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Slaughter and May

| 4 minutes read

UK announces post-Brexit trade deal with Australia

On 15 June 2021, Boris Johnson announced that the UK had agreed the broad terms of a free trade deal with Australia following a meeting with the Australian Prime Minister, Scott Morrison, with an “Agreement in Principle” expected to be published in the coming days.

Save for the UK’s free trade deal with the EU itself, the UK-Australia trade deal will be the UK’s first trade deal since it left the bloc that does not build upon an existing treaty that the UK previously enjoyed as a member state of the EU.

Key takeaways from the deal

Despite the initial fanfare, the UK Government's own estimates suggest that the new arrangements may add as little as 0.02% to the UK’s GDP over the next 15 years, and that despite the proposed elimination of tariffs on Australian goods entering the UK market, the overall impact on the prices of such goods will be negligible.

Whilst the devil will ultimately be in the detail of the final legal text that is agreed between the two countries, there are a number of key takeaways from the announcement.


It is proposed that within five years, the deal will remove tariffs on UK goods that are exported to Australia, which will make British products cheaper to sell into Australia. The UK Government hopes this will, in turn, help to boost many UK industries that export to Australia (in particular the automobile, alcoholic beverage and confectionery industries).

Similarly, tariffs will be removed on Australian goods that are imported into the UK (for example, on wine, swimwear and confectionery) in a phased manner, with a cap on tariff-free imports for 15 years, tariff rate quotas and other safeguards.

The UK Government believes the agreement will benefit consumers by increasing consumer choice, with manufacturers also benefitting from cheaper imports of vital parts and ingredients from Australia.


In terms of services, the deal is likely to make it easier for UK companies to establish in Australia and for various qualifications to be mutually recognised between the two countries.

The UK exported £5.4 billion worth of services, including £1.4 billion of insurance and pension services and £780 million of financial services, to Australia in 2020, and whilst the agreement’s details on services are currently sparse, it is expected that the deal will create more opportunities for trade in services than was originally anticipated, with the agreement seeking to reduce barriers for investment in these sectors.

Technology and Digital Trade

Technology firms and financial services firms are set to benefit from easier data flows under the agreement. In addition, the introduction of a ban on data localisation will allow UK SMEs in particular to explore the market without the cost of having to set up local servers, opening up opportunities for businesses operating in emerging technologies, such as AI and cleantech.


Whilst the elimination of tariffs on Australian goods may be beneficial to the UK consumer, the UK farming industry has raised concerns that the price of its goods may be undercut by Australian farmers, who might see the deal as an opportunity to flood the UK food market, particularly with respect to beef, lamb and sugar. However, it has been pointed out that UK farmers already compete with tariff-free produce from the EU and that they will have an advantage over Australian producers who face high transport costs.

Government Contracts

The trade deal is set to allow UK businesses to be able to “bid for additional Australian government contracts worth billions of pounds”. Whilst the UK Government hopes this will create opportunities for UK firms (in particular, in relation to transport and financial services), it is expected that this will be reciprocated for Australian firms wishing to bid for UK Government contracts, increasing competition in respect of UK public procurement.

As both Australia and the UK have been a party to the WTO Agreement on Government Procurement since 2019 however, it is likely that the deal will only result in some widening of access for UK firms’ looking to bid for such contracts, and will not represent a significant breakthrough.

Employment and labour

The agreement will also allow British citizens under the age of 35 to travel and work more freely in Australia, by doing away with previous requirements that British citizens must spend at least three months undertaking rural unskilled work in order to extend their working-holiday visa by a year. The deal will also allow Australians (under the age of 35) to stay in the UK for three years.

Concluding thoughts

The significance of the deal is not so much that it is the first bespoke deal built from scratch since Brexit, but that it may set a precedent for future deals with other, possibly larger, economies. The initial concerns amongst some industry leaders are that countries may point towards concessions made in this trade deal and look to replicate them in future negotiations.

What may be more significant still is whether the final agreement contains a ratchet clause, or will trigger ratchet clauses in other UK free trade agreements. If such a clause were to exist in the final legal text of this deal it would automatically extend liberalisation to Australia if the UK provides more advantageous treatment in a subsequent free trade agreement with another nation.

Ultimately, however, the deal has more political than economic significance at this stage, as it represents an important initial milestone in the UK Government’s efforts to pivot away from the European-centric model for trade that has been the hallmark of its international trade policy for the past half century.

Slaughter and May has a dedicated Australia Country Team, which is part of our leading Asia-Pacific practice. We advise clients every day on their global matters, taking care of the complexity and risks that come with cross border transactions.


australia, uk, trade, brexit