UK free trade deal sets us firmly on road to recovery

Scott Morrison with Boris Johnson in Rome in October. Picture: Adam Taylor

If Richard Cobden was right when he said free trade was God’s diplomacy, then the Australia-UK Free Trade Agreement is a diplomatic coup.

Britain will eliminate tariffs on more than 99 per cent of Australian exports by value entering the UK. Australia will eliminate tariffs on more than 99 per cent of British exports by value entering Australia, saving Australian households and businesses more than $200m a year on tariffs.

This is a true free trade agreement. It is the fastest major agreement Australia has signed and the most comprehensive and ambitious agreement we have concluded outside of New Zealand. It is the first full agreement negotiated from scratch that Britain has completed since leaving the EU.

It will strengthen the deep connection between our peoples, with Australians now having similar access to Britain as EU nationals, and British nationals having access to Australia similar to our best FTAs. Additionally, both countries will enhance our youth mobility by increasing the age limit from 30 to 35 for a total stay of up to three years.

The Australia-UK FTA is an example to the world that embracing free trade is the best way out of the pandemic.

And it is fitting that Australia is the first country to have signed a deal with Britain, as farmers in Australia vividly remember the impact of the UK going into the common market in 1975. It was a devastating blow to Australian farmers.

This agreement rights this historic wrong and is an opportunity for us to pick up where we left off all those years ago, and finally realise the true potential of our trading relationship.

This deal will lead to growth in Australian agricultural exports, which will make Australian farm produce more competitive in a market of more than 65 million consumers.

About $725m worth of key farming products, including beef, sheep meat, wine and others such as sugar and dairy, will be eligible immediately for duty-free exports to Britain once the agreement comes into force. More than 35,000 tonnes of Aussie beef will be duty-free on entry into force and this will expand to 110,000 tonnes in 10 years.

Britain also has been an important driver of recovery for the Australian wine industry, with exports to the UK increasing nearly 40 per cent this year compared with the year before. Britain, already first in terms of destination for exports by volume of Australian wine, has overtaken the US to become Australia’s largest export market by value. Tariff elimination will deliver an even greater boost to this already wonderful export story.

As we continue to come out of the Covid-19 pandemic, we know it is free trade that will drive our economic recovery.

Trade is essential to the economy and accounts for one in five jobs, boosting our gross domestic product and bringing real benefits for business owners, employees and families.

Economic modelling shows Australia’s trade liberalisation since 1986 has led to real GDP being 5.4 per cent higher in 2016 than it otherwise would have been (with no trade liberalisation). For the average Australian family, trade liberalisation is estimated to have led to real income being $8448 higher than otherwise.

Under our government, 75 per cent of Australia’s trading markets are now covered by free trade agreements, representing preferential access to 3.35 billion customers, up from 26 per cent when we came to office.

The Australia-UK FTA demonstrates the Morrison government’s steadfast commitment to trade and our agriculture sector, as we continue to support jobs and our recovery from Covid-19.

Dan Tehan is the Trade, Tourism and Investment Minister.