Graham Perrett (Moreton, Australian Labor Party) Share this | Hansard source

I present the trade subcommittee's report entitled Inquiry into Australia's trade and investment relationship with the United Kingdom: interim report.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—On behalf of the Joint Standing Committee on Foreign Affairs, Defence and Trade I present the interim report entitled Inquiry into Australia's trade and investment relationship with the United Kingdom: interim report.

The committee welcomed this opportunity to examine Australia's relationship with one of our important trading partners. The inquiry received 72 submissions from across Australia, the United Kingdom, Ireland and Australian businesses in France and Germany. The committee also heard from 58 separate organisations and individuals during 13 public hearings, including diplomatic representatives from the United Kingdom and British based witnesses appearing via videoconference.

The committee presents this interim report as a summary of its findings to date on the opportunities, barriers and challenges facing Australia's future trade and investment relationship with the United Kingdom.

An obvious factor in this, which presents both opportunities and threats, will be the so-called Brexit, the UK's looming departure from the European Union, which will occur after a majority of the British voters who turned out decided to do this in June last year. Consequently, the British government triggered article 50 of the Treaty of Lisbon in March, formally opening a two-year window for negotiating Britain's exit from the EU that expires in March 2019, now less than 18 months away.

Evidence to the inquiry suggests that the outcomes of negotiations between Britain and the EU over Brexit would largely determine the future parameters of Australia's trade relationship with the United Kingdom. The committee will present its final report and recommendation closer to the conclusion of those negotiations.

It does appear that the appetite for broader and more comprehensive trade links between Australia and the United Kingdom is deeply felt on both sides.

In his department's submission to the inquiry the British Secretary of State for International Trade, the Right Hon. Liam Fox, said that the United Kingdom sought to be a champion of free trade and to share Australia's commitment to global trade liberalisation and the benefits of open markets as part of building 'a truly global Britain that is a great trading nation and one of the firmest advocates for free trade in the world'.

The British High Commissioner to Australia, Her Excellency Menna Rawlings, echoed Dr Fox's sentiments, noting that, despite the huge geographical distance, 'when we arrive in each other's countries, we feel as if we're at home'. She noted that there are more expatriate Britons living in Australia than in the 27 European Union nations combined.

The inquiry uncovered a desire for closer trade links on the part of Australian businesses and the primary producer sector as well, with witnesses from a broad range of industries—including beef, sheepmeat and dairy producers, the wine sector, rice growers and sugar farmers—all eager to build on their existing commercial relationships in the United Kingdom and to increase their export volumes if the changes ushered in by Brexit gave them the opportunity to do.

The United Kingdom was Australia's second largest two-way services partner in 2015, accounting for $12.3 billion or 8.6 per cent of total services trade. In 2016, services exports to the United Kingdom were valued at nearly $5 billion, while services imports from the United Kingdom were valued at $7 billion. Tourism was Australia's key services export to the United Kingdom in 2016, at nearly $2 billion, and was also Australia's main services import from the United Kingdom at $2.8 billion.

The United Kingdom's pending departure from the European Union, Brexit, poses uncertainty in terms of Australia's trade relations with Britain and where potential new opportunities Brexit may create are concerned.

Submissions and evidence to the committee also suggested that the United Kingdom's standing as a trading partner may be inflated on account of businesses using the United Kingdom as a gateway to access the larger continental European Union market.

Negotiating Brexit also poses challenges for Australia's trade relationships with the EU given Australia and the EU have commenced a process to explore the negotiation of an Australia-EU free trade agreement.

Australia will not know the implications of Brexit until this UK-EU negotiation is finalised. Should Brexit occur without the UK and the EU reaching an agreement—a so-called hard Brexit—the UK will not retain access to the EU common market or customs union. Under the provisions of article 50 of the Lisbon treaty the United Kingdom is prohibited from negotiating deals with third-country parties such as Australia until Brexit takes effect.

It is obvious that, despite the very best intentions and a genuine desire in both Australia and the United Kingdom for closer trade relations once the UK has left the EU, in practice the question is far too complex to make definitive resolutions and recommendations now.

Given Australia's pursuit of free trade agreements with major trading partners over the last decade—including the United States, China, Japan and South Korea—the exploration of free trade agreements with both the European Union and a post-Brexit UK offers a consistent approach to Australian trade policy that seeks outcomes that are mutually beneficial to all stakeholders.

From the committee's perspective the timing of the UK's departure from the EU is entirely coincidental with the scoping work and ongoing development towards a free trade agreement between Australia and the EU.

Evidence to this inquiry suggests Australia's trade negotiations with the EU are gaining momentum. The committee notes recent developments in the Australian government's trade negotiations following visits by the Minister for Agriculture and Water Resources and the conclusion of an agreement on the Australia-European free trade agreement scoping study by the Minister for Trade, Tourism and Investment.

The committee is of the view that the Australian government should continue its trade negotiations with the European Union as a priority.

However, Australia should be encouraged that Britain has signalled that it is willing to enter into new trade partnerships following its departure from the EU. Australia is well positioned to redefine and expand an already strong trade and investment relationship. The Australian Labor Party would obviously like such agreements to contain no investor-state dispute settlement clauses, but any agreement should include labour-market-testing provisions and independent evaluations of the agreement both beforehand and throughout the life of the agreement.

In conclusion, the committee has heard evidence regarding a diverse range of issues. Future reports by this inquiry will consider these in more detail as the complex issues concerning the United Kingdom's withdrawal from the European Union are resolved and the situation for advancing Australian trade interests becomes clearer.

I commend the interim report to the House.

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