Phoebe Sullivan; Riley Taylor
In June 2022 the UK/Australia Free Trade Agreement was presented to the UK Parliament. With a shared belief in fairness, free enterprise, and the rule of law, this deal builds on the deep relationship between both Commonwealth nations; strengthened by recent partnerships such as AUKUS and the Clean Tech Partnership.
Here at CFOC, we fully welcome this FTA and look forward to seeing the effects of this gold standard agreement that represents a once in a generation deal for both nations.
But what does this deal contain and how will it benefit the United Kingdom?
From a holistic point of view, the Indo-Pacific is a key area of co-operation as China moves to convince Pacific island nations to sign onto a regional security agreement. This opportunity allows Australia and the United Kingdom to continue to work together and listen to what the island nations need from international partners. On the domestic front, this FTA will uphold high standards and foster collaboration on challenges like tackling climate change and unfair trading practices which undercut and harm the UK’s domestic industries.
If we’re talking facts and stats, it is expected to increase trade with Australia by 53%, boost the economy by £2.3 billion and add £900 million to household wages in the long-run. The deal will also create new opportunities to grow the low-carbon economy, for example by cutting tariffs on UK exports of wind turbine blades and electric vehicles. Australia also strongly supports UK membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a topic commonly discussed on the CFOC platform, which would open up 11 markets worth £8.4 trillion GDP for British exporters and investors. Australia itself is projected to be a top 10 global economy by 2050. Early access to trading opportunities in this region will secure superior access for UK exporters to these growing markets, with two thirds of global middle-class consumers expected to be in Asia by 2030.
International Trade Secretary Anne-Marie Trevelyan MP said in a statement: “I am excited to see the UK implement its first ‘from scratch’ Free Trade Agreements in over 50 years”.
UK services will be able to compete in the Australian market on a guaranteed equal footing. UK investors will also benefit from more access than ever before to opportunities in Australia, with guaranteed rights to invest across the Australian economy. The majority of UK investments will no longer need to be reviewed by the Australian Foreign Investment Review Board – saving time, saving money and cutting red tape for UK investors.
A key element of this deal is the removal of tariffs on all UK exports to Australia, making it cheaper to sell products like cars, Scotch whisky and fashion to Australia and for the UK to receive iconic and coveted Australian products such as the Tim Tam. This will ultimately support industries that employ over 3.4 million people in the UK.
For our younger members, as part of the overall mobility package, Brits aged 18 to 35 will be able to travel and work in Australia with a Working Holiday Maker Visa for up to 3 years, deepening the people-to-people and cultural links between our two countries. Australia will also pilot 2 new visa schemes for UK citizens, allowing early career workplace exchanges of up to one year for graduates between 21 and 45.
For the nitty gritty on Cyber Security, businesses will have confidence that their valuable intellectual property will be protected as this deal guarantees fair access for telecoms companies into Australia and forges greater cooperation on 5G and cybersecurity. The world’s first dedicated innovation chapter establishes a Strategic Innovation Dialogue which will drive the commercialisation of new technology and ensure the deal keeps up with technological developments.
Further good news for all who have struggled to keep their business going during the pandemic – The FTA cuts red tape currently faced by more than 13,000 SMEs across the UK who already export goods to Australia. SMEs will benefit from dedicated websites for businesses and information to help them trade with Australia. Businesses from all sectors and regions will benefit from the use of modern digitised trading systems and digital documents, saving time and money.
Whilst CFOC fully commends the UK Government on this new FTA with Australia, we are fully cognizant of the issues raised by the EFRA Committee on the need to commit to upholding animal welfare and environmental standards and agree the EFRA committee’s report acknowledging that the Australia free trade deal does not prevent core standards being adopted in the future and that it is unlikely that much food that doesn’t meet these standards will enter the country because of this deal.
How will this FTA benefit Australia?
Australia and the United Kingdom are natural partners in many fields, including trade. With an estimated $19.3 billion (AUD) in goods and services exported between our two countries, it is no surprise that efforts have now been made to finally remove the archaic barriers blocking economic partnership. At a time of increasing economic crises, with fears of a recession looming, this is not the time for preserving shackles on Australian exporters. Removing these barriers will allow Australian winegrowers to bypass around $43 million in annual customs duties when exporting their world-class products to British consumers, and our farmers who have long suffered due to drought and bushfires will see their tariff-free quotas greatly expanded before ultimately being removed.
It will also allow British renewable pioneers, such as Octopus Energy (the largest solar investor in Europe) to continue their work in transitioning the Australian energy sector away from harmful fossil fuels and towards utilising our abundance of green energy sources.
Beyond benefiting businesses, the agreement will save Australian households and families an estimated $200 million a year due to the removal of tariffs on British imports such as cars, confectionary goods, and even whiskey; this is vital in a time of increasing costs of living and inflation. This agreement represents an important economic step in a time of uncertainty, and strengthens the friendship between the Australian and British peoples, one which travels back centuries.
Our correspondent in Australia, Riley Taylor states “This agreement in many ways is well overdue. The Australian and British peoples are already culturally, diplomatically, and economically interconnected, and it is not the place of governments to stifle that. The agreement will reflect this long standing friendship, and ensure Australian business can continue to grow and provide the British people with our world class goods and services.”