UK-Australia Historic Trade Deal Presents New Opportunities and Challenges for SMEs
The UK-Australia trade deal has been welcomed as the first major international trade deal negotiated by the UK government since Brexit. This zero-tariff, zero-quota trade pact will reportedly save British consumers £34 million a year on Australian products. For UK businesses, this is an exciting opportunity to expand existing trade or to seek out new export markets.
With Australia being the UK’s fifth-largest trading partner, it will now cost less for British businesses to sell products to Australia, providing a competitive edge. It will present specific benefits across the United Kingdom, largely through tariff elimination and a simplification of customs procedures.
Last year, Scotland exported £126m of beverages to Australia. The agreement will help distillers by eliminating tariffs of up to 5% on Scotch Whisky, while car manufacturers in the Midlands and north of England will have tariffs of up to 5% cut.
Over 450 businesses in Wales exported to Australia last year, and life science companies and chemicals manufacturers are especially poised to benefit. 90% of all exports from Northern Ireland to Australia are machinery and manufacturing goods used for Australia’s mining, quarrying and recycling sectors.
Red tape and bureaucracy will be significantly reduced for over 13,000 small businesses in the UK who already export goods to Australia, leading to faster export times. This will be welcome news for UK businesses that have had to navigate complicated new realities since Brexit.
UK imports and exports to and from the EU have collapsed due to increased tariffs, customs declarations and complex paperwork that has not been required for over 40 years - whether this is early teething troubles or the start of a downward trend remains to be seen.
Many believe that this particular trade deal will not significantly impact the UK’s traditional export markets in the EU, which has a GDP of $15 trillion that trumps Australia’s GDP of $1.3 trillion.
However, the exciting glimmer of hope is whether this presents a precedent upon which the UK can secure a free trade agreement with either the USA or China, which are much larger players on the world stage.
Specifically, Australia could also be a possible gateway for the wider Asia-Pacific region, with this deal potentially representing a crucial step along the way to becoming part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which covers 11 countries.
For now, the advantages for UK businesses selling into Australia over other markets include the fact that there is no language barrier. At the same time, there are similar business cultures, practices, legal frameworks to those of the UK.
There will also be access to new intelligence enabling small businesses to take on new opportunities in Australia created by the deal. Unlike in the USA, there is an availability of detailed business financial information, which is critical when researching new customers.
While any deal that lowers barriers to trade opening up new territories is inherently assumed to be positive, there has already been concern expressed in the UK about cheaper imported meat from Australia negatively impacting the British farming sector. Australian companies are permitted to use pesticides and hormone growth promoters that are banned in the UK.
When investigating new opportunities in Australia as a result of the deal, UK businesses will need to apply the same considerations as they would when entering any new market – for example, customer due diligence, trade terms, and logistics, to name a few.
Small businesses intending to take advantage of these new opportunities to trade with Australia but are hindered by cash flow limitations can investigate some of the new solutions available to help them grow their business without having to access traditional credit facilities.
One solution is invoice financing – which can help small businesses get advances on cash they are due from specific individual invoices. Our own offering at Accelerated Payments is able to fund export deals to Australia in multiple currencies and we are currently supporting clients that are now offering products and services to Australian customers.
We work on a flexible basis with an SME, allowing the SME to choose how many and which invoices they use. This provides easy access to funds without incurring fees on every invoice or having to finance an ongoing credit line. The model works particularly effectively for smaller businesses that might be providing services to industry giants.
If you’re a business that’s expanding down under, this could be a great way to manage cash flow during your growth – and with many different invoice financing companies to choose from there’s never been a better time to explore this way of controlling your scaling journey.
Looking to promote your product/service to SME businesses in your region? Find out how Bdaily can help →
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