The Australia-United Kingdom Free Trade Agreement (A-UKFTA) will come into force on 31 May, driving increased two-way trade in goods and services, economic growth and job creation. According to the Australian Government Department of Foreign Affairs and Trade, the trade of goods between the two countries was worth $10 billion in 2022, with major exported products being lead, alcohol and measuring and analysis equipment.
With the elimination of tariffs on 99% of Australian goods exported to the UK, the A-UKFTA improves market access for exports, including agricultural products such as wine, short- and medium-grain rice, honey, nuts, and manufactured products such as auto parts, electrical equipment, and fashion goods. For some agricultural products like beef, sheep meat, dairy and sugar, Australia will have immediate access to duty-free transitional quota with eventual tariff elimination.
“Our trade agreement with the UK will significantly reduce costs for exporters and assist Australian businesses seeking to diversify trade to a wider range of overseas markets, ” said Minister for Trade and Tourism Don Farrell
For imported goods from the UK, there will be an immediate elimination of customs duties for certain goods, whilst the rest will be eliminated over five years making products more affordable for Australians.
“Savings of approximately $200 million a year will be made as tariffs on imports from the UK are eliminated,” according to an official media release.
Improved Customs Clearance Process
An additional benefit of the A-UKFTA is the more efficient and cost-effective customs process. The improved process would make it simpler for traders and customs authorities to prove the originating status of goods. Kuehne+Nagel advises importers to have documentation proving the origin of goods, such as a Declaration of Origin (DOO), ready at the time of import to claim preferential tariff rates. For shipments arriving before 31 May, importers could choose to delay customs clearance until on or after 31 May to utilise the FTA, considering additional costs may be incurred.
In addition, customs processes will be expedited, a significant benefit for perishable products.
“The agreement requires that goods are to be released from customs within clear timeframes to provide certainty in the supply chain and reduce costs. This will be within 48 hours of arrival at customs where possible, and within 6 hours to prevent avoidable loss or deterioration of perishable goods,” stated the Australian Government Department of Foreign Affairs and Trade.
Also included in the deal are strong commitments to the environment, including climate change and labour.
“The Australia-UK FTA represents one of the most comprehensive, innovative and ambitious free trade agreements concluded by Australia to date and strengthens an already close relationship between Australia and the UK,” said Australian Prime Minister Anthony Albanese.
More details on the trade agreement and advice on customs clearance of goods utilising the FTA can be found in our Kuehne+Nagel Advisory
