Australian agricultural exporters set to benefit from A-UK FTA
Australian agricultural exporters will have the best access to the UK since the 1970s when the Australia-United Kingdom Free Trade Agreement (A-UK FTA) enters into force.
The agreement will eliminate tariffs on over 99% of Australian goods exports to the UK. It includes the immediate elimination of all tariffs on:
- wine
- medium- and short-grain rice
- honey
- most seafood
- processed foods
- nuts
- fruit
- vegetables.
The agreement also includes significant new and commercially meaningful quotas and staged out-of-quota tariff reductions for:
- beef
- sheep meat
- sugar
- wheat
- dairy.
The A-UK FTA also establishes enhanced cooperation on key regulatory issues. These include biosecurity, animal welfare and antimicrobial resistance.
The A-UK FTA will enter into force once the UK completes its domestic ratification process. This should occur in the coming months. Australia completed its domestic ratification processes in November 2022.
Implications for Australian agricultural exporters
The UK is Australia’s second largest agricultural market in Europe after Germany. Between 2019–20 and 2021–22 on the average, Germany and the UK agricultural commodities imports from Australia were A$975.9 million and A$768.4 million respectively.
The A-UK FTA provides Australian exporters with improved access across a range of commodities (see Table 1). Key commodities (see Figure 2) will enter under eliminated or reduced tariffs.
Table 1: A-UK FTA key outcomes for agricultural exporters
Goods | Highlights |
Wine | Elimination of tariffs on entry into force (EIF). |
Beef | Elimination of tariffs after 10 years with immediate access to duty-free transitional quotas. |
Sheep meat | Elimination of tariffs after 10 years with immediate access to duty-free transitional quotas. |
Sugar | Elimination of tariffs over 8 years, with immediate access to a duty-free quota during the transition period. |
Dairy | Elimination of tariffs over 5 years, with immediate access to duty-free quotas for dairy products during the transition period. |
Rice | Elimination of tariffs for short- and medium-grain milled rice on EIF. Elimination of tariffs on broken rice over 4 years, with immediate access to a duty-free transitional quota. Access to a permanent annual duty-free quota for long-grain milled rice. |
Seafood | Elimination of tariffs on most products on EIF, and remaining tariffs over 3 years. Tariffs eliminated on EIF include those on all finfish and on fresh and frozen rock lobster. |
Honey | Elimination of tariff on EIF. |
Horticulture | Elimination of tariffs on most fruits and vegetables on EIF, with all remaining tariffs eliminated over 3 or 7 years. |
Wheat, barley and other cereals | Elimination of tariffs over 4 years. Immediate access to a duty-free quota of 80,000 tonnes per year for wheat, and a duty-free quota of 7,000 tonnes per year for barley. |
Nuts | Elimination of tariffs on EIF. |
Source: DFAT
Overview of trade between Australia and the UK
The UK was Australia’s largest export market until 1966–67 (see Figure 1). Rural commodities, such as wool and wheat, were the major component of this trade. From the mid-1960s onwards, Asian markets, particularly Japan, became more valuable. Exports of natural resources (coal and iron ore) became more valuable than agricultural commodities.
Figure 1: The UK’s share of Australia’s goods export from 1949–1950 to 2021–2022
The UK joined the European Economic Community (EEC), the precursor to the European Union, in 1973. Tariffs on Australian agricultural exports increased at that time. At the same time, other EEC countries received preferential access to the UK. This displaced Australian agricultural products.
The UK is an important destination for Australian wine. However, high tariffs have restricted the commercial viability of other agricultural products. In 2021–22, only 1.3% of the value of Australian agricultural exports went to the UK.
Australian agricultural exporters have successfully diversified trade toward new markets, including Japan, South Korea, China and the ASEAN region. Changes in global demographics and proximity to growing Asian markets will continue to see Australian agricultural exporters target these markets.
However, the A-UK FTA will allow Australian agricultural exports to compete on a more equal playing field in the valuable UK market.
Figure 2: Value of Australian agricultural exports to the UK from 1988–1989 to 2021–2022
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