Australia and UK have signed an in-principle bilateral free trade agreement (FTA) which, once finally negotiated and adopted, will greatly benefit Australian exporters and investors looking for new markets, particularly in relation to goods and services previously sold to China.
Key proposals affecting Australian businesses, investors and workers include:
1 .Tariff removal for non-competing Australian goods – wine makers and rice growers to benefit
The export of all Australian goods which have no or minimal impact on UK producers, such as wine, short-grain rice and medium-grain rice, are proposed to be tariff-free.
To allow UK farmers to adapt to the increased competition, “sensitive goods” will be subject to yearly duty-free quotas, which will progressively increase over time until completely removed (by the 15th anniversary of the FTA) . For example, in the first year of operation of the FTA:
|Australian good for export||Annual duty-free quota (tonnes)|
All imports from UK, including favourites such as cars, scotch whiskey and confectionary products, will benefit from full liberalisation from the commencement of the FTA.
2. Less red tape for Australian small and medium enterprises (SMEs)
Australian SMEs that already export or wish to export to UK will benefit from:
(a) the removal of red tape and the reduction of bureaucratic requirements;
(b) quicker export times; and
(c) streamlined processes.
3. Uniform rules to facilitate free trade of services
Proposals to develop and implement uniform policies and regulations for all service sectors aim to provide Australian and UK professionals and services companies with transparency, guaranteed market access and non-discriminatory treatment when operating in each other’s markets. Important sectors to benefit include:
(a) Financial services – the two countries will implement frameworks that allow financial service suppliers to move their back-office functions offshore and avoid the imposition of arbitrary requirements to such functions.
(b) Legal – lawyers will have the ability to practise in both countries, which could give clients greater choice and flexibility when selecting a trusted adviser.
(c) Telecommunications – Australia and UK will provide access to each other’s public telecommunication networks and services on a non-discriminatory basis.
4. Increased mobility for expatriates and backpackers
Australia and the UK are determined to enhance opportunities for business travel within 5 years of enacting the final FTA. This vision will be achieved by:
(a) allowing companies to sponsor foreign employees without the need to prove that a local resident could not be hired to do the job;
(b) guaranteeing visas for service suppliers in certain nominated sectors;
(c) increasing the age cut-off for the countries’ mutual Youth Mobility Schemes to 35 years of age, and allowing total stay of up to 3 years without having to undertake specified work such as regional or farm work.
Additionally, the FTA will outline visa pathways to facilitate mobility of those involved in the agriculture sector and seek to enable workplace exchanges which facilitate career mobility for those in innovation across industry, culture and the arts.
5. Levelling of the investment playing field
Australian and UK investors are to be guaranteed fair treatment in the acquisition of assets and protection from their expropriation (subject to a public interest exception). Obligations to provide “market access” will prohibit the countries from imposing certain quantitative restrictions on investments. Further, a Most-Favoured Nation regime will ensure that if another country is given better access than what is provided under the FTA, such access will be extended under the same or better terms under the FTA.
Inbound UK investors will benefit from higher investment screening thresholds by the Australian Foreign Investment Review Board (to be at least at the thresholds offered to the US and Trans-Pacific Partnership countries).
Further, consultations are underway regarding the removal of residency and nationality requirements for UK and Australian nationals assuming senior manager positions and directorships in the other country.
6. Enhancement of digital trade and data protection
Initiatives to enhance opportunities for digital trade across all sectors will include:
(a) the acceptance of electronic contracts and signatures and the adoption of interoperable electronic invoicing frameworks, to facilitate electronic transactions;
(b) a digital consumer identification framework to help reduce cybercrime, enabling consumers to buy from businesses across the two nations with greater confidence;
(c) the prevention of forced transfer of Source Code and Encryption Keys (subject to legitimate scrutiny by authorities) to protect innovation; and
(d) the adoption of measures to enable cross-border data flows while during high standards of protection for both personal and commercial data.
7. Supporting research, development and trade of environmental goods and services
The FTA will focus on bilateral trade and investment of environmental good and services and cooperation in research and development of key technologies to transition to a decarbonised economy.
When will the FTA come into effect?
Australia and UK are determined to conclude the FTA as soon as possible as the benefits to both countries are significant. While there is no set date for when final negotiations will conclude, please contact us if you would like to discuss how the FTA may affect you.