One of Australia’s most important partners is the United Kingdom of Great Britain and Northern Ireland (UK). Our shared heritage, common values, traditional people-to-people contacts, and mature, open economies underpin Australia’s significant and unique connection with the United Kingdom.
An FTA between Australia and the United Kingdom would build on our current strengths in two-way trade and investment, help us recover from the COVID crisis, and show our shared commitment to global trade liberalisation and a rules-based international order.
Australia already has a strong commercial relationship with the United Kingdom. The UK was Australia’s fifth-largest trading partner in 2019-20, with two-way goods and services trade valued at $36.7 billion. An FTA with the United Kingdom has the potential to strengthen our trade and investment ties, which would benefit Australian firms and consumers.
We’ll also look into ways to expand on our deep and long-standing people-to-people ties, such as youth mobility exchanges, to ensure that the benefits of increased Australia-UK economic cooperation reach as many people as possible.
What are the potential advantages of an FTA between Australia and the United Kingdom?
Australia will pursue a comprehensive and ambitious free trade agreement with the United Kingdom that promotes increasing two-way commerce in products and services, economic growth, and job creation.
An FTA will give Australian exporters a competitive advantage in the UK market by improving market access for goods and services. Greater access to competitively priced goods and services, new technologies, and innovative practises will also benefit Australian firms and consumers.
In the COVID-19 recovery period, an FTA will also strengthen investment flows between the UK and Australia, helping to build and diversify the economy while also creating jobs.
What benefits may an FTA between Australia and the United Kingdom bring?
Services
The two-way trading partnership relies heavily on services. In 2019-20, the United Kingdom is our third-largest services trading partner, accounting for 7.7% ($13.9 billion) of our overall services trade. Financial and professional services, as well as telecommunications, are important industries in our two-way trade partnership.
Australia will seek modern pledges from the United Kingdom that will boost our trade partnership in our priority service sectors. This will involve achieving bold promises on reciprocal recognition of professional degrees and giving qualified professionals entering the UK labour market more stability.
Digital Trade
The rapid advancement of technology and digitisation is reshaping global economies and opening up new corporate and consumer opportunities. The economic recovery from COVID-19 is also being aided by digital trade.
Australia will seek modern agreements with the United Kingdom that will lower digital trade obstacles and let Australians participate in and profit from the digital economy. These will be supplemented by provisions that ensure proper consumer protections as well as reasonable public policy goals.
Goods
In 2020, the United Kingdom was Australia’s fifth-largest goods trading partner, with gold, lead, and wine among our top exports. Under the FTA, Australia will strive to expand market access for our goods exports, particularly agricultural products, by removing tariffs, quotas, and non-tariff barriers.
Due to high tariffs and other trade barriers imposed by the UK as a member of the EU, Australian agricultural exports to the UK have been relatively low since the UK entered the EU. While it is unlikely that we will return to pre-EU agricultural trade volumes with the UK, given that Australian agricultural exporters have already moved their trade to other markets, mainly in Asia, the opening of more options is critical for our primary farmers, particularly as we recover from the COVID.
Investment
In 2020, the United Kingdom was the third-largest source of foreign direct investment (FDI) in Australia ($123 billion), and the second-largest source of total stock ($738 billion). With a total stock of $615 billion and FDI of $135 billion in 2020, it was also the second-largest destination for Australian foreign investment. In the FTA, Australia will seek modern and comprehensive investment rules that will boost chances for Australian enterprises to enter the UK market while also enhancing Australia’s reputation as a desirable investment destination.
Foreign investment from the United Kingdom can increase export potential for Australian businesses by bringing in new enterprises with links in different markets. By bringing new technologies and services to the Australian market, increasing UK investment would foster competition and innovation. Foreign investment, especially that from the United Kingdom, will be critical to our post-COVID economic recovery.
High-quality rules and standards
Australia will look for high-quality agreements on important sustainability concerns like environmental protection and labour rights that are consistent with globally established principles, norms, and rules. We will also aim to implement solid regulatory practises and compliance requirements that will help Australian businesses operate in a more predictable environment.
Ease of doing business
Non-tariff barriers (NTBs) will be addressed by analysing and abolishing trade-restrictive measures for goods trade. Commitments to improve customs procedures’ transparency will also make it easier for Australian businesses to do business with the UK.
