The Australian wine industry will benefit from a Free Trade Agreement (FTA) with the United Kingdom.
Australian Prime Minister Scott Morrison and British Prime Minister Boris Johnson signed an in-principle FTA at Number 10 Downing Street after four years of negotiations.
It will provide a much-needed boost for Australian winemakers after China introduced huge tariffs on Australian wine, effectively shutting down a $1.2 billion market.
The technical details of the agreement – including for wine – are still being worked through.
Former Australian High Commissioner to the UK Alexander Downer has said previously that under a trade deal, “wine will be able to go into the UK duty-free”.
It is not yet known if the duty for wine will be completely eliminated or if it will taper off over time.
Tony Battaglene, chief executive of Australian Grape & Wine said, “We’re hoping the final text of the agreement will address a range of costs and barriers Australian wine exporters currently face in the UK.
“We know there is more work to do on the detail, but the elimination of tariffs is critical for our sector.
“Other areas we are hoping to see progress on, include simpler certification requirements, and improvements in our ability to further process and package Australian wines in the UK market, which will drive innovation, create jobs here and in the UK, and reduce our carbon footprint”.
Under the trade deal, Britons coming to Australia will be allowed to apply for a three-year-long working holiday visa and the age limit will be increased to 35.
The UK is our biggest export market by volume (264 million litres).
It is our second-biggest export market by value ($461 million) behind China ($869 million).
However as stocks of Australian wine in China dry up, the UK will likely emerge as our biggest market by value.
“You give us Tim Tams, we give you Penguins, you give us Vegemite, you give us Marmite, we give you Burberry mackintoshes and you give us RM Williams,” Boris Johnson said.
Mr Morrison said, “I said we would wait for the right deal, and I think we’ve got the right deal between the UK and Australia.
“This is the most comprehensive and ambitious agreement that Australia has concluded.
“The only one which comes into close connection with that is the arrangement we have with New Zealand.”
It is Britain’s first major trade deal since it split from the European Union on 1 January.
The recent strong growth in Australian wine exports to the UK continued in the 12 months ended March 2021.
Value increased by 33 percent to $461 million and volume by 21 percent to 264 million litres (29.3 million 9-litre case equivalents).
This extended the UK’s lead as the biggest destination for Australian wine exports by volume and saw it jump over the USA into second place by value.
The average value received for Australian wine in the UK increased by 10 percent to $1.75 per litre, the highest level in a decade.
The FTA is expected to come into effect from 1 July next year.