A UK/Australia trade deal – the next step towards a post-EU future

Published on
5 min read

The UK and Australia have reached agreement in principle on a free trade agreement, recognising the strong existing relationship between the two countries. While the details remain to be fleshed out, the move has been heralded as an important next step for the UK. It marks the first trade agreement that the UK has reached separately from the existing EU suite. It is also seen as an important staging post towards membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

A detailed outline available on the UK Government’s website explains the elements of the agreement:

Trade in goods

The outline agreement will see the parties move to eliminate customs duties, address non-tariff barriers to trade and establish a consultative committee. Rules of Origin systems will be implemented, with efficient processes to prove the status of goods. The UK automotive sector will benefit from product specific rules, expected to include a Regional Value Content of 25% for cars.

The planned liberalisation of trade in goods has raised concerns for many in the UK’s agrifood sector. Farming representatives have expressed fears that the industry operating within UK standards and space constraints will not be able to compete on price. However, time periods for adjustment with reducing tariffs over periods of up to 15 years are built in to address these concerns. Tariffs on beef and sheep meat will be eliminated after a decade, and sugar tariffs will be cut over eight years. Dairy product tariffs will be removed over five years, with duty-free quotas being introduced immediately.

The tricky issues of animal welfare and antimicrobial resistance are earmarked for specific cooperation, although the agreement will affirm the rights of Australia and the UK to maintain their own animal welfare policies.

Trade in services

A broad and liberal approach to trade in services is mapped out. The outline agreement envisages a combination of high standards and full market access, with only limited exceptions. Most-favoured nation rules will ensure that the best access offered to other countries will be replicated between the UK and Australia. The parties commit to ensuring that their competent authorities exhibit impartiality, transparency and responsiveness to eliminate unnecessary barriers to trade. Neither party will be permitted to discriminate in favour of home suppliers.

Professional services provisions will enable working in the other party’s territory with measures to facilitate the recognition of qualifications.

Financial services will benefit from extensive mutual commitments. The agreement will address regulatory cooperation specifically, with a view to working together on areas like mutual compatibility and emerging issues.

A chapter on telecoms will address access to markets, networks and services on a non-discriminatory basis. Regulatory independence and impartiality will be required.

Mobility

New rules on travel for the purposes of business travel and employment will see nationals of each country gaining greater access to work opportunities in the other. Greater mobility for younger people will be allowed, with those of 35 or under able to spend up to three years employed in the other country without the current restrictions on the kinds of work they can do.

Investment

Fair treatment and protections for investors will sit alongside rights to regulate in the public interest. Other measures will address barriers and bureaucracy in areas like headquarters localisation and mandatory levels of R&D.

Digital trade

The commitments given in relation to digital trade are described as “ambitious”, with the intention of enabling cross-border data flows and avoiding unjustified data location obligations. At the same time, world-leading standards for the protection of personal data are promised, along with online consumer protections. This section has raised concerns in light of the EU’s recent adequacy decision for EU-UK data flows. This includes strong oversight measures, and could be threatened by changes in regulatory approach and onward data flows.

Intellectual property

Commitments to adequate, effective and balanced protection and enforcement of IP rights will presumably coincide in large part with existing international treaty provisions. These will be bolstered with additional points such as plans for a geographic indications scheme in Australia, and for Australia to sign up to the Hague Agreement on Industrial Designs. Medicines pricing is specifically addressed, presumably with a view to protecting the ability of the NHS to control budgets.

Government procurement and competition law

The existing WTO GPA baselines will be extended to promote supplier access to procurement opportunities in each other’s markets.

Commitments to maintain and enforce competition law, and protect consumers are envisaged, without seeking alignment of national laws.

Business practices and regulation

The agreement will require regulatory protections and standards in the following areas:

  • labour and modern slavery
  • the environment
  • small and medium enterprises
  • good regulatory practices
  • trade and gender equality
  • development
  • cross-cutting (to address issues like national security, public health systems and the Northern Ireland Protocol)
  • transparency and anti-corruption
  • dispute resolution
  • innovation, with plans for a joint forum to address the regulation and commercialisation of new technologies

Both the UK and Australia present the outline deal as an important win. The UK Government summarises some of the expected benefits in a "Ten key benefits" document. Among these is an expectation that the deal “Paves the way to CPTPP, which will further open up 11 Pacific markets worth £9 trillion GDP”. We can see this foreshadowed in the outline agreement, with areas like labour rights and environmental protection explicitly referencing provisions in CPTPP. A paper on the UK’s strategic approach to acceding to the CPTPP is available here. While signing up to CPTPP is an attractive prospect, there are likely to be points of contention, such as continuing membership of the European Patents Convention and data privacy standards.

Further information

Mills & Reeve has developed an especially close working relationship with like-minded law firm Hall & Wilcox in Australia.  Working together we are able to provide a wide array of legal advice and guidance in connection with UK/Australian matters.  For further information please contact John Grundy, who heads Mills & Reeve’s Australasian desk, at john.grundy@mills-reeve.com.

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