Statement by the Minister for Trade, Tourism and Investment, the Hon Dan Tehan MP on the Australia-United Kingdom Free Trade Agreement
Tuesday 8 February 2022
On 17 December last year, on behalf of Australia, I signed the Free Trade Agreement between Australia and the United Kingdom of Great Britain and Northern Ireland with the Right Honourable Anne-Marie Trevelyan MP, UK Secretary of State for International Trade. Today, it gives me great pleasure to table this agreement and the accompanying National Interest Analysis for Parliament’s consideration.
Australia and the UK are both trading nations that share a commitment to liberalised, free trade underpinned by our shared heritage and values.
Our nations also share a closely aligned strategic outlook and we co-operate across a wide range of foreign policy, defence, security, intelligence, trade and economic issues.
The Australia-UK FTA is a gold standard agreement. It is the most liberalising agreement signed by Australia with a major trading partner, outside our agreement with New Zealand.
It will liberalise trade between our two countries, creating jobs and opportunities for both our citizens. And it will send a message to the world that both countries believe in the benefits of free trade and a rules-based system.
This agreement will immediately eliminate tariffs on more than 99 per cent of Australian goods exports to the UK, currently valued at around 9.2 billion dollars upon entry into force. That will make Australian exporters selling goods to the UK more competitive, creating new opportunities to reach more customers and grow their business.
Australian households and businesses will save around 200 million dollars a year with tariffs on almost all British imports eliminated on entry into force.
Mr Speaker, the Australia-UK FTA will be an historic agreement for Australian farmers. In the early 1970s, when the UK turned to what was then the European Communities, it left our farmers out in the cold and searching for new markets. Our farmers proved resilient and innovative, tapping into the growing Asia market, where they continue to successfully operate today.
This FTA rights that wrong and provides our agricultural producers with access to the UK market again and will enable them to compete on an equal footing with competitors, including the European Union.
Our farmers will have improved access to more than 65 million UK consumers who value safe, sustainably produced products with the strong provenance Australia offers.
Barriers to Australian exports will be removed across key products including wine, seafood, grains, fruit and vegetables, honey, nuts, short and medium grain milled rice and olive oil.
Tariffs on beef and sheep meat will be completely eliminated after ten years with safeguards for another five years; tariffs on sugar will be completely eliminated over eight years; and tariffs on dairy will be removed over five years.
Tariffs on all Australian origin industrial goods, except ammonia and aluminium, will be eliminated on entry into force and the remaining tariffs over three years.
This agreement will also build upon our strong people-to-people links to make it easier for Australians and Brits to travel and work in each other's country.
There will be new opportunities and certainty for Australian business.
Australians will be allowed to stay in the UK for three months to grow their business and forge business links, or, for investors seeking to establish a branch of their business, the ability to stay in the UK for a year.
Our businesses can send managers and specialists to the UK for three years on a corporate transfer, and graduates for a year.
Australians entering the UK on a contract to supply a service, or as an independent professional, have the same opportunities of stay as European Union nationals for up to a year.
There will be legally binding rules and access to the UK government procurement market for Australian suppliers of goods, services and construction services – including SMEs and Indigenous-owned businesses. This market is worth an estimated half-a-trillion dollars annually.
Australian businesses will have the guaranteed right to bid for UK government procurement opportunities in a wide variety of areas, including education, legal and taxation services, as well as construction services and public works concession contracts, at the national and sub-national levels.
UK businesses will also be able to bid for government contracts in Australia, in line with our existing open government procurement framework. Australia has, however, maintained reservations in priority public policy areas, such as small and medium enterprise and Indigenous procurement, the protection of essential security, health and welfare services, and other specific exceptions requested by State and Territory Governments.
We’ve made skilled mobility easier with the removal of economic needs testing on businesses wanting to employ an Australian in the UK, or a UK national in Australia, for the categories identified in the FTA.
This will reduce red tape for Australian companies and bring treatment of UK nationals in Australia to the same level enjoyed by nationals of our other FTA partner countries.
The agreement will provide a best practice framework for professional services regulatory and accreditation bodies to reduce or eliminate barriers, such as licensing and registration requirements and processes, through direct collaboration with their counterparts.
A side letter to the FTA sets out future improvements to Australian and UK Working Holiday and Youth Mobility programs, to allow participation up to the age of 35 and for three years, without specified work requirements.
A Joint Declaration alongside the FTA details extensive mobility pathways available for our citizens to work in agriculture and agribusiness in each country.
Australia will also establish an Innovation and Early Career Skills Development Pilot to pioneer streamlined mobility opportunities for UK citizens.
Together, these settings are designed to support a bounce-back in two-way mobility as both our countries emerge from the challenges of COVID-19, and to promote the expansion of two-way services trade and investment.
The UK is already a significant investor in Australia, with the third highest stock of foreign direct investment, which was 123.5 billion dollars in 2020.
The preferential Foreign Investment Review Board screening thresholds in the FTA, combined with added certainty through the commitments Australia has agreed, will promote even higher levels of UK investment across the Australian economy.
The FTA also provides high levels of guaranteed access for Australian investors in the UK investment market, high standard investment protections and significant transparency regarding treatment for Australian investors in the UK. This will further boost the considerable existing Australian foreign direct investment in the UK (134.1 billion dollars in 2020).
Australia and the UK have agreed not to include an Investor-State Dispute Settlement Mechanism in the FTA, reflecting the confidence we have in each other’s legal systems.
Mr Speaker, the pitfalls and constraints of paper-based trade became evident during the pandemic.
Improved efficiency through paperless trading will be enabled by a commitment in the Australia-UK FTA to facilitate electronic trade administration documents.
Barriers to digital trade will be reduced through commitments to recognise electronic contracts and methods of electronic authentication, including electronic signatures. Strong rules on data flows will create a more certain and secure online environment. The agreement will enable cross-border data flows that are critical to all kinds of businesses, and prohibit unjustified data localisation requirements, whilst ensuring high standards of data protection.
The FTA recognises that Australia and the UK have high standards of protection for IP rights and robust legal systems underpinning these rights.
Under the FTA, Australia has agreed to make all reasonable efforts to become a party to the Hague Agreement Concerning the International Registration of Industrial Designs.
This will make it easier for designers to file applications for design protection in other countries, and will result in an extension of the period of protection in Australia from 10 to 15 years.
Australia and the UK have also agreed to commence discussions on enabling reciprocal access to their respective Artist Resale Royalty schemes.
These schemes ensure artists receive a portion of the sale price when their work is resold through an art market professional such as an auction house or art dealer.
Australian artists cannot currently access the UK’s Artist Resale Royalty scheme, so this agreement will allow them an additional source of income, and promises to be a significant benefit for our Indigenous artists, in particular.
The FTA will not require any changes to Australia’s Pharmaceutical Benefits Scheme or require increases in the price of medicines in Australia.
The FTA aims to support the high levels of environmental protection in Australia and the UK, as appropriate in a trade agreement, including recognition of the importance of achieving the goals of the Paris Agreement.
The Labour Chapter is our most comprehensive to date, and is consistent with the ground-breaking Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
For the first time in Australian FTA practice, this agreement also includes a dedicated provision on modern slavery, including efforts to ensure that private and public sector entities operating in our respective territories take appropriate steps to prevent modern slavery in their supply chains.
The agreement recognises the important role that innovation plays to support economic growth by stimulating competitiveness, increasing productivity, encouraging investment, and promoting international trade.
I’m proud to say this agreement contains Australia’s first ever chapter dedicated to innovation.
In that innovation chapter, we have agreed to establish a Strategic Innovation Dialogue to promote trade-facilitative innovation policy and trade in innovative goods and services, and to cooperate on mutual interests.
As with all proposed treaties, the Joint Standing Committee on Treaties will now have the opportunity to review the full text of this agreement, before providing its report and making its recommendations in due course.
Given the considerable benefits and opportunities this FTA will bring to both Australia and the UK, I look forward to the agreement entering into force as soon as possible. I encourage all businesses and stakeholders to become familiar with its outcomes and be ready for its implementation, which I hope will occur this year.
As an open trading nation, our future prosperity depends on Australian businesses continuing to be competitive, to be innovative, and to be successful in new markets.
Trade agreements help create opportunities for businesses and people to grow and succeed. This creates more jobs and more skilled people to fill those jobs.
This is why our Government is pursuing an active trade negotiating agenda and why Australia is continuing to advocate internationally for open, rules-based trade and investment.
Coalition Governments have concluded almost all of Australia’s most significant FTAs, including this latest agreement with the UK. And we continue to expand the market opportunities available to Australian business through ongoing negotiations, including with the EU and India.
When the Australia-UK FTA enters into force, around 75 per cent of Australia’s two-way trade will be covered by free trade agreements, up from 27 percent in 2013.
This represents preferential access to almost 3 billion customers through our extensive FTA network.
I commend this agreement to the Parliament and hereby table the Australia-United Kingdom Free Trade Agreement with its National Interest Analysis.