UK-Australia free trade agreement welcomed, but a published trade policy is needed

As the first trade deal negotiated from scratch following the UK’s departure from the EU, the UK-Australia future trade agreement (FTA) provides an insight into the UK Government’s vision for trade after Brexit.

By Joanne Knox
Thursday, 23rd June 2022, 10:28 am

However, the House of Lords International Agreements Committee has said it is “regrettable” that it cannot be placed in the context of a published trade policy and understood in relation to other policy priorities, for example on climate.

In its report on the agreement, published today, the committee welcomes it, in particular, the provisions facilitating services trade, including those in relation to legal and financial services, mobility, digital trade, consumer protection and support for SMEs.

It does identify, however, some risks flowing from the agreement that will need to be carefully monitored.

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While the report notes that the government was right to secure a deal with Australia ahead of market access negotiations with the trans-Pacific trade bloc (CPTPP), to which Australia is a party, prioritising the speed of the negotiations may have come at the expense of using the UK’s leverage to negotiate better outcomes — for example, on Geographical Indications (GIs) and the environment.

The agreement substantially liberalises access to the UK market for Australian agricultural products, and the committee heard concerns from farming organisations.

It remains to be seen whether the safeguards in the FTA are robust enough to ensure fair competition and effectively respond to potential surges in Australian agricultural imports.

While the committee concludes that import volumes would likely be tempered by geographical distance and Australia’s focus on Asia as its main export market, it also emphasises that the unconditional approach to removing tariffs could set a precedent for future negotiations.

The report, therefore, concludes that the government should take full account of the potential cumulative effects of this agreement and other FTAs on UK agriculture as a whole, with impact assessments providing more detailed information on the impacts on the devolved administrations.

The report raises concerns over the lack of ambition in the environmental chapter, and, further to the election of a new government in Australia, has urged the government to review commitments made as soon as possible.

The committee notes that some questions also remain regarding the protection of personal data, given the differences between the UK and Australia’s data protection regimes and has called on the government to explain how it will ensure that UK citizens’ personal data, exchanged under the agreement, will be protected, and offer commitments that digital trade provisions in new future trade agreements will not risk losing the UK’s data adequacy decision with the EU.

Predicting the precise impact of trade agreement is “notoriously difficult”, and the report concludes by identifying several areas that should be subject to monitoring after implementation.

These include: whether businesses are making the most of the preferences in the agreement, the effectiveness of the agricultural safeguards, the impact of Australia’s different production methods, the levels of pesticide residue on imported goods from Australia, and the deal’s impact on the environment and climate change.

The report is expected to be debated in the House of Lords in July.

Baroness Hayter, chair of the International Agreements Committee, said: “The UK-Australia free trade agreement underlines the need for the government to publish a comprehensive trade policy, before it signs any other major trade agreement.

“This will enable trade policy to be understood in relation to other policy priorities and enable us to assess the impacts and trade-offs of trade liberalisation and debate Negotiating Objectives in context, assisting Parliamentary scrutiny.

“While we welcome this agreement, particularly the services and trade chapters, and the liberal rules of origin, there are risks which can’t be quantified now and will need to be monitored on implementation.

“For example, the impact on UK agriculture and on the devolved nations.

“We remain concerned about the adequacy of the information shared with the devolved administrations regarding reserved matters and call on the Government to ensure that consultation with the devolved administrations and legislatures is comprehensive and timely, and that they are involved throughout the negotiations, including on reserved matters.

“Whilst there are elements of the Environment Chapter which we welcome, the government should take disappointment from UK stakeholders seriously.

“Given that we gave Australia generous agricultural market access, it is regrettable that the government did not press Australia for more ambitious commitments on climate change nor include any references to reducing Australia’s reliance on coal.

“However, in light of the new Australian Government’s more positive approach to tackling climate change, we have asked the government to pursue this through the joint committee.

“There is a risk that this agreement could set a precedent for the negotiations with countries, particularly with other large agricultural producers, such as the US, Canada, Mexico, Argentina and Brazil.

“That is why we are urging the government to set out a clear policy against which future negotiations can be measured,” Baroness Hayter concluded.