The new UK-Australia free trade agreement may have certain impacts on different ASX shares and industries.
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A free trade agreement between Australia and the United Kingdom has been agreed this week. It could affect some ASX shares.
According to reporting by various media, including The Australian Financial Review, it is the Australian agricultural sector which could be one of the main Australian beneficiaries, with tariff reductions on wine, meat, dairy goods and rice to the UK.
Meanwhile, British products like Whiskey and cars will be cheaper in Australia. British made cars, including brands such as Mini and Jaguar, will have tariffs instantly removed.
British farmworkers will be able to work in Australia under a specialist visa. Australia’s international border has been largely shut to potential overseas farmworkers because of COVID-19.
One of the largest horticultural businesses in Australia is Costa Group Holdings Ltd (ASX: CGC).
Beef and sheep
According to the reporting, tariffs will be removed over the next decade, with duty-free quotas increasing over that time. After a decade, a safeguard will be in place for five years, with a 20 per cent tariff levied on exports above the quota.
There are some large Australian farming businesses that work in those two categories. One of the biggest is ASX-listed Australian Agricultural Company Ltd (ASX: AAC).
The AFR reported that Australian wine can be sold tariff-free in the UK once the trade deal comes into effect. This may provide support for the industry after the recent tariffs that have been put on wine by China, which used to be a huge consumer of Aussie wine.
One of the large Australian winemakers is ASX share Treasury Wine Estates Ltd (ASX: TWE).
The dairy industry is another sector where the tariffs will be changed. According to reporting, dairy tariffs will be eliminated after five years, with duty-free quotas steadily increasing during that time.
One of the biggest dairy businesses in Australia is Bega Cheese Ltd (ASX: BGA).
Commentary on this deal
At the end of a BBC article covering the free trade agreement, the article concluded with:
The deal marks the end of what has essentially been a 50-year lock-out for Australian farmers, who have struggled to navigate Brussels’ restrictions, tariffs and quotas.
The president of the Australian National Farmers’ Federation said it had been very difficult to break into the UK because it was “way too expensive and way too far”.
Australian farmers have also been looking to diversify due to the increased tensions between Australia and China. In the past year, China has imposed tariffs and restrictions on everything from Australian beef, barley and wine, to rock lobster and coal.
The post What ASX shares might be affected by the UK-Australia trade deal? appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO and Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.