Australia and the United Kingdom made history with their landmark free trade agreement, the A-UKFTA. This new arrangement will significantly boost business between the two countries as Australian exports become more affordable. This unprecedented achievement indicates both nations' dedication to open commerce, an invaluable tool for strengthening diplomatic relations while creating mutually beneficial opportunities for businesses and consumers.
In principle, this agreement eliminates tariffs on over 99% of Australian goods exports to the UK, thereby presenting businesses across Australia with new export opportunities and the potential for new job creation.
Read on as we discuss three of the standout benefits of the A-UKFTA and ways in which Australian businesses and individuals can take advantage of it.
1. Eliminating tariffs
Tariff-free exports of Australian goods
One of the main advantages of the A-UKFTA is that it enables Australian farmers to have improved access to over 65 million UK consumers who favour sustainably made food items such as wine, beef and sheep.
Upon implementation of the agreement, businesses can enjoy exemptions of AU$43 million in annual customs duties when shipping wine from Australia to the UK. At the commencement date, a zero tariff rate is established for beef of 35,000 tonnes. This quota will gradually increase to 110,000 tonnes within a decade, after which the tariff on beef shall be removed. Similarly, An initial quota of 25,000 tonnes of sheep meat will be subject to no tariff upon entry into force and will increase to 75,000 tonnes within the next ten years. Tariffs on sheep meat will then be fully abolished after the tenth year. These commercially significant commitments make Australian products seem more competitive in the UK market, thereby creating new opportunities for Australian businesses to export their products to the UK, boosting employment and economic growth.
Tariff savings on import goods from UK
Additionally, Australian firms and customers can also enjoy cost savings of AU$200 million a year with reduced import tariffs on products from the UK, including motor vehicles, beverages, confectionery items, cookies and cosmetics. Almost all imported goods shipping from UK suppliers to Australia’s consumers will be exempt upon implementation of the A-UKFTA.
2. Access to the UK's research and innovation ecosystem
Beyond direct trade ties, commitments in the A-UKFTA also include creating a framework based upon cooperation and collaboration between research institutions and businesses of both nations, especially in science and technology. This provides a valuable opportunity for knowledge-sharing while allowing Australian businesses more immediate access to the world-class innovation ecosystem in the UK to develop new products and services that will, in turn, boost Australia’s economic growth.
With the A-UKFTA, Australian companies now have the added opportunity to access the UK government's lucrative procurement market, valued at over AU$500 billion annually. With newly-granted rights for businesses down under, this arrangement provides a novel chance to capitalise on a substantial economic advantage.
3. More diversified opportunities for Australians
Moving on to a more personal take on the impacts of the A-UKFTA. For the first time in over four decades, Australian professionals can now compete on a level playing field with their counterparts in the European Union (EU) other than Ireland. This provides an unprecedented opportunity for Australians to enter some of the UK’s most sought-after roles across growing industries.
The A-UKFTA has also changed eligibility criteria for Australians who wish to participate in an extended working holiday in the UK. Previously limited to those under 30 years of age, the eligibility has now been raised to 35 years old, and they can now stay in the country for up to three years. This increase in age limit and duration of stay provides more opportunities for Australians to secure jobs in the UK that were not accessible to them.
