#TradeTuesday: The UK-Australia Free Trade Agreement - Perspectives from UK and Down Under

The UK House of Lords began their ‘line by line examination’ of the  Bill which will implement the Free Trade Agreement with Australia (and New Zealand) yesterday [23 January 2023]. And so as this deal – which has garnered many a headline over the years - inches ever closer to ratification, read below how the FTA is perceived in the UK, and from Australia.

The UK perspective  

By James Surallie (SEC Newgate UK’s Trade Team) 

A “Win-Win” – this was the phrase used by former International Trade Secretary Liz Truss (and later Prime Minister) to describe the UK's first trade deal agreed from scratch since leaving the EU. For some, the UK-Australia Free Trade Agreement represented the beginning of ‘Global Britain’ and an important step in the UK’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). But since the “historic” signing in December 2021, the trade agreement has been widely criticised, leaving many to wonder if the “Win-Win” Liz Truss was referring to, is just a win for Australia. 

There have been three main concerns surrounding the deal. Firstly, the lack of parliamentary scrutiny. As discussed in my previous blog, many felt the trade deal passed through Parliament without MPs having sufficient opportunity to debate the agreement before the end of the Constitutional Reform and Governance Act (CRaG) period. This was in spite of the government promising a ”world leading scrutiny process”. 

Critics have also contended that the agreement was rushed to begin with. In September 2019, Liz Truss promised to launch negotiations with Australia “as soon as possible” after the UK left the EU, which some argued was a bid to demonstrate the benefits of Brexit. This approach was later fiercely criticised by former long-standing Environment Secretary, George Eustice. In an infamous speech last winter, he declared that the “Australia deal is not actually a very good deal for the UK”, highlighting the role Liz Truss played by setting an “arbitrary target” to conclude negotiations with Australia by the time of the G7 summit, thus tilting the deal in Australia’s favour. 

Although the lack of scrutiny and negotiations have raised questions among the British public, the primary concern noted is its impact on UK agriculture. The UK-Australia FTA will see tariff rate quotas applied to a number of sensitive agricultural products, such as beef and sheep meat, and will last up to ten years. Despite this, organisations such as the National Farmers’ Union (NFU) have argued that these safeguards will allow immediate access for large volumes of product above current levels. As a result, they said “there is little in this deal to benefit British farmers”, highlighting how the government’s own Impact Assessment estimated that the agri-food sector will be adversely affected by increased competition.  

Combined, these criticisms of the UK-Australia FTA appear to suggest that this deal represents a steep learning curve for the government, especially in its impact on specific sectors - farming front and centre.  In its bid to demonstrate its new ‘Global Britain’ agenda, this deal was more than just a “quid pro quo”. And in the process, Britain has grown closer with one of its closest allies, creating another stepping stone in its bid to join the CPTPP.  

The Australian perspective  

By SEC Newgate Australia 

Half a century after Britain joined the European common market and effectively ended what had been Australia’s most important long-standing trading partnership, Aussie businesses and consumers are poised to take advantage of the new Free Trade Agreement (FTA) in the coming months.  

After a period of high political turnover and uncertainty in the UK, Australia grew concerned that British enthusiasm for the deal had cooled. However, both governments have managed to keep things on track, with Prime Ministers Albanese and Sunak agreeing at the 2022 G20 Summit that the agreement will come into force in the first quarter of 2023.    

The FTA was signed in late 2021, however needs to be ratified by legislation passed in both parliaments. Australia has now passed the legislation with support from across the political spectrum and awaits for its British colleagues to do the same.   

Australian business leaders are enthusiastic about the benefits of the FTA. They believe it will usher in a new era of bilateral investment between the two nations and close strategic allies.  

It’s notable that Australia’s Agriculture Minister, Murray Watt, made the trip to Westminster last week. He was dispatched to rally the troops and ensure the UK holds up its end of the deal, in the face of growing disquiet from some MPs and growing doubts from farming groups concerned about Australian products flooding the UK market. His visit follows that of the Minister for Trade Senator Don Farrell, who was in town before Christmas on the same mission. Such frequent visits from senior ministers are unusual, which should leave no doubt about Canberra’s eagerness to get this deal across the line as planned.  

Like the UK, the Australian Government has worked hard in recent years to expand its international trade relationships. This FTA is expected to help Australia diversify and liberalise its trade – after years of rising tensions with its largest trading partner, China – and is the first of the UK’s post-Brexit trade deals, which will act as a foreign policy tool to bring the UK and the Indo-Pacific closer together.     

The ambitious FTA has already led to several Australian companies, including Lendlease, Macquarie Group, AustralianSuper, IFM Investors, Worley, and Fortescue Future Industries, announcing plans to invest approximately £28.5 billion (AUD$49.93bn) into clean energy, technology and infrastructure projects across the United Kingdom.  

Once ratified, it will eliminate tariffs on over 99% of Australian exports to the UK, including sheep meat, beef, dairy, sugar and wine, and provide enhanced opportunities for Aussies to live and work in the UK, and vice versa. A key benefit for companies from both countries is that it will make it easier for family and partners to also work in either jurisdiction.  

More broadly, Aussie businesses and consumers will also benefit from the reduced tariffs on a range of imported British goods including whisky, gin (and Fever-Tree!), pharmaceuticals, cars, machinery and the freeing up of access both ways for services companies.  

The UK Trade Secretary, Kemi Badenoch, has indicated that we will be enjoying “tariff-free British gin and tonics… by next Christmas”, and I for one cannot wait!