The UK has historically been a key trading partner for Australia and New Zealand underpinned by a shared heritage and common values. It is currently Australia's seventh largest trading partner for goods and services and New Zealand's fifth largest.

Post-Brexit, the UK could strike free trade agreements (FTAs) with Australia and New Zealand, either bilaterally or via the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which both antipodean countries are members of, provided the UK's future relationship with the EU permits such deals.

The UK accounted for nearly two-fifths of Australia's and two-thirds of New Zealand's goods exports in 1950, but these shares have declined to 1 per cent (excluding gold) for Australia and 2.6 per cent for New Zealand today.

Both antipodean countries are key suppliers of food and wine to the UK, whilst the UK mainly exports vehicles to Australia and New Zealand.

Average applied tariffs are relatively low at around 2.5 per cent in Australia and 2.0 per cent in New Zealand. The UK applies the EU's Common External Tariff which is around 5.1 per cent on average but comprises high tariffs and volume restrictions on sensitive agricultural products such as lamb and beef. Australia also imposes a 5 per cent tariff on Scotch Whisky.

Regulatory differences such as those related to food safety standards and biosecurity requirements also exist, although EU-wide sector agreements with Australia and New Zealand have helped improve bilateral regulatory cooperation and facilitate trade. For example, the EU has a comprehensive agreement with New Zealand to recognise each other's agricultural standards and reduce border checks for agri-food imports. The EU has also agreed to recognise Australian winemaking techniques and to simplify import requirements for certain industrial goods from both countries.

UK-Antipodean trade in services is dominated by tourism which accounts for 43 per cent of Australia's and nearly 60 per cent of New Zealand's total services trade with the UK. Tackling barriers to services trade by agreeing to mutually recognise qualifications, for instance, could help boost bilateral trade flows in other services sectors.

Investment links are strong, with the UK ranking as Australia's third largest source (AUD83 billion) and New Zealand's fifth largest source (NZD5.3 billion) of direct investment. UK direct investment in Australia has grown by 33 per cent and by 58 per cent in New Zealand over the past decade.

But Australia and New Zealand have investment screening thresholds which make them amongst the most restrictive countries in the OECD for foreign investment, although evidence suggests these regimes are less restrictive in practice. Both countries typically liberalise these thresholds for certain sectors for investors from FTA partner countries.

Tackling remaining trade and investment barriers between the UK and Australia and New Zealand via prospective trade deals would help level the playing field with existing FTA partners and could unlock trade complementarities. It would also help smaller businesses which are disproportionately affected by regulatory differences and red tape.

UK firms could also leverage Australia's and New Zealand's extensive network of trade deals across the Asia-Pacific to boost trade and investment in the region

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