Australia's $19.47 billion goods trade relationship with the UK was beefed up last night as the two countries agreed to the broad terms of a new free trade agreement (FTA) that will phase out tariffs on 99 per cent of products and provide greater mobility for young people.
While gold represents the vast majority of Australia's exports to the UK, food and wine exporters stand to benefit along with other niche industries such as fashion, whose trade was only worth $26 million last year.
In contrast, Australia's 'beverages, spirits and vinegar' trade with the country was worth $477 million in 2020 and beef exports were worth $80.1 million (compared to gold exports of $10.86 billion).
For its part the UK exports $284 million worth of beverages and spirits to Australia, the bulk of that being Scottish whisky, as well as $1 billion in machinery, more than $800 million in vehicles and $866 million in pharmaceuticals.
In its press release following the announcement - the first of its kind for the UK post-Brexit - the British Government highlighted the free trade deal would eliminate tariffs on Australian favourites like Jacob's Creek and Hardys wines, swimwear and confectionary, "boosting choice for British consumers and saving households up to £34 million ($62.3 million) a year".
UK Prime Minister Boris Johnson waxed lyrical about the deal, albeit with the caveat he didn't want to exaggerate its importance for GDP with more of a political and symbolic importance.
"We already sell cars, we sell whisky, I'm proud to say to Australia, we sell boomerangs to Australia, of the non-returnable variety," Prime Minister Johnson said.
"And now, thanks to this deal, we hope that there will be even more trade between the UK and Australia, and the broad outlines of the deal, as you can imagine, is that you give us Tim Tams, we give you Penguins, you give us Vegemite and we give you Marmite.
"We give you Burberry and Macintoshes, and you give us RM Williams Japaras."
Citizens aged under 35 from both countries will be able to move more freely between the UK and Australia with expanded rights.
"A new free trade agreement with the UK will deliver more Australian jobs and business opportunities for exporters, bringing both countries closer together in a changing strategic environment," Australian Prime Minister Scott Morrison and Trade Minister Dan Tehan said in a joint release.
"The FTA is the right deal for Australia and the United Kingdom, with greater access to a range of high-quality products made in both countries as well as greater access for businesses and workers, all of which will drive economic growth and job creation in both countries.
"Professionals will benefit from provisions to support mutual recognition of qualifications and greater certainty for skilled professionals entering the UK labour market."
It is hoped the increased mobility has some potential to alleviate Australia's skills shortage problem as well by attracting more British talent to our shores. An Australian Bureau of Statistics (ABS) survey in December noting one in five businesses surveyed were having difficulty finding suitably skilled or qualified staff.
A meta-study conducted by CEO Magazine last year found the UK had the best education system in the world in terms of quality and opportunity, ahead of Australia which also ranked highly in third place.
Business Council chief executive Jennifer Westacott highlighted the trade deal as a win for Australian exporters, businesses and workers, improving trade and opportunities from professional services through to the digital economy.
"This record setting deal means Australians will get comprehensive tariff-free and mostly quota-free market access to the fifth largest economy in the world and our fifth largest trading partner," Westacott said.
"Lowering barriers to key agriculture goods over time will be a significant boost to regional Australia and means UK consumers can better access Australia's world-class quality products.
"Enhanced people-to-people links, including through labour mobility and mutual professional recognition, will help create the industries Australia needs for the future, from professional services to the digital economy."
Westacott said the deal paved the way for more ambitious trade outcomes in our region and globally.
"Australian exporters were effectively locked out of the UK market nearly 50 years ago, so it is great to see those opportunities return," she said.
"The economic gains from unlocking more trading opportunities will be made even greater if we take gradual, careful steps to reopen borders and critical sectors of the economy.
"We congratulate the Morrison government for raising the bar with this agreement, creating new opportunities for Australians and helping set Australia up for the future."
One of the most contentious parts of getting the FTA over the line was agriculture, so to allay British farmers concerns Australian beef and sheep meat tariffs will be phased out over 10 years, sugar tariffs will be eliminated in eight years, and dairy tariffs will be eliminated in five years. There will also be caps in place around how much these Australian agri-sectors can export to the trading partner.
The deal comes as Australia's farmgate production is set to hit a record high of $66.3 billion.
"With the announcement of the UK FTA agreement yesterday, Australian farmers have yet another market to export the best food and fibre in the world," Australian Agriculture Minister David Littleproud said.
The UK Government explained the country exported $9.89 billion worth of services to Australia in 2020, including $2.56 billion of insurance and pension services, and $1.4 billion of financial services.
Red tape and bureaucracy will be torn down for more than 13,000 small and medium sized businesses across the UK who already export goods to Australia, with quicker export times.
"Around 40 per cent of UK small firms who trade internationally do so already with Australia, and a trade deal that could be worth up to £900 million ($1.65 billion) will only increase those numbers," UK Federation of Small Businesses chair Mike Cherry said.
"Australia is a key market for the UK technology sector and an important gateway to the wider Indo-Pacific region," added techUK CEO Julian David.
"The free trade agreement announced today has the most advanced digital trade provisions of all the deals the UK has signed so far, opening up opportunities for our innovative businesses operating in emerging technologies, such as AI and cleantech.
"The free flow of data provisions and the ban on data localisation will allow our SMEs in particular to explore the market without the cost of having to set up servers."
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support