What the UK and Australia free trade agreement means for local businesses

With the free trade agreement between the United Kingdom and Australia entering into force in May 2023, discover what it means for local businesses and the potential benefits it brings.

The Australia-United Kingdom Free Trade Agreement (A-UKFTA) represents a historic and significant trade deal between Australia and the UK. This gold standard agreement entered into force on 31 May 2023 and holds immense potential for local businesses in both countries.

Here’s how you can benefit from the A-UKFTA:

1. Cost-savings on shipping to the UK

With the A-UKFTA eliminating tariffs on over 99% of Australian goods exports to the UK, this brings significant benefits to Australian businesses, particularly in the agriculture sector. Key Australian exports such as wine, rice, sugar, honey, nuts, olive oil, and food supplements will now enjoy duty-free access to the UK market.

Moreover, businesses exporting certain manufactured goods stand to gain too. This is because UK tariffs on Australian industrial goods, including auto parts, electrical equipment, cosmetic products, and fashion items, have been eliminated. Additionally, Australia will have access to expanding duty-free tariff transitional quota volumes for agricultural products like beef, sheep meat, dairy, and sugar. 

This means that shipping to the UK market is not just cheaper but will also bring about greater profits for businesses. 

2. Establish their brand presence in the UK 

The UK and Australia trade deal opens up avenues for Australian businesses to establish their brand presence in the UK and support their online sales. In 2021, the UK was already Australia’s second-largest destination for foreign investment, with a total foreign direct investment (FDI) worth AU$135 million.

The A-UKFTA further provides essential protections for investors, ensuring fair treatment and safeguarding against expropriation. This comprehensive agreement covers both FDI and portfolio investment, benefiting not only traditional sectors but also services, technology, and advanced manufacturing. 

With enhanced investor protections, Australian businesses can confidently expand their operations and build their brand presence overseas. This presents a promising opportunity for businesses to establish an omni-channel branding strategy, leveraging both physical and online platforms to reach a wider customer base and drive online sales.

3. Ensure a seamless digital shopping and trade experience

Recognising the importance of digital trade in the modern economy, the A-UKFTA includes ambitious commitments to enhance opportunities for digital trade across all sectors. The FTA facilitates a more efficient, certain and secure online environment for businesses. This enables cross-border data flows while ensuring appropriate protections for consumers and public policy objectives. 

Barriers to digital trade will be reduced, and the acceptance of electronic versions of trade administration documents, contracts, and signatures will be facilitated. This makes it easier to ship goods to the UK for Australian businesses and grow their sales in the UK market. 

Moreover, enforcement and compliance provisions will protect consumers and personal information online while discouraging unsolicited commercial electronic messages. This means that UK residents will be better protected when they shop online on Australian e-commerce sites, enabling local businesses to extend their presence overseas. 

4. Consider the UK a new market to target

Evidently, A-UKFTA brings exciting prospects for increased exports and imports between Australia and the UK, offering substantial benefits to businesses in their respective economies. This FTA opens doors for Australian businesses to diversify their trade to a wider range of overseas markets, resulting in reduced costs and improved market access for goods and services. With two-way goods trade worth AU$10 billion in 2022 and two-way services trade worth over AU$11 billion in 2021-22, the UK is a major trading partner for Australia. Subsequently, the UK represents a lucrative market for Australian businesses seeking to expand and tap into new opportunities as the A-UKFTA is expected to increase bilateral trade by 53%. The strong bilateral trade relationship, with significant trade volumes in goods and services, makes the UK an attractive destination for businesses to target if local businesses want to ship to Europe. This mutually beneficial trade agreement opens doors for businesses to flourish in the UK and leverage it as a gateway to the broader European market.

Take advantage of the A-UKFTA with the help of DHL Express

The UK and Australia free trade agreement brings immense benefits for local businesses, with the potential for increased exports and imports, tariff reductions or eliminations, enhanced digital trade, and the encouragement of investment. This landmark agreement signifies a strong partnership between Australia and the UK, along with setting a benchmark for future trade deals. As businesses discover the possibilities offered by this agreement, partnering with a trusted logistics provider like DHL Express Australia can ensure seamless shipping from Australia to the UK and support throughout the process. Open a business account with DHL Express Australia to leverage their expertise in international shipping and take advantage of the new prospects created by the A-UKFTA. Further expand your business overseas by checking out our guide to explore APAC markets with FTAs.