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Trade welcomes Oz-UK announcement of FTA

Published:  15 June, 2021

The reality of a Free Trade Agreement (FTA) between Australia and the UK has moved a step closer with the prime ministers of both countries confirming on Monday that a deal will be done, though with much detail still to be thrashed out.

The FTA should in time see the removal of Australian import tariffs of 5% on spirits distilled in the UK, such as whisky and gin, with the reciprocal arrangement also removing tariffs on UK imports of Australian wines.

The announcement will be welcomed by many sectors in the wake of Brexit, with gin exporters and wine importers and retailers particularly standing to benefit.

Wine & Spirit Trade Association (WSTA) figures confirm that £27m worth of gin was exported to Australia in 2020, being one of the few markets continuing to grow despite the pandemic.

On the UK import side, wine is currently the single biggest agricultural export from Australia to UK, also accounting for a lion’s share, at £1.5bn and 230m bottles, of total wine sales through the off-trade.

Australian wine exporters will also be hoping that an easing of export requirements to the UK and removal of tariffs will help offset some of the losses following the trade barriers erected during Australia's current trade spat with China, which had grown to become Australia's prime wine export market.

“The benefits of a tariff-free, quota-free UK-Australia trade deal are great news for British producers exporting English wine and spirts to Australia. It’s also good news for importers as it will enhance the UK as a global hub for wine trading, and will ultimately benefit UK consumers too,” said Miles Beale, CEO of WSTA.

The deal will, however, take some time to finalise, with the FTA announcement “really a political moment that says ‘we’re going to do a deal’”, said WSTA’s communications chief, Lucy Panton.

That translates as having agreed some “headline parameters” to forge the path ahead, but with a possible timescale of the draft text of the FTA agreement emerging late summer, to be signed later this year, before going though parliamentary processes in both UK and Australia, with a final removal of tariffs unlikely until mid-2022.

The Food and Drink Federation (FDF) also welcomed the news.

“The UK and Australia are important trade partners when it comes to food and drink, with trade in our sector’s products worth more than £800m in 2020. The FDF therefore welcomes the news that the UK has agreed broad terms of a trade deal with Australia," said Dominic Goudie, head of international trade at FDF.

"It is now vital that we know the detail of what has been agreed to help businesses understand and begin to prepare for the new terms of trade. Food and drink manufacturers will hope that this deal will remove burdensome and unnecessary barriers to trade that will provide a timely boost for our industry’s post-Covid recovery."

Total food and drink exports to Australia in 2020 stood at £430m, with the top products exported being whisky, at £116m, and Gin, at £27m. Australia's leading food and drink export was wine, valued at £280m, ahead of lamb and mutton (£46m) and pulses (£8.5m).