Negotiations between Australia and the European Union regarding a free trade agreement (FTA) continue with both sides of negotiations expecting that there should be an agreement reached soon. Media reporting and departmental briefings have all confirmed that there has been significant momentum to conclude an agreement with only a few items remaining at the time of drafting.
From an industry perspective it is anticipated that the 5 per cent import tariff on automotive vehicles would be removed. However, our understanding is that an outcome on Luxury Car Tax (LCT) has not been reached. As LCT is a high value domestic tax, and not a formal part of any FTA, it has been used as leverage to extract other outcomes in other sectors of the economy in final negotiations.
In the event that an FTA is finalised, advice from DFAT is that the ratification process will still likely take between 18 and 24 months to complete before any agreement comes into force.