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London, June 15 (PTI): British Prime Minister Boris Johnson and his Australian counterpart Scott Morrison have agreed on a historic free trade agreement (FTA) that will make it cheaper for the UK to sell its cars and Scotch whisky Down Under and remove barriers for business, Downing Street said on Tuesday.
The main elements of the deal were agreed by the two leaders at a meeting in Downing Street on Monday night, with a final Agreement in Principle to be published in the coming days.
Downing Street said the FTA eliminates tariffs on UK goods and boosts jobs and businesses, in the first major trade deal negotiated from scratch by the Johnson-led government since Britain left the European Union (EU) last year and was free to negotiate its own agreements.
An FTA with Australia is also dubbed as a gateway into the fast-growing Indo-Pacific region, which covers India.
Today marks a new dawn in the UK's relationship with Australia, underpinned by our shared history and common values, said Johnson.
Our new free-trade agreement opens fantastic opportunities for British businesses and consumers, as well as young people wanting the chance to work and live on the other side of the world. This is global Britain at its best looking outwards and striking deals that deepen our alliances and help ensure every part of the country builds back better from the pandemic, he said.
According to UK trade officials, the new FTA means iconic British products like cars, Scotch whisky, biscuits and ceramics will be cheaper to sell into Australia, boosting UK industries that employ 3.5 million people across the country.
The UK-Australia trade relationship was worth 13.9 billion pounds last year and is set to grow under the deal, Downing Street said.
With reference to the farming industry that had been concerned about greater Australian imports, the government said that British farmers will be protected by a cap on tariff-free imports for 15 years, using tariff-rate quotas and other safeguards.
Agricultural producers will also be supported to increase their exports overseas, including to new markets in the Indo-Pacific.
And, the FTA also means that Brits under the age of 35 will be able to travel and work in Australia more freely and vice versa.
This deal delivers for Britain and shows what we can achieve as a sovereign trading nation. It is a fundamentally liberalising agreement that removes tariffs on all British goods, opens new opportunities for our services providers and tech firms, and makes it easier for our people to travel and work together, said Liz Truss, UK International Trade Secretary.
The agreement paves the way for us to join the Trans-Pacific Partnership, a 9 trillion pounds free trade area home to some of the biggest consumer markets of the present and future. Membership will create unheralded opportunities for our farmers, makers, innovators and investors to do business in the future engine room of the global economy, she said, in reference to the UK's bid to join the CPTPP alliance of 11 Pacific nations from Australia to Mexico.
According to officials, the free trade deal will eliminate tariffs on Australian favourites like Jacob's Creek crackers and Hardys wines, swimwear and confectionery, boosting choice for British consumers and saving households up to 34 million pounds a year.
The government listed out the benefits of the deal as helping Scotland by removing tariffs of up to 5 per cent on Scotch whisky; tariffs will be removed and customs procedures simplified on machinery and manufacturing goods; and car manufacturers in the midlands and north of England, including Tata Motors owned Jaguar Land Rover, will see tariffs of up to 5 per cent cut, expected to boost the demand for their exports.
According to official statistics, the UK was Australia's fifth largest trading partner in 2019, with total trade between the UK and Australia was worth 13.9 billion pounds last year.
The UK was the third largest direct investor in Australia and the second largest recipient of Australian foreign direct investment (FDI) in 2020.
The UK exported 5.4 billion pounds worth of services, including 1.4 billion pounds of insurance and pension services and 780 million pounds of financial services, to Australia in 2020.
Under the FTA, the UK government hopes red tape and bureaucracy will be torn down for more than 13,000 small and medium sized businesses across the UK who already export goods to Australia, with quicker export times.
"A trade deal with Australia will come as great news for many of our members who have long been exporting there as well as those who are hoping to expand their trade ambitions, said Mike Cherry, National Chair of the Federation of Small Businesses.
In the next steps, the UK Parliament will scrutinise the FTA once the text is published, along with an impact assessment.