An innovative and progressive free trade agreement
Q. What does the Australia-UK Free Trade Agreement mean for the bilateral relationship and growing trade and investment links? The Australia-United Kingdom Free Trade Agreement (A-UKFTA), which entered into force on 31 May 2023, marks a historic moment in our partnership. The agreement is a benchmark trade deal, one that delivers benefits for all Australians, including manufacturers, workers, farmers, tradies, innovators, families, and students. The United Kingdom is one of Australia’s major trading partners, with two-way goods trade worth $10 billion in 2022, and two-way services trade worth over $11 billion in 2021-22, making it our second largest services trading partner. The UK is also Australia’s second largest source of investment, amounting to a cumulative total of over $1 trillion in 2022, and is the second largest destination for Australian investment abroad. The enduring strength of Australia- UK relations is underpinned by our rich and vibrant people-to-people links. The agreement not only incorporates several new areas, such as climate change, animal welfare, innovation, and gender, but also enhances pathways for the two-way movement of people and ideas between our countries. Australians will also begin to see the benefits of improved market access for goods and services. Increased investment from the UK, facilitated by key provisions in the agreement, will bring new technologies and services to the Australian market, including in clean energy technology, and foster productive exchanges among industry.
Government procurement opportunities will also be expanded in each other’s markets. The agreement includes world-class provisions to support increased digital trade and contains Australia’s first ever chapter dedicated to innovation in an FTA. Trade agreements like the A-UKFTA create and increase trade and investment options for Australian companies. Diversifying trade remains the prerogative of individual businesses, but the government can support that trade diversification in different ways. Free trade agreements are a vital component of trade diversification, and the A-UKFTA demonstrates a commitment to creating more of those diverse opportunities. Q. Trade and the Australian economy – how does this agreement benefit Australian businesses and Australia more broadly? With the entry into force of this comprehensive agreement, there will be no tariffs on over 99 per cent of Australian goods exports to the UK, opening up new export opportunities including for the agriculture sector. Along with Australian agricultural exports of wine, beef and sheep meat, opportunities for manufactured products such as auto parts, electrical equipment, and cosmetic products will be enhanced. The A-UKFTA will deliver unprecedented benefits to Australian businesses and create new, well-paying jobs. Savings for Australian households of about $200 million a year will be made as tariffs on imports from the UK are eliminated. After five years, all UK imports will enter Australia duty free, helping ease cost-of- living pressures for families and reducing input costs for Australian
businesses. We know that trade is important to Australia’s prosperity. One in four Australian jobs is connected to international trade, and free trade agreements like the A-UKFTA are a driver for that prosperity to be shared as widely as possible across the Australian community. Q. How have shifting national priorities affected the work of reaching an agreement? Since the early days of negotiating free trade agreements, the areas under negotiation have expanded. Beyond tariffs, trade agreements now cover emerging areas such as digital trade, environment, labour, and the green economy. Complementary economic initiatives covering areas such as cooperation on critical minerals can also be discussed and pursued alongside the FTA. In all our trade agreements, our priority is to build in strong rules and standards that will benefit Australia, as well as our trade partners. This includes those areas such as digital trade, clean and renewable energy, and in economic resilience. Our objective is to also make trade as efficient and seamless as we can.
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business envoy
Department of Foreign Affairs and Trade
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