Mariam Azzo
Special Counsel •
Sydney
Australia-United Kingdom Free Trade Agreement in force – now to make it work for you
Time to read: 1 minutes
The A-UK FTA impacts current supply chains, arrangements with suppliers and customers and overall business operations.
Eighteen months after it was signed, the Australia-United Kingdom Free Trade Agreement (A-UK FTA) entered into force on 31 May 2023– an agreement our Prime Minister considers as one of the most comprehensive, innovative and ambitious free trade agreements concluded by Australia to date.
Effect of the A-UK FTA
This "gold-standard" trade agreement is set to deliver unprecedented benefits to Australian businesses and create new well-paying jobs, including the elimination of tariffs on over 99% of Australian goods exported to the UK and reduction of other trade barriers. The A-UK FTA will also regulate digital trade, make it easier for Australian companies and individuals to operate in the UK market and raise the investment screening threshold to match that given to other key Australian investment partners with whom Australia has a free trade agreement.
Australian exports which can now enter the UK duty free include wine, short and medium grain rice, sugar, honey, nuts, olive oil and food supplements. UK tariffs on Australian industrial goods, such as auto parts, electrical equipment and fashion items are also now eliminated, and Australian agricultural products, including beef and sheep meat, sugar and dairy products, will have duty free transitional quotas, with eventual elimination of all tariffs.
Notably, the A-UK FTA also strengthens the people-to-people links between Australia and the UK. Australian professionals now have the same access to the UK job market as nationals from the European Union, except the Republic of Ireland. From 31 January 2024, Australians up to the age of 35 (up from 30) will be able to apply for working holidays in the UK and stay for a maximum of three years instead of two.
The two-way goods and services trade between the UK and Australia was worth $10 billion and over $11 billion in 2021-22 respectively. The Minister for Trade and Tourism has stated that this agreement "creates new opportunities to deepen and expand trade and investment with one of Australia’s most important and longstanding trading partners."
What does this mean for Australian businesses?
We encourage businesses and investors to, if not already, consider how best to take advantage of the new opportunities provided by the A-UK FTA by, for example, understanding how the agreement impacts current supply chains, arrangements with suppliers and customers and overall business operations and/or, for those not yet operating in Australia and the UK, investigating any opportunities for growth or expansion into either region.
The ratification of the A-UK FTA also means that private investors from the UK will gain the advantage of the higher monetary screening thresholds for certain investments under the Australian foreign investment framework in relation to investment actions taken on or after 31 May 2023.
Disclaimer
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.