The UK government wants to finalise a free-trade agreement with Australia in early June.

A deal with Australia would be the first trade agreement negotiated from scratch by the UK since it left EU.

But how does a free-trade agreement work and what other deals has the UK made?
What is a free-trade deal?

A free-trade deal aims to encourage trade between by making it cheaper. This normally applies to goods but occasionally in services as well.

Making trade cheaper is usually achieved by reducing or eliminating tariffs. These are government taxes or charges for trading goods across borders. A car importer might have to pay a 20% tariff on top of the vehicle's price, for example, to bring it into a country.

Trade agreements also aim to remove quotas (limits on the amount of goods that can be traded).

Trade can also be made simpler if countries have the same rules, such as the colour of wires in plugs. The closer the rules are, the less likely that goods need to be checked.

Why have tariffs and quotas at all?

While free-trade agreements aim to boost trade, too many cheap imports could threaten a country's manufacturers. This could affect jobs.

For that reason a government might choose to put tariffs on certain things. Tariffs on car imports, for example, could help protect local carmakers from cheaper vehicles coming in from abroad.

What is the UK-Australia deal?

The UK says it is close to securing a free-trade deal with Australia and hopes to have it signed in early June.

Farmers say a deal will mean they will be undercut by cheap imports, which will cost jobs.

But the UK government says any deal will contain protections for farmers and tariff reduction in certain areas - such as beef and lamb - can be phased in over several years.

What does the EU-UK trade deal mean?

After Brexit happened on 31 January 2020, the UK and EU needed to decide the rules for their future trading relationship.

This was important because the EU is the UK's largest and closest trading partner.

After months of negotiation - which went down to the wire - a UK-EU trade deal came into force on 1 January.

The deal prevented any tariffs and quotas being introduced - which would have made it more expensive to trade.

But not everything is the same as it was before Brexit.

As the UK no longer has to follow EU rules on product standards, new checks have been introduced.

Strict EU laws on animal products also mean some UK products can no longer be exported.

The deal also doesn't completely eliminate the possibility of tariffs in future. Both sides will need to stay close to shared rules in areas like workers' rights and environmental protection. If either the UK or the EU shift their rules too far, the other side could introduce tariffs.

What's in the UK-EU trade deal?

What happened to the trade agreements the UK was already part of?

Before Brexit, the UK was automatically part of any trade deal the EU had negotiated with another country. At the time the UK left, the EU had about 40 trade deals covering more than 70 countries.

The UK has negotiated rollover deals with 66 of these countries.
List of rollover trade agreements

Talks are ongoing with a further three countries, but the largest agreements have been done.

Any existing EU agreement that was not rolled over ended on 31 December with trade then taking place on World Trade Organization (WTO) terms until a deal could be reached.

Trading on WTO terms means importers face tariffs and extra paperwork. For example, a shipment of bananas arriving into Portsmouth from Ghana was charged a tariff of £17,500 in January. Since then, an agreement with Ghana has been reached.
What about other trade agreements?

The UK signed a deal with Japan in October 2020 - the first that differed from an existing EU deal. The total value of UK-Japan trade (imports and exports) was £31.6bn in 2019, or 2% of the UK's total trade.

An agreement with Norway, Iceland and Liechtenstein, announced on 4 June, builds on the EU rollover deal that came into force on 1 January. The UK government says it will boost sectors such as digital and cut tariffs on UK farm products such as cheese and meat.
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