On Friday, Australia and the United Kingdom inked a free trade agreement that will eliminate nearly all levies on exports between the two countries. Australian Trade Minister Dan Tehan in Adelaide and British Secretary of State for International Trade Anne-Marie Trevelyan in London signed the FTA in a virtual ceremony.
The agreement eliminates 99 percent of export taxes, saving Australia approximately USD 10 billion on exports such as lamb, beef, sugar, and dairy. It is anticipated to save the UK $200 million (USD 144 million) per year on products such as vehicles, whisky, and cosmetics. Australian agricultural exporters will also have better access to the British market, with tariffs on Australian wines entering the UK being reduced by 40 million Australian dollars (USD 29 million) per year.
Living and working in the other country will be easy for Australians and Britons. Tehan stated that the agreement, which will go into force in 2022, will increase investments and aid in the recovery from the pandemic. “Our economies will be able to work together again,” Tehan said. “Through this project, young Australians and young Britons will be able to gain incredible experiences and chances.” Following its exit from the European Union, the United Kingdom has pursued trade agreements aggressively. It has hailed the pact as its largest “from the ground up” collaboration to date.
The agreement demonstrated what Britain can achieve “as a nimble, autonomous sovereign trading nation,” according to Trevelyan. “This is just the beginning,” she continued, “as we step out in front and seize the seismic opportunities that await us on the global stage.”
The agreement could help Britain secure admission to the Comprehensive and Progressive Trans-Pacific Partnership, an 11-nation trade agreement that includes Australia. Tehan believes that include Britain in the CPTPP will assist to alleviate Indo-Pacific trade uncertainties. He stated, “I look forward to expanding on this FTA.”
Following months of discussions, Prime Ministers Scott Morrison of Australia and Boris Johnson of the United Kingdom announced an in-principle agreement in June. Johnson had to get the support of Britain’s agriculture sector and overcome fears that Australia’s exports would flood the country.
Australia’s eighth-largest two-way trading partner, worth about 27 billion Australian dollars in 2018, is the United Kingdom. It is also Australia’s third-largest services trading partner, with 5.5 billion Australian dollars in service exports and 9.2 billion Australian dollars in service imports in the same year.