UK secures new free trade deal with Australia


The UK has secured a trade deal with Australia eliminating tariffs on all UK goods and boosting jobs and businesses across the country.

The main elements of the deal were agreed by Prime Minister Boris Johnson and Australian Prime Minister Scott Morrison at a meeting in Downing Street last night.

The new Free Trade Agreement means 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 £13.9bn 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 and other safeguards.

Under the agreement, Brits under the age of 35 will be able to travel and work in Australia more freely, opening opportunities for young people.

The Prime Minister Boris Johnson said: “Today marks a new dawn in the UK’s relationship with Australia, underpinned by our shared history and common values. Our new free-trade agreement opens fantastic opportunities for British businesses and consumers, as well as young people wanting the chance to work and live on the other side of the world. This is global Britain at its best – looking outwards and striking deals that deepen our alliances and help ensure every part of the country builds back better from the pandemic.”

The free trade deal will eliminate tariffs on Australian favourites like Jacob’s Creek and Hardys wines, swimwear and confectionery, boosting choice for British consumers and saving households up to £34m a year.

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.
  • More than 450 businesses in Wales exported to Australia last year, and life science companies and chemicals manufacturers are set to benefit 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. Under the new FTA tariffs will be removed and customs procedures will be simplified.
  • 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 and will boost our bid to join CPTPP, one of the largest free trade areas in the world, covering £9 trillion of GDP and 11 Pacific nations from Australia to Mexico.

Secretary of State for International Trade, Liz Truss, said: “This deal delivers for Britain and shows what we can achieve as a sovereign trading nation. It 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. The agreement paves the way for us to join the Trans-Pacific Partnership, a £9tn free trade area home to some of the biggest consumer markets of the present and future. Membership will create unheralded opportunities for our farmers, makers, innovators and investors to do business in the future of engine room of the global economy.”

Industry reaction

National Chair of the Federation of Small Businesses, Mike Cherry, said: “A trade deal with Australia will come as great news for many of our members who have long been exporting there as well as those who are hoping to expand their trade ambitions. As we look beyond the pandemic and enjoy the benefits of post-Brexit growth, deals like this will reap vast rewards to small firms right across the UK. Around 40 per cent of UK small firms who trade internationally do so already with Australia, and a trade deal that could be worth up to £900 million will only increase those numbers. The inclusion of a small business chapter in this agreement will also ensure that the needs of smaller businesses are fully catered for in the years to come.”

CEO of techUK, Julian David, said: “Australia is a key market for the UK technology sector and an important gateway to the wider Indo-Pacific region. The free trade agreement announced today has the most advanced digital trade provisions of all the deals the UK has signed so far, opening up opportunities for our innovative businesses operating in emerging technologies, such as AI and cleantech. The free flow of data provisions and the ban on data localisation will allow our SMEs in particular to explore the market without the cost of having to set up servers. We are looking forward to working with our industry and the government to make sure the sector takes full advantage of these state-of-the-art digital trade provisions.”

Adrian Young, a tax partner at accounting and business advisory firm HURST, said: “The signing will enable Boris Johnson to claim progress in the UK’s post-Brexit drive to extend trading relationships beyond the EU.

“It also potentially brings the UK closer to joining the Trans-Pacific Partnership agreement (the Comprehensive and Progressive Agreement for Trans-Pacific Partnership), which is perhaps the longer term but bigger prize. This is especially so if the US also joins, under President Joe Biden’s more internationally-engaged approach.

“The deal focuses mostly on goods, promising to remove import tariffs on flows between the two countries.

“However, questions remain about the detail, much of which remains to be determined.

“Boris Johnson is no doubt hoping the 15-year cap on tariff-free imports will assuage some concerns in farming circles. However, there remain more general issues about food standards and animal welfare. Australia has a less stringent approach to chemical use in food production, and UK farmers fear that this will give their Australian counterparts an edge when it comes to pricing.

“Overall it’s certainly positive news, and Mr Johnson is, I think, being realistic when he says that on its own it’s not going to be a game-changer for the UK economy. “While not wanting to detract from the upbeat message, some in the north west business community are nevertheless still concerned that trade between the UK and the EU remains mired in uncertainty.

“Anecdotally, I am hearing frustration that time is being spent on this relatively small deal at the expense of making our post-Brexit relationship with the EU run more smoothly.”