Australia Free Trade Agreement

Lord Bilimoria Excerpts

Monday 11th July 2022 Lords Chamber

[Lord Bilimoria (CB)]

My Lords, I paid full credit to the Department for International Trade for having rolled over more than 66 EU bilateral free trade agreements in time for the transitional period. As president of the CBI at the time, I was proud to play a role in making that, including the Canada deal, happen. The UK-Australia free trade agreement is the first the UK has negotiated from scratch since leaving the EU and was signed on 16 December here in the UK and, because of the time difference, on 17 December in Australia.

It will always remain to be seen how trade flows will be affected once implementation of an agreement takes place. I am sure the Government will agree that is it is one thing signing a free trade agreement, it is another ensuring that businesses in both countries make full use of them and are aware of all the provisions and improvements in the FTA. What plans do the Government have to communicate those benefits to businesses here in the UK, in particular? Organisations such as the CBI will have a major role to play in that.

I congratulate the noble Baroness, Lady Hayter, and the International Agreements Committee on its report, Scrutiny of International Agreements: UK-Australia Free Trade Agreement. It clearly states:

“Imports from Australia will lead to greater consumer choice, which is welcome. Consumers could also benefit from lower prices for imported goods.”


The Secretary of State, Anne-Marie Trevelyan, has described the agreement as

“historic … setting new global standards in digital and services and creating new work and travel opportunities for Brits and Aussies”.

Of course, it will help create new opportunities for businesses in both the UK and Australia.

For example, it gives guaranteed access to bid for an additional £10 billion-worth of Australian public sector contracts and allows young people—and “young” has been extended from 18 to 35—to work for three years unrestricted in each other’s countries. The New Zealand free trade agreement now also has this provision, which I am delighted to hear. For the first time, UK service suppliers, including architects, researchers, accountants, lawyers and scientists, will have access to visas to work in Australia without being subject to Australia’s changing skilled occupation list. This is more than Australia has ever offered to any other country in a free trade agreement. The big thing about this is that it removes all tariffs, making it cheaper to sell our products, including Scotch whisky, to Australia, and for Australian wines to come over here. So that is a big aspect, and I do not think people appreciate that the UK has traditionally been the second-largest services exporter in the world, so it is very important for us.

This is, in my view, the most comprehensive free trade agreement in the world. It covers many different areas, which I shall go into, including 32 chapters, from trade in goods to trade remedies, rules of origin, trade facilitation, customs procedures, financial services, investment, the environment, trade and gender equality, dispute settlements and an impact assessment—and it has the first-ever dedicated innovation chapter in any free trade agreement in the world, which is fantastic news.

The Government’s impact assessment estimates that this agreement could increase trade between the UK and Australia by more than 50%, representing

“around £10.4 billion in the long run”.

That is fantastic. Of course, this increase

“is driven by reductions in regulatory restrictions to goods and services trade, tariff reductions, income and supply chain effects as the UK economy grows.”

Other speakers have mentioned that the impact on our GDP is relatively modest, at 0.08%.

On the restrictions and concerns around agriculture, there is a 15-year phasing-in period for beef and sheep. Of course, as Anne-Marie Trevelyan said, this is

“only a small fraction of our overall beef imports. Just 0.1% of all Australian beef exports went to the UK last year. Also, it is relatively unlikely that large volumes of beef and sheep will be diverted to the UK from lucrative markets in Asia, which are much closer to Australia”.—[Official Report, Commons, 5/1/22; col. 66.]

It is important that we debate this agreement because it is a forerunner to future agreements. A New Zealand one has just been agreed, an India free trade agreement is being negotiated and other agreements are now being uprated. We are also starting to upgrade some of the 66 bilateral agreements that were rolled over from the EU, such as the one with Mexico, to make them bespoke to us. The CPTPP was also mentioned; I will come to it later.

When it comes to digital and data provisions, as the Lords International Agreements Committee asked, how will the Government

“ensure that UK citizens’ personal data exchanged under the agreement will be protected and offer commitments that digital trade provisions in future trade agreements will not put at risk the UK’s data adequacy decision with the EU”?

Can the Minister address that? The committee’s report also referred to the Trade and Agriculture Commission’s

“finding that the FTA is unlikely to lead to substantive increases of imports into the UK of goods produced to lower standards, including animal welfare standards.”

This will be a concern for many people. The committee recommended:

“The Government should continue to monitor the levels of”


items; for example,

“pesticide residue on imported goods from Australia”.

Do the Government agree?

There is a chapter on small and medium-sized enterprises. The agreement will be advantageous here, but how can we encourage SMEs to export more? At the moment, only 10% of our companies export; of those, only 14% are super-exporters that export more than 10 different products to 10 different countries. Compare that with a country such as Germany, where it is 40%. The export strategy is absolutely vital, and we need to do much more to promote exports.

Going back to my role with the CBI, I personally played a major role in helping this particular free trade agreement at various stages, including helping it get over the line. We worked with not only the DIT on our side but Dan Tehan, the Australian Trade Minister who was the vice-president of the CPTPP accession committee at that time, and, of course, His Excellency George Brandis, the then Australian high commissioner. We have similarly been working with the New Zealand Trade Minister and the New Zealand high commissioner, Bede Corry. This way of working—getting business organisations such as the CBI to help the Government get these deals over the line and bringing stakeholders face to face with both sides—has worked extremely well; I would recommend it for all future negotiations, including the continuing India negotiation.

The noble Baroness, Lady Liddell, expressed some scepticism about the CPTPP. I think that it will be a fantastic thing for Britain. It covers 13% of the world economy; if you include the UK, it is 16%. It gives the UK access to the fast-growing Indo-Pacific region. We will be with allies of ours. We will have huge benefits, including modern digital rules and the elimination of tariffs. Of course, as the impact assessment says, the Australian FTA is a big

“stepping stone to our accession to CPTPP”;

I imagine that the Government would agree with that.

It will allow us to eliminate tariffs on UK exports more quickly—for example, whisky can come down from 165% duty to 0% in Malaysia, and car duty can be reduced to 0% in Canada by 2022—if we complete these negotiations. These are huge benefits to us. We also have the rules of origin, allowing content from all CPTPP countries to be cumulated, so that if goods have at least 70% CPTPP content, they qualify for preferential tariffs. It is great that 70% can come from any combination of CPTPP countries.

What stage are we at now with the CPTPP agreement? Will we gain accession by the end of the year, which was the target? We already have, if we include New Zealand, bilateral agreements with nine of the 11 countries—leaving only Malaysia and Brunei—equating to £110 billion worth of trade with the UK. That is higher than China, which has just under £100 billion. This is one of the largest free trade agreements in the world and key to the success of global Britain. Its members are the fastest-growing economies in the world, with expanding middle classes, an appetite for British goods, products and services, and a respect for brand Britain. For the UK to remain competitive, it must position itself as a trading partner of choice in that region.

On the environmental provisions, the FTA refers to the Paris Agreement but has been criticised for the lack of explicit reference to limiting the global average temperature increase to 1.5 degrees.

Can the Minister provide some clarity on the interaction between the Northern Ireland protocol and the FTA? It appears that exports from Northern Ireland to Australia will benefit from the FTA but that there are complications with goods entering Northern Ireland, including from the UK. This is further complicated by the protocol. Please, will the Government sort out the Northern Ireland protocol? Let us deal with the practicalities. I have visited CBI members on the ground in Northern Ireland. They just want to get on with it and get this protocol resolved using a practical mindset, because once we resolve the protocol, we can work on the biggest trade agreement that we have, which is with our neighbour on our doorstep. Some 45% of our trade is with the European Union, and the trade and co-operation agreement needs to be upgraded in a huge way, which we cannot do unless we sort out the protocol. Similarly, the Horizon project, which was so valuable for research between European universities and British universities, is under threat of being lost unless we sort out the protocol. There is an urgency over there.

The United Kingdom published our first integrated review on 16 March 2021. It talked about a tilt to the Indo-Pacific. Policy Exchange, of which I am proud to be a trustee, was ahead of the game. It produced a report, A Very British Tilt: Towards a New UK Strategy in the Indo-Pacific Region, in November 2020. It is so sad that the foreword of that report was written by the late Shinzo Abe.

Professional services and the recognition of qualifications in the FTA are hugely important, providing a pathway towards a mutual recognition of professional qualifications, which, again, would be very useful for our services exports. On legal services, it provides an agreement allowing UK and Australian lawyers to advise clients. If only we could have this in the India free trade agreement as well. Temporary entry for UK businesspersons is very useful for us, as is youth mobility, which I referred to. The agreement also includes provision on market excess for investors. Digital trade is covered, which is fantastic, as well as digital facilitation, data governance and data protection, technologies in data innovation, and consumer protection. It also has a very strong intellectual property chapter—again, I advise that we have the same in the India deal—and covers procurement, and the areas of beef and sheepmeat that I touched on earlier.

That said, the Government’s impact assessment shows a negative effect of the FTA on agriculture, forestry and fishing, and the semi-processed food sector. Do the Government agree? This is why the FTA is generally regarded with concern by the farming sector. The NFU warned that the agreement could have a significant impact on UK farming, with livestock and sugar particularly affected because of the lower cost of production in Australia compared with the United Kingdom.

Security and trade go hand in hand. Australia is a member of the Quad, along with Japan, the United States and India. I have suggested that the UK should join the Quad, making it Quad Plus, thereby encircling the world. We have AUKUS as well.

The speed of this deal was fantastic—one year, or one and a half years by the time it was signed. India signed deals with the UAE and Australia in under 90 days, but they were much lighter in content. It is very important that we do this thoroughly, and we have done that here.

Finally, trade deals such as this are all very well, but we must continue to be a magnet for inward investment as a country. We cannot do that if we have the highest tax burden in 70 years. That also comes into play. All in all, I am all for the deal and I congratulate the Government on securing it.