“Landmark” is the description of the recent free trade agreement between the post-Brexit UK and post-China Australia.
Announced after a recent G7 meeting, the FTA in principle will increase trade between the two countries.
The FTA is the first bilateral deal the UK has signed since leaving the European Union, turning it into a huge national talking point.
While the in-principle FTA news looks very bullish at the moment, tariff supporters should smell the stench – especially UK farmers.
The Productivity Commission examined bilateral trade in 2010 and found little evidence that bilateral agreements translate into trade benefits.
“This may be because the main factors influencing decisions to do business in other countries lie outside the scope of bilateral and regional trade agreements,” the committee said.
What the UK-Australia FTA will mean for different commodities.
● Milk tariffs will be abolished after five years.
● During the five-year transition, Australia will gain immediate access to a duty-free quota for cheese (43,000 tonnes) and non-cheese dairy products (20,000 tonnes).
● The quota will increase each year, helping to create immediate business opportunities.
● The United Kingdom is the second largest importer of dairy products in the world.
● Australia is the world’s fourth largest exporter of dairy products.
● Prior to 1973, when the UK joined the EU, the UK was Australia’s largest dairy export market. Since then, Australian dairy products have been severely disadvantaged by high tariffs while European products have benefited from zero tariffs.
● Australian dairy products do not expect to return to the heyday of trade before the 1970s, but high-value niche opportunities are expected to emerge as Australia takes advantage of its counter-seasonal offer.
● Tariffs and quotas for short and medium grain rice varieties will be removed upon entry into force of the FTA (July 2022).
● Certain tariffs and quotas will be maintained for long grain rice.
● The majority of Australian rice production consists of high quality short and medium grains.
● SunRice said the FTA is an important achievement for the Australian and riparian rice industry.
● Tariffs on sugar will be eliminated over eight years.
● CANEGROOWERS chairman Paul Schembri said Australian sugar had not had this kind of access since 1973, when the UK joined the European Common Market (which became the EU).
● Beef tariffs will be eliminated after 10 years.
● During the transition, Australia will have immediate access to a duty-free quota of 35,000 tonnes, which will increase to 110,000 tonnes annually.
● Australian red meat exports to the UK were previously limited by very restrictive UK and EU import regimes.
● Meat & Livestock Australia said the FTA will see the UK “liberalized” over a 10-year period.
SHEEP / GOAT
● Tariffs on sheepmeat will be abolished after 10 years.
● During the transition, Australia will have immediate access to a duty-free quota of 25,000 tonnes, which will increase to 75,000 tonnes annually.
● Sheep Producers Australia said the “ambitious bilateral free trade agreement” would provide sheep producers with better market access.
● No word on wool yet.
● Tariffs on wine will be abolished upon entry into force of the FTA.
● The UK remains Australia’s largest wine export market by volume.
● Tariffs for wheat and barley will be removed over four years.
● Australia High quality durum, wheat and canola already enjoy zero tariff access to the UK market.