The proposed free trade agreement (FTA) between Australia and the UK, announced this week, is set to benefit consumers and exporters on both sides, albeit weighted in favour of the British. Tariffs will be removed on 99 per cent of Australian goods by value entering the UK, including Australian wine and short and medium grain milled rice, while there will be full liberalisation of UK goods entering Australia. While the deal is good news for many, it will be some time before Australian farmers ca
ers can reap any benefit.
Tariffs on beef, lamb, dairy and sugar are set to be slowly phased out over the next 15 years.
Beef and sheep tariffs will be eliminated after 10 years, sugar tariffs over eight years and dairy tariffs will be eliminated over five years. During the transition periods, Australia will have immediate access to a set duty-free quota for each.
Somerdale International, a leading UK exporter of British cheese and dairy products, has been supplying cheese to the Australian retail and foodservice sectors for more than 30 years.
Stephen Jones, Somerdale International’s managing director, believes the deal will provide a further boost to sales.
“The phased removal of tariffs on cheese, together with increases to the duty free quota levels and simplification of customs procedures will allow us to grow over time our British cheese offer to our Australian customers and their consumers,” Jones told Inside Retail.
The business works closely with Mayers Fine Food, distributing through its supply chain to retail customers such as Woolworths, Coles and Costco, and in 2012 established a permanent office in Australia. In recent years, the business has seen a growing demand for both classic and contemporary British cheeses. Jones is hopeful that the FTA will allow the business to build on this increased interest by providing consumers with greater choice and value.
Somerdale British cheeses. Image: Supplied.
Somerdale exports British cheese to over 50 countries worldwide, including the US, China and across Europe, and has sales of over £41 million. Looking at the wider food industries on both sides, Jones is optimistic about the impact the agreement will have.
“The reduction of tariffs and red tape in trade between the UK and Australia can only be a good thing for our respective food industries and the consumers they serve,” he said.
“Over time it should provide new and exciting market opportunities for both Australian and British cheesemakers stimulating investment and innovation. Enabling them to grow sales by delivering greater value, both in terms of quality and price, and greater choice, in terms of the range of cheeses we can offer and through showcasing their taste, provenance and ever increasing usage occasions.”
“Competitive advantage”
In 2020 the UK was Australia’s fifth-largest goods trading partner, with two-way goods trade valued at $21.9 billion.
According to Sandy Rudd, founder and director of digital export initiative The Global Collective, the agreement will make it easier for businesses and brands to expand into each market.
“It creates a number of business opportunities for both brands wanting to export and companies who offer services, further generating an increase in employment and shared resources, which will definitely strengthen the already existing bilateral trade,” Rudd told Inside Retail.
“By reducing and eliminating certain barriers to international trade and investment, Australian exporters, importers, producers and investors will have a competitive advantage when entering the UK market.”
Rudd also pointed to the changes and commitments around customs procedures as a positive for exporters.
“Goods will be released within 48 hours of arrival at customs where possible and perishable goods will be released within six hours, again where possible to prevent avoidable deterioration of those goods, with the introduction of simplified paperwork requirements, enabling faster release of shipments,” she said.
While she says intellectual property (IP) has always been a little confusing for exporters, there are many IP provisions set out in the FTA to support both economies for growth and future success in export and trade.
“Both countries will commit to protect, support and encourage innovation and creativity across copyright, design rights, patents, trade marks, trade secrets and test data,” she said.
Five negotiating rounds have been held since Australia and the UK launched negotiations for a free trade agreement in June last year. Tuesday’s announcement is an “in principle” agreement and is yet to finalised.
Overall, Rudd said the most important takeaway for brands is that it means access to another export market where there will be “more support, less barriers to market, less risk and reduced cost to export your products”.