4th Report - Scrutiny of international agreements: UK-Australia free trade agreement

The government's response

What the committee recommended 53

1. 1
   In economic terms, the agreement is forecast to have a modest positive impact. Conclusion · paragraph 3
2. 2
   This agreement is, however, politically significant, providing an indication of the UK Government’s approach to... Conclusion · paragraph 4
3. 3
   The agreement also helps pave the way for the UK’s accession to CPTPP. Conclusion · paragraph 5
4. 4
   We welcome the provisions facilitating services trade, including those in relation to legal and financial... Conclusion · paragraph 19
5. 5
   The establishment of a Professional Services Working Group (PSWG) to facilitate discussions on the mutual... Conclusion · paragraph 20

See all 53 recommendations and conclusions

Sources

• 4th Report - Scrutiny of international agreements: UK-Australia free trade agreement ↗The committee's report, parliament.uk
• Government response to IAC report on UK-Australia trade agreement ↗The government's response, 5 September 2022, parliament.uk

Recommendations and conclusions 53

1. 1
   In economic terms, the agreement is forecast to have a modest positive impact. Conclusion · paragraph 3 Conclusion (the committee's words)

   In economic terms, the agreement is forecast to have a modest positive impact. The Government’s impact assessment anticipates a 0.08% increase to GDP by 2035—although increased collaboration and positive dynamic effects not captured by the modelling may unlock further benefits over time, particularly in services and digital trade.
2. 2
   This agreement is, however, politically significant, providing an indication of the UK Government’s approach to... Conclusion · paragraph 4 Conclusion (the committee's words)

   This agreement is, however, politically significant, providing an indication of the UK Government’s approach to trade after Brexit.
3. 3
   The agreement also helps pave the way for the UK’s accession to CPTPP. Conclusion · paragraph 5 Conclusion (the committee's words)

   The agreement also helps pave the way for the UK’s accession to CPTPP. As the then High Commissioner told us, Australia “would have been in a strange position to be championing the UK’s accession into the CPTPP if we had not been able to do an FTA with you ourselves”. The UK Government was also able to secure a commitment during the negotiations that Australia would not seek additional market access or faster tariff reduction through the CPTPP negotiations, thus providing a degree of certainty for those negotiations.
4. 4
   We welcome the provisions facilitating services trade, including those in relation to legal and financial... Conclusion · paragraph 19 Conclusion (the committee's words)

   We welcome the provisions facilitating services trade, including those in relation to legal and financial services, which represent a significant benefit to the UK. We highlight, in particular, the guarantees that UK lawyers will be able to practise the law of the other Party, other foreign law (to the extent qualified) and international law in Australia using their home qualification.
5. 5
   The establishment of a Professional Services Working Group (PSWG) to facilitate discussions on the mutual... Conclusion · paragraph 20 Conclusion (the committee's words)

   The establishment of a Professional Services Working Group (PSWG) to facilitate discussions on the mutual recognition of other professional qualifications is a positive step, though this is a framework and does not yet secure such mutual recognition.
6. 6
   The Government should continue to hold discussions with Australian counterparts and support UK regulators in... Recommendation · paragraph 21 Recommendation (the committee's words)

   The Government should continue to hold discussions with Australian counterparts and support UK regulators in securing mutual recognition. We ask the Government to clarify whether discussions will be needed with regulators at the sub-federal level in Australia; and, if so, what steps it is taking to engage with individual states.
7. 7
   We welcome the improvements in mobility arrangements, which can increase services trade. Conclusion · paragraph 26 Conclusion (the committee's words)

   We welcome the improvements in mobility arrangements, which can increase services trade. While it is difficult to quantify their impact at this stage, Australia’s removal of an economic needs tests and skilled occupation list for UK professionals should increase the movement of UK professionals and delivery of services in Australia.
8. 8
   We welcome the agreement’s provisions on digital trade. Recommendation · paragraph 33 Recommendation (the committee's words)

   We welcome the agreement’s provisions on digital trade. The ban on data localisation requirements should benefit many sectors, including financial services. The Government’s Impact Assessment did not quantify the potential impacts of the digital trade provisions. Given the importance of digital trade, we call on the Government to strengthen their assessments and ensure that it is included in Impact Assessments in future.
9. 9
   Some questions remain regarding the protection of personal data, given the differences between the UK... Conclusion · paragraph 34 Conclusion (the committee's words)

   Some questions remain regarding the protection of personal data, given the differences between the UK and Australia’s data protection regimes. We ask 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 FTAs will not risk losing the UK’s data adequacy decision with the EU.
10. 10
    We welcome the investment provisions in the agreement. Conclusion · paragraph 41 Conclusion (the committee's words)

    We welcome the investment provisions in the agreement.
11. 11
    However, Government policy towards investor-state dispute settlement (ISDS)—though not included in this agreement—remains unclear. Recommendation · paragraph 42 Recommendation (the committee's words)

    However, Government policy towards investor-state dispute settlement (ISDS)—though not included in this agreement—remains unclear. We call on the Government to clarify its policy towards ISDS, including its position on other mechanisms for investment protection. The absence of a clear policy begs the question whether the omission of ISDS in this agreement was sought by the Government, or whether it assented to an Australian request to exclude it.
12. 12
    It remains to be seen how UK agriculture will be impacted by the agreement with... Conclusion · paragraph 56 Conclusion (the committee's words)

    It remains to be seen how UK agriculture will be impacted by the agreement with Australia and whether the tariff rate quotas and safeguards will protect the interests of the UK agricultural sector, and that of the devolved nations in particular.
13. 13
    Individual UK producers may be adversely affected by increased agricultural imports from Australia. Conclusion · paragraph 57 Conclusion (the committee's words)

    Individual UK producers may be adversely affected by increased agricultural imports from Australia. We therefore welcome the Government’s assurances that it will be monitoring the usage of TRQs in real time through its licensing system and monitor the implementation of the agreement.
14. 14
    There is a risk that this agreement could set a precedent for the negotiations with... Conclusion · paragraph 58 Conclusion (the committee's words)

    There is a risk that this agreement could set a precedent for the negotiations with countries closer to the UK market, particularly with other large agricultural producers, such as the US, Canada, Mexico, Argentina and Brazil. The impacts of the UK-Australia agreement may therefore go well beyond this particular FTA.
15. 15
    The key question is the extent to which liberalisation in agricultural trade in the Australia... Conclusion · paragraph 59 Conclusion (the committee's words)

    The key question is the extent to which liberalisation in agricultural trade in the Australia agreement will be claimed as a precedent in future FTA negotiations. The Government regard each FTA in its own terms, but there will be expectations created for future negotiations.
16. 16
    We welcome the expert Trade and Agriculture Commission’s report on the agreement and note its... Conclusion · paragraph 70 Conclusion (the committee's words)

    We welcome the expert Trade and Agriculture Commission’s report on the agreement and note its 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.
17. 17
    However, the report also acknowledges that some goods produced to potentially lower standards will enter... Recommendation · paragraph 71 Recommendation (the committee's words)

    However, the report also acknowledges that some goods produced to potentially lower standards will enter the UK, including goods produced using pesticides banned in the UK and, in particular, beef that has been raised in feedlots. It is reasonable to assume that Australian producers will enjoy a production cost advantage over UK farmers in those cases. The Government should continue to monitor the levels of pesticide residue on imported goods from Australia and ensure that they remain at safe levels.
18. 18
    It is clear that the Government has prioritised tariff removal over demanding certain conditions on... Recommendation · paragraph 72 Recommendation (the committee's words)

    It is clear that the Government has prioritised tariff removal over demanding certain conditions on production methods and animal welfare to be met. We call on the Government to set out its rationale for prioritising this approach over available alternatives and to consider further the circumstances under which it may ask for such conditionality.
19. 19
    The TAC has concluded that the UK’s right to regulate will be unaffected in the... Conclusion · paragraph 77 Conclusion (the committee's words)

    The TAC has concluded that the UK’s right to regulate will be unaffected in the short term, but could be constrained through decisions taken by the Joint Committee. We welcome the Government’s confirmation that any equivalence decisions or other significant amendments arising from Joint Committee discussions would be subject to formal scrutiny procedures under CRAG.
20. 20
    However, it is unclear what amendments would be considered “significant” and, consequently, be subject to... Conclusion · paragraph 78 Conclusion (the committee's words)

    However, it is unclear what amendments would be considered “significant” and, consequently, be subject to CRAG.
21. 21
    Where amendments fall short of the requirement to lay them for parliamentary scrutiny under CRAG—and... Recommendation · paragraph 79 Recommendation (the committee's words)

    Where amendments fall short of the requirement to lay them for parliamentary scrutiny under CRAG—and particularly where the change does not require domestic legislation—there will be a scrutiny gap. We call on the Government to ensure that significant amendments to this agreement that may not engage CRAG are still notified to us.
22. 22
    We welcome the joint FSA/FSS advice which found that the agreement maintains UK levels of... Conclusion · paragraph 86 Conclusion (the committee's words)

    We welcome the joint FSA/FSS advice which found that the agreement maintains UK levels of statutory protection for human health in relation to food imports.
23. 23
    While the FSA/FSS have provided advice on food standards, we regret the DIT has not... Recommendation · paragraph 87 Recommendation (the committee's words)

    While the FSA/FSS have provided advice on food standards, we regret the DIT has not commissioned advice on the impact of the agreement on broader human health issues. We call on the Government to explain why it has not commissioned such advice.
24. 24
    Although Australia represents a relatively small market for UK manufacturing exports, the reduction in tariffs,... Conclusion · paragraph 96 Conclusion (the committee's words)

    Although Australia represents a relatively small market for UK manufacturing exports, the reduction in tariffs, customs procedures and rules of origin in the agreement are likely to be beneficial.
25. 25
    In particular, we welcome the agreement’s liberal rules of origin. Recommendation · paragraph 97 Recommendation (the committee's words)

    In particular, we welcome the agreement’s liberal rules of origin. We call on the Government to ensure that businesses have support to take advantage of these.
26. 26
    While the agreement reduces some technical barriers to trade, more needs to be done. Recommendation · paragraph 98 Recommendation (the committee's words)

    While the agreement reduces some technical barriers to trade, more needs to be done. Given the significant differences in the Parties’ regulatory regimes, the agreement should be used as an opportunity to achieve this. We call on the Government to set out its plans for further reducing technical barriers to trade.
27. 27
    The UK Government has an obligation to ensure that Northern Ireland is able to benefit... Conclusion · paragraph 102 Conclusion (the committee's words)

    The UK Government has an obligation to ensure that Northern Ireland is able to benefit from any new trade agreements and is not disadvantaged compared to the rest of the UK. The publication of the Northern Ireland Protocol Bill will undoubtedly lead to further debate on this issue.
28. 28
    Although there is continued uncertainty over the Protocol, the Government will need to ensure that... Conclusion · paragraph 103 Conclusion (the committee's words)

    Although there is continued uncertainty over the Protocol, the Government will need to ensure that consumers and businesses in Northern Ireland can fully benefit from this (and any future) trade agreements.
29. 29
    We also call on the Government to ensure that the explanatory materials on future trade... Conclusion · paragraph 104 Conclusion (the committee's words)

    We also call on the Government to ensure that the explanatory materials on future trade agreements routinely cover how trade between Northern Ireland and the other Party will be impacted by the Protocol.
30. 30
    There are elements of the Environment Chapter which we welcome. Conclusion · paragraph 114 Conclusion (the committee's words)

    There are elements of the Environment Chapter which we welcome. These include commitments on environmental protection, including controlling ozone-depleting substances, ship pollution and the regulation of marine wild capture fisheries. We also welcome that the provisions in the climate and environment chapter are subject to dispute resolution.
31. 31
    However, the disappointment from UK stakeholders about the Environment Chapter is something that the Government... Recommendation · paragraph 115 Recommendation (the committee's words)

    However, the disappointment from UK stakeholders about the Environment Chapter is something that the Government should take seriously. Considering that the UK granted Australia generous agricultural market access, it is regrettable that the Government did not press Australia for more ambitious commitments on climate change and that the temperature goals which are fundamental to the Paris Agreement were not explicitly referenced in the FTA. We call on the Government to establish a firm baseline for future agreements which goes beyond the Australia text.
32. 32
    We call on the Government to review the provisions related to environment and climate issues... Recommendation · paragraph 116 Recommendation (the committee's words)

    We call on the Government to review the provisions related to environment and climate issues and to monitor their implementation. The change of government in Australia and the engagement of the electorate on environmental issues gives the Government an opportunity to revisit the Environment Chapter of the agreement. We hope that this will be taken up in the Joint Committee and ask the Government to keep us informed of developments.
33. 33
    Given Australia’s position on coal, it is regrettable that the agreement did not include any... Conclusion · paragraph 117 Conclusion (the committee's words)

    Given Australia’s position on coal, it is regrettable that the agreement did not include any references to reducing or reviewing Australia’s reliance on coal. This contrasts with the trade agreement the UK signed with New Zealand.
34. 34
    The impact assessment states that the agreement should not significantly change the greenhouse gas (GHG)... Conclusion · paragraph 118 Conclusion (the committee's words)

    The impact assessment states that the agreement should not significantly change the greenhouse gas (GHG) emissions within UK-based production, but some areas, such as transport-related emissions, have been left out of the calculations, and the potential for increases in carbon leakage is not discussed in detail.
35. 35
    The Government’s future impact assessments should cover in greater detail transport-related emissions, the potential for... Conclusion · paragraph 119 Conclusion (the committee's words)

    The Government’s future impact assessments should cover in greater detail transport-related emissions, the potential for increases in carbon leakage, impacts on deforestation and biodiversity. Trade sustainability impact assessments produced for the European Parliament during trade negotiations are more detailed in this regard.
36. 36
    In the light of our net zero commitments, future FTAs should seek to achieve a... Conclusion · paragraph 120 Conclusion (the committee's words)

    In the light of our net zero commitments, future FTAs should seek to achieve a net reduction in GHG emissions—which may be achieved by agreements on production methods and procurement.
37. 37
    Geographical Indications are important to regions of the UK which feel their agricultural interests have... Recommendation · paragraph 131 Recommendation (the committee's words)

    Geographical Indications are important to regions of the UK which feel their agricultural interests have been undermined by the removal of tariffs. It is disappointing that the UK Government has been unable to achieve this negotiating aim. After the agreement is implemented, the Government should encourage Australia to make progress towards reviewing the provisions on GIs and introducing a GI scheme. As we have seen in the case of the UK-Japan FTA, when the agreement does not set out the timescale and detailed steps for GI approval in the partner country, there can be a significant delay in obtaining protection.
38. 38
    The other parts of the IP chapter have been broadly welcomed and the agreement reflects... Conclusion · paragraph 132 Conclusion (the committee's words)

    The other parts of the IP chapter have been broadly welcomed and the agreement reflects the aims set out in the Negotiating Objectives. We note that this is an area in which continued co-operation in implementation is important, and that for example the UK should continue to push Australia on the Hague Agreement on Industrial Designs, as well as on other issues raised by UK stakeholders.
39. 39
    The Government has been broadly successful in incorporating its objectives on procurement into the agreement... Conclusion · paragraph 136 Conclusion (the committee's words)

    The Government has been broadly successful in incorporating its objectives on procurement into the agreement and we welcome the procurement chapter.
40. 40
    We welcome the inclusion of a dedicated SME chapter. Conclusion · paragraph 141 Conclusion (the committee's words)

    We welcome the inclusion of a dedicated SME chapter. We note that it remains unclear as to whether such chapters have a positive impact on SME trade engagement. Once the Agreement has been implemented, we therefore call on the Government to monitor the levels of preference usage and provide export (and other) support for SMEs as required.
41. 41
    We welcome the chapter on competition policy and consumer protection. Conclusion · paragraph 142 Conclusion (the committee's words)

    We welcome the chapter on competition policy and consumer protection. We note, however, that the UK-New Zealand FTA separates these out into individual chapters. Such inconsistency is unhelpful, and we believe that consumer interests are important enough to deserve a dedicated chapter.
42. 42
    We welcome the inclusion of an innovation chapter but would welcome further information from the... Conclusion · paragraph 143 Conclusion (the committee's words)

    We welcome the inclusion of an innovation chapter but would welcome further information from the Government about how it could be used for the benefit of UK businesses and consumers.
43. 43
    We call on the Government to provide clarity on why it has chosen particular chapters... Recommendation · paragraph 144 Recommendation (the committee's words)

    We call on the Government to provide clarity on why it has chosen particular chapters to be subject to dispute resolution mechanisms and not others.
44. 44
    We thank the devolved administrations for the evidence they submitted. Recommendation · paragraph 151 Recommendation (the committee's words)

    We thank the devolved administrations for the evidence they submitted. In the absence of detailed information provided by the UK Government on the discussions it has had with the devolved administrations, it is vital that we hear from them directly. We reiterate our open invitation to the devolved administrations and legislatures to raise with us any issues they consider to be significant.
45. 45
    While we accept that the negotiation of trade agreements is a reserved competence, trade agreements... Conclusion · paragraph 152 Conclusion (the committee's words)

    While we accept that the negotiation of trade agreements is a reserved competence, trade agreements will have a significant impact not just on devolved policy areas, but also on devolved economies more generally (even in reserved areas) and interests.
46. 46
    We remain concerned about the adequacy of the information shared with the devolved administrations regarding... Conclusion · paragraph 153 Conclusion (the committee's words)

    We remain concerned about the adequacy of the information shared with the devolved administrations regarding matters that are reserved, such as tariff liberalisation for sensitive agricultural goods.
47. 47
    We call on the Government to ensure that consultation with the devolved administrations and legislatures... Recommendation · paragraph 154 Recommendation (the committee's words)

    We call on the Government to ensure that consultation with the devolved administrations and legislatures is comprehensive, transparent, detailed and timely, and that their views are represented throughout the negotiations, including on reserved matters that may have an impact on them.
48. 48
    We welcome that the Government has conducted a modelling review to provide a more detailed... Conclusion · paragraph 155 Conclusion (the committee's words)

    We welcome that the Government has conducted a modelling review to provide a more detailed sub-national assessment of the impact of FTAs. We look forward to receiving assessments with more detailed information on the impact of FTAs on the nations and regions of the UK.
49. 49
    We welcome the collaborative and constructive engagement we have had with DIT officials and Lord... Conclusion · paragraph 160 Conclusion (the committee's words)

    We welcome the collaborative and constructive engagement we have had with DIT officials and Lord Grimstone throughout the negotiations. In particular, we welcome that our recommendation for an exchange of letters to consolidate existing parliamentary scrutiny commitments in respect of trade agreements has been accepted and implemented.
50. 50
    Whilst we are grateful for the time we had to scrutinise this FTA prior to... Recommendation · paragraph 161 Recommendation (the committee's words)

    Whilst we are grateful for the time we had to scrutinise this FTA prior to its formal laying under CRAG, we were only able to scrutinise this agreement after all decisions had already been taken. The Government commitment to facilitate a debate on the Negotiating Objectives if requested by the committee was made too late for this particular agreement. We reiterate the recommendation we made in our Working practices: one year on report that it is important that consultation and dialogue with our committee starts before a mandate is established, so the final mandate can be informed by Parliament.
51. 51
    We welcome the Government’s commitment to monitoring and evaluation and call on it to keep... Conclusion · paragraph 169 Conclusion (the committee's words)

    We welcome the Government’s commitment to monitoring and evaluation and call on it to keep us (and the International Trade Committee in the Commons) informed on progress and outcomes, and make any reports available to Parliament by depositing copies in the libraries of both Houses.
52. 52
    The UK-Australia trade agreement is the first ‘new’ trade agreement where the UK is not... Conclusion · paragraph 170 Conclusion (the committee's words)

    The UK-Australia trade agreement is the first ‘new’ trade agreement where the UK is not simply replicating the trade arrangements we had as part of the EU, making it an important indicator of its post-Brexit trade policy.
53. 53
    However, it is regrettable that the agreement cannot be placed within the context of a... Conclusion · paragraph 171 Conclusion (the committee's words)

    However, it is regrettable that the agreement cannot be placed within the context of a published trade policy. We ask the Government to publish a comprehensive trade policy before it signs another trade agreement with a major economy. This will enable trade policy to be understood in relation to other policy priorities, to see how Government assesses the impacts and trade-offs of trade liberalisation, to set the Negotiating Objectives in context, and to inform public consultation and Parliamentary scrutiny.