UK-Australia trade deal: what are the terms of new deal - and what does it mean for immigration and goods?

Farmers in the UK have concerns about the agreement and are worried they may be undercut on price and standards
Australia's Prime Minister Scott Morrison met with Boris Johnson in Downing Street on Monday (Getty Images)Australia's Prime Minister Scott Morrison met with Boris Johnson in Downing Street on Monday (Getty Images)
Australia's Prime Minister Scott Morrison met with Boris Johnson in Downing Street on Monday (Getty Images)

A UK-Australia free trade deal has been agreed between Prime Minister Boris Johnson and his Australian counterpart, Scott Morrison.

The broad terms of the agreement were settled over dinner in No 10 on Monday evening (14 June), Australia’s minister for trade Dan Tehan said.

It will be the first major free trade agreement made since Brexit with a country that the UK did not have an existing deal with while it was a member of the EU.

Downing Street has insisted the new deal will be a “fantastic opportunity” for British businesses, but there are fears from UK farmers who are worried they may be undercut in terms of price and standards.

Here is everything you need to know about it.

How will the free trade deal work?

The new agreement will be a zero-tariffs free trade deal.

Free trade deals aim to encourage the trading of goods, and occasionally services, by making it cheaper.

This is often achieved by reducing or eliminating tariffs, which are government taxes or charges in place for trading between different countries.

Often, quotas - limits on the number of goods that can be traded - are also removed under trade agreements.

The UK-Australian deal will give food producers and businesses in each country better access to each other’s markets.

In 2019-20, trade of goods and services between the UK and Australia was valued at £20.1billion.

Metals, wines and machines form the biggest goods exports from Australia to the UK, while the country’s main imports to the UK are cars, medicines and alcohol.

The value of the deal is expected to increase UK GDP slightly over 15 years, worth an estimated 0.01 to 0.02%.

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What are the terms of the deal?

The full details of the trade deal have not yet been disclosed, but it is centred almost entirely on goods.

Downing Street said the new agreement meant British produce - like cars, biscuits, Scotch whisky and ceramics - would be cheaper to sell to Australia.

And tariffs on Australian produce, like wine, swimwear and confectionery, will be eliminated, it was announced.

In turn, the deal could boost industries in the UK that employ 3.5million people, the government has claimed.

The agreement will mean the two countries will work closely on defence, technology and climate change through a “future clean tech partnership”.

It will also offer young people under the age of 35 the chance to live and work in Australia by extending their work-holiday visas without having to seek three months’ employment in an industry like farming, fishing or construction.

The government has also said British farmers will be protected by a cap on tariff-free imports for 15 years, using tariff rate quotas and other safeguards, but further details have not been given.

And the agreement may pave the way for the UK to eventually join a wider Asia Pacific free trade deal, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which ministers have said could provide farmers in Britain with huge opportunities.

Could it be bad news for British farmers?

But some farmers in the UK have fears that there will be no proper safeguards in place to stop them being undercut by cheap imports from Australia.

Farmers in Australia are permitted to use some chemicals which are banned in the UK, like hormone growth promoters, pesticides and feed additives.

The UK Trade and Business Commission - a newly-formed cross-party - has sounded the alarm over the deal, which it insisted had not been properly seen or examined by MPs.

It is worried that farms in Australia operate on a large scale that smaller farms in the UK can’t compete with, resulting in some going out of business.

The country is home to eight of the 10 biggest farms in the world - including one which is larger than Israel.

And the National Farmers Union (NFU) has said Australian farmers are able to produce beef with lower production costs, which could lead to UK farmers being undercut.

Meanwhile, concerns over the deal have been raised in Scotland, with ministers saying the farming industry could become overwhelmed if the market is saturated with lower-standard goods.

Yet UK Trade Secretary Liz Truss defended the trade deal last month, telling MPs: "We will make sure in all the deals we do that British farming thrives."

The Department for International Trade has previously said any UK-Australia deal would include protections for the farming industry and not impact the high standards adhered to in the UK.