Dan Tehan (Wannon, Liberal Party, Minister for Trade, Tourism and Investment) Share this | Link to this | Hansard source

by leave—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 Rt Hon. 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 cooperate across a wide range of foreign policy, defence, security, intelligence, trade and economic issues.

The Australia-UK Free Trade Agreement 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 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 a year, with tariffs on almost all British imports eliminated on entry into force.

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 growing Asia markets, 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 sheepmeat 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 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 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.

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 groundbreaking 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 three 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.

I take this opportunity to thank my predecessor, Simon Birmingham; former UK trade minister Liz Truss; and current UK trade minister Anne-Marie Trevelyan for being party to the negotiation of this agreement. It is an historic agreement. It is one that sets our two nations up for the future, and I have the great honour of tabling the Australia-UK FTA.

Madeleine King (Brand, Australian Labor Party, Shadow Minister for Trade) Share this | Link to this | Hansard source

Thank you to the minister for his contribution on this matter and for all of his efforts in the trade portfolio, as well as those of the department and, of course, his personal team in his ministerial office. Australia has a rich history of trade and foreign investment with the United Kingdom. Before that, of course, we know our First Nations peoples traded internationally for thousands of years with the communities of South-East Asia. But, without doubt, the UK is certainly our oldest trading partner of the modern era.

Like many other Australians, I have British heritage. Indeed, until early 2016, I too was a British citizen. My dad moved over here in the early 1950s and was one of the first employees of British Petroleum. He worked at the Kwinana Oil Refinery, sadly now closed. This investment from a British company in our country and in my state of Western Australia built the town of Kwinana and the suburbs of Medina and Calista, in which I was born and which I am now very lucky to represent in this place. These days, the UK-Australia trade relationship is worth over $30 billion, and that is only going to grow, as Britain has abandoned the European Union and the UK now has to seek new markets.

We in Labor know that the vast market potential for Australia now and into the future lies in our region. The Indo-Pacific is the fastest-growing region in the world, and it's on our doorstep. The member for Grayndler, the Labor leader, has referred to this recently as 'the privilege of proximity', something my former colleagues at the Perth USAsia Centre, at the University of Western Australia, have known and have been talking about in Perth for many years.

However, it is fair to say that the rise of ecommerce and digital trade, turbocharged by the effects of COVID-19, has meant that Australia's geography is less of a barrier to trade with the UK and Europe than it once was, especially in services that can be delivered digitally. Following the decision by the UK to exit the European Union, it was clear that bilateral trade agreements were to be pursued as a matter of priority. Indeed, I understand that, having not negotiated a trade deal since the 1970s, the UK government sought the advice and expertise of Australian trade negotiators to get the ball rolling on these processes.

The process of negotiating this free trade agreement has not been without problems. I was concerned, for example, that I, my office and the general public learn more about the direction of negotiations for this free trade agreement from the UK government itself than we do from our own government. I want to thank the British High Commissioner, Vicki Treadell; and the former High Commissioner, Menna Rawlings, who were very open and active in their engagement and dialogue with me in this place.

I am concerned about the lack of transparency displayed by the Morrison government and also former Liberal governments on what impact this secretive approach has on the outcomes of this agreement, which we've only had a chance to look at since it's been signed in December. The government has not released any modelling or an impact statement in relation to the Australia-UK FTA, although I note that the national interest report was delivered today; nor has it consulted widely on its provisions before signing. The UK itself, new to free trade agreements, adopts a more open approach, seeking the views of the community, stakeholders and business to inform the negotiation process before they undertake it. We do the reverse.

I am concerned that, in this government's haste to secure a deal, it has negotiated away some of the protections that we in Labor believe are crucial for any international agreement to operate in Australia's national interest. There are a number of red flags that I will highlight. Firstly, this agreement includes procurement provisions which go well beyond current World Trade Organization obligations. There is a side letter proposing further dialogue between Australia and the UK regarding local government procurement options, which is sometime in the future. We are yet to know what that will entail.

Procurement is one of the most powerful levers Australian governments have to support Australian jobs and Australian businesses. This agreement obliges Australian governments to treat British companies as though they are Australian companies, with the financial thresholds contained in the WTO agreement on government procurement completely eroded. It will be open slather on government procurement into this country. It's unclear at this moment to what extent this might undermine state and territory governments' own local procurement arrangements. The Commonwealth's procurement budget was worth over $69 billion last year, yet, as I stated before, our trading relationship with the UK is worth $30 billion. We need to think about the disparity more substantially when we think about procurement.

I note Australia will maintain existing safeguards as outlined in the WTO agreement, including the ability to preference small and medium enterprises, protect national treasures and provide advancement and welfare for First Nations Australians. But will liberalising our procurement with the UK provide a net gain, and is this truly in Australia's national interest? It will be up to the government to assure Labor and the Australian public that they have done enough in this regard. These are questions they will continue to ask, as will of course the Joint Standing Committee on Treaties. I note that the treaties committee requires 20 joint sitting days to consider treaties. We have 3.5 of those days left in this parliament, so it will undoubtedly be a task for the 47th parliament.

This agreement includes the movement of people and mutual recognition of qualifications. It is in large part a migration agreement. Labor has expressed concerns about the unwarranted waiving of labour market testing in relation to international recruitment. This FTA not only waives labour market testing; it allows unlimited numbers of temporary workers to come in from the United Kingdom. I note that these provisions are not contained in the principal text of the agreement but inside letters that can be cancelled at any time by any party. It doesn't feel like much of a commitment. The prolific use of side letters in this agreement simply demonstrates the undue haste with which this FTA has been pursued by this government.

The agreement establishes a professional services working group to facilitate effective implementation and administration of systems for recognition of other professional qualifications. The Australian government must be clear as to exactly what other professions will be included. Labor will not support conditions that seek to water down Australian standards or undercut Australian wages. While Australia depends upon a robust international intellectual property system, Labor is concerned that seemingly innocuous IP provisions in this agreement could undermine the PBS and Medicare, particularly in relation to generic-brand pharmaceuticals, although I note the minister's comments in relation to this earlier. These concerns need to be addressed as a matter of urgency, and no doubt the treaties committee will look to that.

Finally, Australian wine exporters have been in contact with me quite furiously and regularly regarding the function and utility of this agreement, given the proposed amendments to the UK's alcohol duty system announced by the Johnson government in October. More than one-third of Australia's wine exports are sold to the UK, making it now Australia's No. 1 wine export market following the loss of our trade into China. In May 2021 the International Wine and Spirits Record estimated the value of Australian wine sold in the UK in the past year to be 2 billion pounds, the equivalent of A$3.8 billion. But exporters are concerned that the UK's proposed duty changes will create a system that is simply unworkable for them. That's because the proposed duties significantly favour some countries over others.

Currently, any alcoholic beverages, including wine, are taxed based on the concentration of alcohol by volume, which is known as the ABV. Under the new regime, wine and sparkling wine between 8.5 per cent ABV and 22 per cent ABV would be taxed at 25.88 pounds per litre of pure alcohol. Wine Australia claims this would result in a significant increase in the duties payable on still wine above 11.5 per cent ABV. We know that 97 per cent of still wine exported from Australia has an ABV of more than 11.5 per cent. In fact, the average alcohol concentration of Australian wines exported to the UK in the last year was 13.2 per cent.

Many Australian viticultural areas typically produce wine grapes that ripen at a higher sugar level than other countries, particularly those throughout Europe. More sun and less water mean fruit with a more intense flavour. It's great for producing our amazing Australian wines, but as a result Australian wines are on average higher in alcohol than the weaker, less sun unexposed wine products of Europe. On top of this, the alcohol content is widely influenced by the seasonal conditions. Under the proposed duty regime, the duty rate in one vintage year is likely to vary from the next, meaning a logistical nightmare for exporters in terms of tax rates and labelling requirements. If implemented, these duty changes would mean an estimated debilitating 11 per cent tax increase on Australian wine exports to the UK.

I'm sure these proposals—they're internal proposals of the UK government and of course we don't interfere in the work of other governments—of the UK Conservative government are not intended to be protectionist, but they will operate to significantly disadvantage Australian wine producers and will completely wipe out any gains that have been made for red wine producers in this UK-Australia free trade agreement. Red wine producers across this country that export to the UK or seek to export to the UK are quite rightly asking: what is the point of this free trade agreement for our industry?

Stakeholders have proposed various changes to the incoming regime, and I implore the minister and his government to consult with these crucial exporters to seek a solution to the problem that is coming their way. Given the hits Australian wine exporters have already faced with smoke taint from bushfires, tariffs and trade sanctions from China and increased shipping rates due to the global shipping crunch, they simply do not need this. They should not be left out in the cold. The Morrison government has often made a show of its bromance with Boris Johnson's government, and I call on the minister and I call on the Prime Minister to leverage this to ensure that our vital wine industry is supported and that the UK-Australia FTA is the best possible agreement for every business across this country.

Labor knows and understands that trade diversification is key to the future prosperity of this country, but we do need to diversify the products we sell and not just the markets we sell them to. The Harvard Atlas of Economic Complexity recognised recently that Australia's relative economic complexity is in decline. We are now ranked No. 86 in the world, between Paraguay and Uzbekistan. This government doesn't seem to have any plan past the pomp and ceremony of signing up to agreements, but we need to do the hard work to ensure that these deals are good for Australian exporters and Australian jobs, and that they seek to ensure that we make more things here so that we have more things to export that are more complex, that cost more and that therefore increase our export earnings.

The Morrison government prove time and time again that they are all about the photo op and not about the follow-up. Labor is the party of free, fair and open trade. It was Labor that opened the doors to open trade with other nations. We welcome reducing tariffs on Australian goods and are comforted that the Australia-UK FTA does not include ISDS provisions. I doubt whether this would be the kind of agreement that Labor would have negotiated and concluded with our British counterparts were we in government. We look forward to this free trade agreement going forward for the consideration of the treaties committee, and I guess we will do something similar in the next parliament and again refer it to that committee as the inquiry will naturally expire when this parliament terminates.

Labor has an open view on this agreement. We'll study it carefully. We'll ask questions, as well we should. We will continue to work with the minister's office. I accept that the duties issue with the UK is a very complex and difficult problem, and I can only imagine the red wine producers of this country tearing their hair out at all the adversity they're facing. This feels like a nasty blow at the end of what was a hopeful road to the UK-Australia FTA. Again, I look forward to the Treaties Committee considering this deeply, and I thank the minister for his efforts.