Simon Birmingham

Australia-UK begin free-trade deal talks

June 17, 2020
By Alana House

Australia and the UK have officially launched formal free-trade deal talks that could see wine tariffs eliminated.

Australian Trade Minister Simon Birmingham announced at the National Press Club today, in front of the UK’s High Commissioner to Australia, that the negotiations will formally begin this afternoon.

“Take for example Australian wine – one in five bottles of wine sold in the UK is Australian wine,” Birmingham said.

“But we’ve reached that point of success in the UK market while consumers pay a tariff. They don’t pay a tariff on French, Italian or Spanish wines.

“If we can eliminate that tariff, that’s going to either mean our winemakers can get a bigger margin and enjoy a greater profit or that they can be even more competitive.”

Hardys wines

The expectation from both sides is to have a “bold and ambitious deal” – which could add up to $2billion in trade between the two countries – signed by Christmas.

But the trade minister, who is launching the formal free-trade deal negotiations via video link with his UK counterpart Liz Truss, admitted his goal was a difficult one.

“I do hope that if we can, we could get something settled before the end of the year,” he said. “But that would be record breaking time for trade deals.”

Truss added: “Pivoting towards the Asia-Pacific will diversify our trade, increase the resilience of our supply chains and ensure the UK is less vulnerable to political and economic shocks in certain parts of the world.”

“There is no doubt Australia was a casualty from the UK’s entry into the European economic community 48 years ago,” Birmingham said.

“In 1973, the UK was Australia’s third largest two-way goods partner. Now it’s our 12th.

“UK consumers turned away from Australian produce when high tariffs and low quotas were imposed as a result of their membership of the EU. Brexit now presents new opportunities for our two nations.”

What it could mean for Aussie wine

The UK is Australia’s largest export market by volume, with about 80% of it being bulk wine for bottling.

Australian wine sold into the EU attracts a tariff of between 10 and 20 euro cents a litre.

Australian Grape and Wine chief executive Tony Battaglene told The Weekly Times the industry was hoping for zero tariffs in a stand-alone agreement with the UK, as well as greater flexibility.

“We’re not allowed to export bulk wine into the UK and carbonate it there. It’s an historical, protective measure. Now that the UK is on its own, this could give us the flexibility to change those technical issues,” Mr Battaglene said.

“It’s a great market and this could be a chance to increase our penetration there at the higher price points.”

According to Wine Australia, the total value of Australian wine exports grew by 3% to $2.91 billion in the 12 months to December 2019.

The top five destinations for Australian wine exports by value were:

  • China (including Hong Kong and Macau) – up 12% to $1.28 billion
  • US – down 1% to $419 million
  • UK – down 9% to $352 million
  • Canada – down 13% to $183 million
  • Singapore – up 18% to $105 million.
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