Australia signed a new bilateral free trade agreement (FTA) with the UK to create more jobs and business opportunities for Australians. UK is Australia third largest trade partner in services, accounting for 7.7% of total trade in services in 2019-2020.
The trade deal has been particularly praised by Australian agricultural and meat producers – who will likely benefit from better access to the UK food market and duty-free trade, which in turn will make it easier to export items. such as meat, wine and sugar. and cheaper.
Other benefits include:
- Foreign investment from the UK can increase export opportunities for Australian businesses by helping them to diversify away from Asian markets and venture into new ones.
- For many small and medium-sized enterprises (SMEs) in the agricultural sector, foreign investment from the UK will play a crucial role in their post-COVID-19 economic recovery.
- The increase in UK investment will also encourage Australian companies to innovate and introduce new technologies to the Australian market.
While the UK exported £ 5.4bn in services, including £ 1.4bn in insurance and pension services and £ 780m in financial services, to Australia in 2020, the deal can help many other financial and professional services companies.
“Red tape and bureaucracy will be cut for more than 13,000 UK-based SMEs already exporting goods to Australia, with faster export times,” said the Institute of Export & International Trade .
Here are the primary industries that should benefit from the free trade agreement:
The Australian meat industry is heavily dependent on exports, with export markets accounting for over 70% of its total revenues. But political tensions with China have had an impact on trade with its largest meat export market.
The COVID-19 pandemic has also severely crippled the meat processing industry. Several meat processing facilities in Victoria have been at the center of the outbreaks and have been forced to close.
Data from the Australian Meat and Cattle Report (MLA) shows that Australia had nearly 77,500 businesses operating in 2020 with a market size of around $ 23 billion.
In 2018-2019, New South Wales had 18,749 registered red meat and livestock businesses, representing 24% of all red meat and livestock businesses in Australia. Victoria followed with 17,802 companies and Queensland with 16,694.
The new deal promises to eliminate tariffs on Australian beef destined for the UK by 2031.
Under the free trade agreement, Australia will have immediate access to a duty-free quota of 35,000 tonnes, which will gradually increase to 110,000 tonnes over the next decade.
Over the next five years, beef imports exceeding a volume threshold of 175,000 tonnes will be subject to a 20% tariff safeguard duty for the remainder of the calendar year.
Likewise, sheep meat tariffs will be abolished after ten years. Australia will have immediate access to a duty-free quota of 25,000 tonnes during the transition period, which will increase in equal increments to 75,000 tonnes in the 10th year.
In contrast, Australia frequently uses the EU-wide quota for duty-free sheepmeat, which currently stands at 19,186 tonnes, meaning that Australian exports of red meat to the Great Brittany can increase sharply.
“For Australian red meat producers, processors and exporters, this means working with UK importers and distributors to deliver high quality Australian red meat products to meet the demanding demand of UK customers,” said Andrew McDonald. , President of Australia-UK Red Meat Market Access. Intervention force.
“While our ability to serve the market was previously limited by a very restrictive UK import regime (and before 2021 the European Union), the A-UK FTA will facilitate an easier response for UK consumers looking to purchase the aussie – if they wish. do it.
As part of the FTA, Australia and the UK have agreed to include a chapter on SMEs, highlighting their importance in the economies of both countries. The chapter will commit both the UK and Australia to publishing information about the agreement that is relevant to SMEs, as well as provisions that allow cooperation between the two countries, such as identifying ways to ” help SMEs.
The commitments of the SME chapter will include:
- Establish and maintain an information website for SMEs interested in trading, investing or doing business with the other country.
- Facilitate cooperation between the UK and Australia, for example through the exchange of information on programs to help SMEs participate in global markets.
The UK will liberalize Australian imports with 99% of Australian products, including Australian wine and short and medium grain milled rice, entering the UK duty free when the deal comes into force.
According to the Food and Drink Federation’s (FDF) analysis of HMRC figures, wine is Australia’s second-largest export to the UK, with 230 million bottles worth £ 1.5 billion sold in UK stores and supermarkets in 2020.
Speaking to the beverage industry, Julian Dyer, COO of Australian Vintage Ltd, said the signing would bring huge benefits to both the Australian wine industry and the UK consumer.
“The deal will allow Australian companies like ours to compete and innovate more successfully, ultimately reducing costs and increasing the number of better quality wines for UK drinkers,” he said.
In five years, Australian dairy exporters will be allowed to send goods to the UK duty-free, with an immediate quota of 24,000 tonnes of duty-free cheese, which will increase to 48,000 tonnes by 2026. .
Dairy products other than cheese could also export 20,000 tonnes duty-free each year. There will be a new transitional duty-free butter quota of 5,500 tonnes, which will increase to 11,500 tonnes in the fifth year.
Australia and the UK have made commitments that will increase digital commerce opportunities across all sectors of the economy, while ensuring global privacy standards and legitimate public policy goals.
It will also include provisions to ensure the recognition of electronic contracts and signatures and legal frameworks on electronic transactions that facilitate electronic commerce.
With the deal, the UK and Australia will ease rules for all service sectors, including cross-border trade in services, professional services, financial services, shipping and delivery services and telecommunications.
This will include full market access for all UK and Australian service suppliers, including ensuring that commitments on services extend to Australian and UK flag vessels, with the exception of some specific reservations.
The UK and Australia will also commit to enforcing Shipping Services and Express Delivery Schedules, while lawyers will be able to practice in the other country’s territory using their original qualifications and title. .
With regard to telecommunications, Australia and the United Kingdom are committed to guaranteeing access by Australian and UK service providers to the other country’s public telecommunications networks and services on a non-discriminatory basis.
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