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June 16, 2021
UK and Australia agree on trade deal
On 14 June 2021, the United Kingdom (UK) and Australia announced that a free trade deal had been agreed in principle between the two countries. The announcement was made by UK Prime Minister Boris Johnson and Australian Prime Minister Scott Morrison at a meeting in London. It is understood that the agreement (FTA) will not only eliminate tariffs on goods but will also include provisions related to services and the digital economy. Details of the final Agreement in Principle are expected to be published in the coming days. The FTA is not expected to enter into force until early 2022.
This is the first major trade deal negotiated from inception by the UK since it left the European Union (EU). The UK Government issued a press release indicating that the agreement is expected to provide benefits to businesses operating in all parts of the UK by removing tariffs on imports of UK goods into Australia. Examples cited include Scottish whisky distillers, Welsh life science companies and chemicals manufacturers, English car manufacturers and Northern Irish manufacturers of goods and machinery used in Australia’s mining, quarrying and recycling sectors. The Government also said that the deal will benefit UK consumers by eliminating tariffs on imports of popular Australian goods such as wine, swimwear and confectionary.
The agreement also looks to secure new and ambitious commitments on market access for services professionals, cutting-edge digital provisions including data flows as well as reduced barriers to investment that will benefit the UK’s service sector. The agreement also sees the UK and Australia’s Youth Mobility schemes extended to three years and the age limit raised to 35 years old.
This announcement follows from the UK’s recent bid to begin the accession process to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP),1 which was formally approved by the member countries on 2 June 2021. The CPTPP is a trade agreement between 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United Kingdom), Indirect Tax