Prospects for future UK-Australia Services Trade

George Riddell is Director of Trade Strategy at EY, London, primarily responsible for advising companies on their international trade strategy. He has a decade of experience in international trade. Prior to joining EY, he spent over six years with the UK delegation to the WTO.

On 17 June 2021, Australia and the United Kingdom announced an Agreement in Principle on a new Free Trade Agreement (FTA). Since then, negotiators on both sides have been hammering out the details of the legal text of the agreement.

With that final agreement expected imminently, it is an ideal moment to look at one of the topics that has garnered less attention than its agricultural counterparts – trade in services. Here I assess the prospects for services trade between the countries, as well as areas of future development.

Current situation

While the COVID-19 pandemic continues to disrupt global trade, prior to the pandemic the amount of services trade between the UK and Australia has been considerable, with the UK being Australia’s third largest two-way services trading partner, accounting for 7.7% of   Australia’s total services trade in 2019-20. For the UK, services exports to Australia had been growing steadily from £6.2bn in 2016 to £7.7bn in 2019.

In 2019, the top categories of UK services trade with Australia (excluding travel) included:

1  Other Business Services

£1.8bn

Professional & Management Consulting Services

£553m

Legal, Accounting & Public Relations

£449m

2 Trade, trade-related & other business services

£1.2bn

Architectural, Engineering and Scientific Services

£274m

3 Insurance Pension Funds

£1.2bn

4 Transportation

£1.1bn

5 Financial Services 

£0.7bn

For services providers in Australia exporting to the UK in 2019 (excluding travel) other business services (£880m) and technical and trade-related services (£619m) were also the largest categories of Australian exports.

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The views expressed here are the author’s and may not necessarily represent the views of their employer nor the Institute for International Trade.