The deal, which comes into force later this year, will see tariffs on Australian wine slashed from up to 20p per bottle to zero providing more choice for UK shoppers. Currently, all Australian wine is charged a tariff of up to 20p per bottle (£26 per hundred litres).
However, International Trade Secretary Liz Truss said the tariff will be eliminated as part of the agreement.
Ms Truss said: “Our trade deals with Australia and other friends will bring a big, post-Brexit dividend for consumers.
“It is clear the UK has a great thirst for Australian wine, and it is fantastic that we will now have a greater selection on our shelves.
“More free trade means lower prices and more choice for shoppers.”
The news will benefit brands including Barossa Valley Shiraz and Margaret River Chardonnay and iconic Australian favourites such as Jacob’s Creek and Hardys.
David Haworth, Managing Director of Pernod Ricard UK (producer of Jacob’s Creek), said: “We welcome the UK-Australia FTA as trade deals like this unlock benefits for British consumers.
“With the UK being the number one market by volume for Australian wine, a reduction in tariffs will remove costs and enable us to continue to deliver our portfolio of premium brands at scale, such as the Jacob’s Creek range of wines, and offer outstanding value to consumers, competing effectively against EU wines which currently face no tariffs.”
HMRC figures reveal the UK imported around £290million worth of wine from Australia last year, making it the UK’s top food and drink import from the country.
British cars, Scotch whisky and confectionery will also be cheaper to sell in the tariff-free agreement, boosting industries that employ 3.5 million people in the UK.
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The European Union needs to stop punishing the UK by taking a “strict approach” in implementing the Northern Ireland Protocol, an influential Tory MP has said.
David Jones, Tory MP for Clwyd West and deputy chairman of the European Research Group expressed concerns about how Brussels “continues to assert that its strict application” was the best way to protect the Good Friday Agreement.
The Protocol, part of the Brexit divorce deal agreed by the UK and Brussels, effectively keeps Northern Ireland in the EU’s single market for goods.