FTA could return Australia and UK to pre-1970s heyday

By Daneka Hill

Jun 18, 2021

‘Landmark’ is how the recent free trade agreement between a post-Brexit United Kingdom and post-China Australia is being described.

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Announced after a recent G7 meeting, the in-principle FTA will increase trade between the two nations.

The FTA is the first bilateral agreement the UK has agreed to since leaving the European Union, turning it into a massive national talking point.

While the in-principle FTA news seems very rosy right now, supporters of tariffs are expected to kick up a stink — especially UK farmers.

The Productivity Commission examined bilateral trade in 2010 and found little evidence that bilateral agreements result in commercial benefits.

“This may be because the main factors that influence decisions to do business in other countries lie outside the scope of bilateral and regional trade agreements,” the commission said.

What the UK-Australia FTA will mean for different commodities.

DAIRY

● Dairy tariffs will be eliminated after five years.

● During the five-year transition Australia will get immediate access to a duty-free quota for cheese (43,000 tonnes) and non-cheese dairy (20,000 tonnes).

● The quota will increase every year, helping create immediate commercial opportunities.

● The UK is the second largest dairy importer in the world.

● Australia is the fourth largest dairy exporter in the world.

● Prior to 1973 when the UK joined the EU, the UK was Australia’s largest dairy export market. Since that time, Aussie dairy has been severely disadvantaged by high tariffs while European products enjoyed zero tariffs.

● Aussie dairy doesn’t expect to return to the heyday of pre-1970s trade, but there is an expectation high-value, niche opportunities will emerge as Australia leverages its counter seasonal supply.

RICE

● Tariffs and quota arrangements for short and medium grain rice varieties will be removed as soon as the FTA comes into effect (July 2022).

● Some tariff and quotas will remain for long grain rice.

● The majority of Australian rice production is high-quality short and medium grain.

● SunRice said the FTA was a significant outcome for the Aussie and Riverina rice industry.

SUGAR

● Sugar tariffs will be eliminated over eight years.

● CANEGROWERS chair Paul Schembri said Australian sugar hasn’t had this kind of access since 1973 when the UK joined the European Common Market (which became the EU).

BEEF

● 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, increasing each year to 110,000 tonnes.

● Australian red meat export into UK was previously constrained by highly restrictive UK and EU import regimes.

● Meat & Livestock Australia said the FTA would see the UK ‘liberalised’ over a 10-year period.

SHEEP/GOAT

● Sheep meat tariff will be eliminated after 10 years.

● During the transition Australia will have immediate access to a duty-free quota of 25,000 tonnes, increasing each year to 75,000 tonnes.

● Sheep Producers Australia said the “ambitious bilateral free trade agreement” would offer sheep producers greater market access.

● No word on wool yet.

WINE

● Wine tariffs will be eliminated as soon as the FTA comes into effect.