Significant developments in the Australian free-trade agenda

A version of this article was first published by The DCN in May 2022.

Customs & Trade law expert Andrew Hudson provides a summary of recent and still-under-negotiation trade pacts and analyses their significance.

As Australia moves towards a federal election on 21 May 2022, the federal government and its agencies have moved to act in accordance with its caretaker conventions.

While allowing for the normal business of government to be conducted, these conventions place some restrictions on that business. However, that does not preclude the busy negotiators from the Department of Foreign Affairs and Trade (DFAT) from advancing our national interests with a variety of new and proposed trade agreements, whether recently completed or still being negotiated.

For these purposes, I thought it was worth summarising progress with those trade agreements that are significant to industry, whether they are known as free-trade agreements or economic partnership agreements or have other titles.

The work on trade liberalisation by DFAT and other agencies also represents an important counterpoint to the challenges created by supply chain blockages and sanctions, and other trade controls associated with Russia’s war with Ukraine.

Regional Comprehensive Economic Partnership

As referred to in our previous commentaries and continuing professional development sessions, the Regional Comprehensive Economic Partnership (RCEP) came into effect for Australia on 1 January 2022. Other countries have since completed their implementation procedures and become active parties to the RCEP, most recently with RCEP coming into force on 18 March 2022 for Malaysia. This means that RCEP has yet to enter into force for Indonesia, Myanmar or the Philippines.

Comprehensive Progressive Trans-Pacific Partnership

Although the Comprehensive Progressive Trans-Pacific Partnership (CPTPP) has entered into force for several parties (including Australia), ratification by Brunei, China and Malaysia has yet to take place. For those countries, the CPTPP will enter into force 60 days after they complete their ratification processes. As at the time of writing, several countries (the United Kingdom (UK), China and Taiwan) have expressed their intention to accede to the CPTPP. Of these countries, the UK is the most advanced, with the CTPP Commission agreeing to formally commence accession negotiations with the UK on 2 June 2021. DFAT is now inviting submissions from interested parties on the impacts of the UK acceding to the CPTPP.

Australia-United Kingdom Free Trade Agreement

We recently reported on the signing of the Australia-United Kingdom Free Trade Agreement (A-UKFTA) and have included commentary on some of its impacts for industry in CPD sessions.

Australia is now progressing to the ratification process, which includes submitting the agreement for scrutiny before the Joint Standing Committee on Treaties (JSCOT) in our Federal Parliament. However, the agreement did not complete the required review by JSCOT before the dissolution of Federal Parliament ahead of our next federal election on 21 May. Accordingly, the consideration will need to start again before the newly constituted JSCOT following the election. The A-UKFTA has bipartisan support, so hopefully, JSCOT would recommend taking action to proceed. That would then lead to passing legislation required to implement the A-UKFTA, mainly with amendments to a variety of customs legislation.

At the same time as Australia takes steps to ratify the A-UKFTA, the UK is proceeding along its own pathway for ratification of the agreement. Most recently, the UK Trade and Agriculture Commission (TAC), established under the UK’s Agriculture Act 2020, was tasked by the UK’s Department for International Trade to provide advice as to certain aspects in the A-UKFTA relating to trade in agricultural services and whether they would require any changes to the UK’s domestic statutory protections in relation to animal or plant life or health, animal welfare and the environment, whether the A-UKFTA would affect the ability of the UK government to set such statutory provisions in the future or whether they would undermine such current protections.

The report by the TAC (dated 31 March 2022) was then released to the UK Parliament dated “April 2022”. The report examines in some detail whether there would be significant increases in imports of Australian products and whether differences in treatment of agricultural products between Australia and the UK would be in breach of current UK protections and would preclude the UK from taking action against imports it believed to be against UK protections or UK “public morals” (for example, in terms of differences in the use of feedlots, pain relief standards on animals subject to procedures and the types of procedures allowed). For the most part, the TAC Report considered that the UK “public morals” provisions of the A-UKFTA and World Trade Organisation agreements would not preclude the UK from taking actions it believed to be required (so long as they were implemented equally against imports of all countries) or to raise issues with Australia pursuant to the terms of the A-UKFTA for discussion and resolution.

Australia-India Economic Cooperation and Trade Agreement

Our commentary here provided some details on positive outcomes from the Australia-India Economic Cooperation and Trade Agreement (AI-ECTA). However, that agreement may take some time to be ratified and implemented in both countries. In Australia, it will also need to go before JSCOT and then, subject to a positive recommendation from JSCOT, domestic enabling legislation would be required to be passed by the Federal Parliament (again including amending customs regulations).

The other significance of the AI-ECTA is that it will provide a timeframe to start negotiations on a more comprehensive agreement, being the Australia-India Economic Co-operation Agreement (AICEPA), which is hoped to be completed by the end of 2022 for later ratification and implementation. Those negotiations could be conducted despite the current caretaker conventions.

Australia-European Union Free Trade Agreement

Australia and the European Union (EU) commenced Free Trade Agreement (FTA) negotiations on 18 June 2018, and it is probably reasonable to say that there is no sign that negotiations are close to completion. The twelfth negotiating round took place between 7 and 18 February 2022, and there seem to be several issues still to be resolved. Among such issues are the request from the EU to preserve many “geographical indicators” for the exclusive use of EU producers and exporters and the possibility of a “carbon tax” being imposed on goods from countries which the EU do not believe have appropriate carbon policies in place (such as Australia).

Australia-United Arab Emirates Comprehensive Economic Partnership Agreement

On 17 March 2022, trade ministers from Australia and the United Arab Emirates (UAE) released a joint statement announcing the intention of the parties to pursue a Comprehensive Economic Partnership Agreement (CEPA). This would be Australia’s first FTA with a Middle Eastern country and would operate as a starting point to the broader-based FTA with the Gulf Co-operation Council (GCC), which is referred to below. Australia and the UAE had previously started work on an FTA with the UAE in March 2005; however, those negotiations were subsequently taken over in negotiations for the FTA with the GCC, which negotiations were paused in June 2009. DFAT is currently seeking submissions from interested parties whose business interests would be affected or improved by the CEPA.

Australia-Gulf Co-operation Council Free Trade Agreement

As stated above, Australia and the members of the Australia-Gulf Co-operation Council (GCC) (Bahrain, Oman, Qatar, Saudi Arabia and the UAE) had commenced negotiations on a proposed FTA in July 2007, but those negotiations were paused in June 2009. The pause in negotiations was initially caused by an internal review by the GCC of its approach to trade agreements. However, at the GCC Leaders Summit in 2021, the GCC representatives expressed their interest in potentially resuming negotiations (see here). While negotiations have not yet commenced, DFAT is seeking comments from stakeholders with an interest in the agreement, including details of any current impediments to trade with the GCC, which could be addressed in the FTA with the GCC. DFAT has advised that comments on a potential agreement with the GCC can be included in comments on the CEPA with the UAE.

Summary

In my experience, DFAT has always pursued the Australian FTA agenda, including extensive engagement with stakeholders at all stages before or after those FTAs have been concluded.
I am always eager to be involved in that engagement before these agreements are concluded so that specific issues (such as rules of origin and customs procedures for claims of preferential status) can be raised with DFAT.

Many clients also wish to be involved to pursue their own interests and, in my experience, it is much better to try and have issues included in an FTA before it is concluded as opposed to after the text of the FTA is agreed. Even so, there are still ongoing working committees established by the FTAs which provide opportunities for specific concerns to be raised by DFAT in those committees.

Whatever approach is adopted, it is in the interests of every part of industry to pay close attention to FTAs before they commence to ensure that the full range of benefits can be secured as early as possible after the FTA commences.

For advice on all aspects of Australian and international trade and customs obligations, please contact our Customs & Trade team.