Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I present the trade subcommittee's report entitled Inquiry into Australia's trade and investment relationship with the United Kingdom: interim report.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—On behalf of the Joint Standing Committee on Foreign Affairs, Defence and Trade I present the interim report entitled Inquiry into Australia's trade and investment relationship with the United Kingdom: interim report.

The committee welcomed this opportunity to examine Australia's relationship with one of our important trading partners. The inquiry received 72 submissions from across Australia, the United Kingdom, Ireland and Australian businesses in France and Germany. The committee also heard from 58 separate organisations and individuals during 13 public hearings, including diplomatic representatives from the United Kingdom and British based witnesses appearing via videoconference.

The committee presents this interim report as a summary of its findings to date on the opportunities, barriers and challenges facing Australia's future trade and investment relationship with the United Kingdom.

An obvious factor in this, which presents both opportunities and threats, will be the so-called Brexit, the UK's looming departure from the European Union, which will occur after a majority of the British voters who turned out decided to do this in June last year. Consequently, the British government triggered article 50 of the Treaty of Lisbon in March, formally opening a two-year window for negotiating Britain's exit from the EU that expires in March 2019, now less than 18 months away.

Evidence to the inquiry suggests that the outcomes of negotiations between Britain and the EU over Brexit would largely determine the future parameters of Australia's trade relationship with the United Kingdom. The committee will present its final report and recommendation closer to the conclusion of those negotiations.

It does appear that the appetite for broader and more comprehensive trade links between Australia and the United Kingdom is deeply felt on both sides.

In his department's submission to the inquiry the British Secretary of State for International Trade, the Right Hon. Liam Fox, said that the United Kingdom sought to be a champion of free trade and to share Australia's commitment to global trade liberalisation and the benefits of open markets as part of building 'a truly global Britain that is a great trading nation and one of the firmest advocates for free trade in the world'.

The British High Commissioner to Australia, Her Excellency Menna Rawlings, echoed Dr Fox's sentiments, noting that, despite the huge geographical distance, 'when we arrive in each other's countries, we feel as if we're at home'. She noted that there are more expatriate Britons living in Australia than in the 27 European Union nations combined.

The inquiry uncovered a desire for closer trade links on the part of Australian businesses and the primary producer sector as well, with witnesses from a broad range of industries—including beef, sheepmeat and dairy producers, the wine sector, rice growers and sugar farmers—all eager to build on their existing commercial relationships in the United Kingdom and to increase their export volumes if the changes ushered in by Brexit gave them the opportunity to do.

The United Kingdom was Australia's second largest two-way services partner in 2015, accounting for $12.3 billion or 8.6 per cent of total services trade. In 2016, services exports to the United Kingdom were valued at nearly $5 billion, while services imports from the United Kingdom were valued at $7 billion. Tourism was Australia's key services export to the United Kingdom in 2016, at nearly $2 billion, and was also Australia's main services import from the United Kingdom at $2.8 billion.

The United Kingdom's pending departure from the European Union, Brexit, poses uncertainty in terms of Australia's trade relations with Britain and where potential new opportunities Brexit may create are concerned.

Submissions and evidence to the committee also suggested that the United Kingdom's standing as a trading partner may be inflated on account of businesses using the United Kingdom as a gateway to access the larger continental European Union market.

Negotiating Brexit also poses challenges for Australia's trade relationships with the EU given Australia and the EU have commenced a process to explore the negotiation of an Australia-EU free trade agreement.

Australia will not know the implications of Brexit until this UK-EU negotiation is finalised. Should Brexit occur without the UK and the EU reaching an agreement—a so-called hard Brexit—the UK will not retain access to the EU common market or customs union. Under the provisions of article 50 of the Lisbon treaty the United Kingdom is prohibited from negotiating deals with third-country parties such as Australia until Brexit takes effect.

It is obvious that, despite the very best intentions and a genuine desire in both Australia and the United Kingdom for closer trade relations once the UK has left the EU, in practice the question is far too complex to make definitive resolutions and recommendations now.

Given Australia's pursuit of free trade agreements with major trading partners over the last decade—including the United States, China, Japan and South Korea—the exploration of free trade agreements with both the European Union and a post-Brexit UK offers a consistent approach to Australian trade policy that seeks outcomes that are mutually beneficial to all stakeholders.

From the committee's perspective the timing of the UK's departure from the EU is entirely coincidental with the scoping work and ongoing development towards a free trade agreement between Australia and the EU.

Evidence to this inquiry suggests Australia's trade negotiations with the EU are gaining momentum. The committee notes recent developments in the Australian government's trade negotiations following visits by the Minister for Agriculture and Water Resources and the conclusion of an agreement on the Australia-European free trade agreement scoping study by the Minister for Trade, Tourism and Investment.

The committee is of the view that the Australian government should continue its trade negotiations with the European Union as a priority.

However, Australia should be encouraged that Britain has signalled that it is willing to enter into new trade partnerships following its departure from the EU. Australia is well positioned to redefine and expand an already strong trade and investment relationship. The Australian Labor Party would obviously like such agreements to contain no investor-state dispute settlement clauses, but any agreement should include labour-market-testing provisions and independent evaluations of the agreement both beforehand and throughout the life of the agreement.

In conclusion, the committee has heard evidence regarding a diverse range of issues. Future reports by this inquiry will consider these in more detail as the complex issues concerning the United Kingdom's withdrawal from the European Union are resolved and the situation for advancing Australian trade interests becomes clearer.

I commend the interim report to the House.

John McVeigh (Groom, Liberal Party) Share this | Link to this | Hansard source

by leave—As a member of the Joint Standing Committee on Foreign Affairs, Defence and Trade, I'm pleased to follow the member for Moreton in addressing our interim report entitled Australia's trade and investment relationship with the United Kingdom. As has been explained, we had a particularly high level of interest in this inquiry—72 submissions from across Australia, the UK and Ireland and from Australian businesses in France and Germany. We had 58 separate organisations and individuals presenting during 13 public hearings. These included diplomatic representatives from the UK and British based witnesses appearing via teleconference—and, of course, all of this at the same time as significant international, industry and, of course, national media attention on this issue of potential trade relationship between Australia and the UK in the future.

The committee's report presents a summary of findings to date on the opportunities and barriers facing our trade and investment relationship with the UK in the future. All of this, of course, was precipitated by Brexit, the UK's looming departure from the European Union following British voters deciding by majority to do so in June of last year. Consequently, as has been explained, article 50 of the Treaty of Lisbon was triggered, formally opening the two-year period of negotiating Britain's exit from the EU. That is, as has been explained, some 18 months away. The inquiry heard quite clearly that the outcome of the negotiations between Britain and the EU over Brexit will largely determine the future opportunities and challenges for Australia and our trade relationship with the UK.

Having said that, it's clear there is a very strong appetite between Australia and the UK for more comprehensive trade links in the future. As I'll explain in just a few moments, some of that may revisit what we have experienced between our two nations, our two regions, in years and decades in the past. The submission to the inquiry from the British Secretary of State for International Trade, the Rt Hon. Liam Fox, said the UK sought to be a champion of free trade and a supporter of open markets, like us here in Australia, and that environment of free trade is a passion that it shares in considering potential relationships with other countries in the future. The relationship between the UK and Australia, of course, is very strong. We feel at home with one another, as the British High Commissioner to Australia, Her Excellency Menna Rawlings, explained in her discussions with our committee.

Much of the inquiry has included a reference to a great desire for closer trade links on the part of those involved in Australian agriculture, food processing and other primary production. As committee members, most if not all of us have either an agricultural or a rural background and/or agricultural careers. So we as a committee relate particularly well to the potential for Australia's agriculture and food products going forward in the beef, sheepmeat, dairy, wine, rice and sugar areas, on which we have heard various submissions during our inquiry thus far. These industries and producers lost much of their access to the British markets in 1973, when Britain joined what was then the EEC and there was strict enforcement of import quotas and tariffs that remain in place today.

And therein lies the opportunity for Australian agriculture, Australian agribusiness, going forward. To see the decline in beef over many years, to see the decline in other products such as wine, sugar, rice and dairy, brings significance to the potential in growing trade links that will support exports from these very important industries for Australia.

I can refer to the dairy industry example in particular. Where I'm from—Groom, in the Darling Downs, in Queensland—I can recall when I was a young boy the Queensland Butter Marketing Board, which really was operating at its strength, I guess, mid-last century, before I was born, in marketing butter, amongst other things, to Europe. It is fascinating to consider that that happened when we consider so-called food miles, the tyranny of distance, nowadays. But the fact that that supported in Queensland many regional dairy-processing facilities, butter factories, which are no longer in existence is an important part of our agricultural history.

Despite that loss, the UK remains a very significant trading partner for us. Again, this inquiry points to the ways in which we might be able to revisit some of that success in the future in the interests of particularly our agricultural industries, as I've said.

The UK's pending departure from the European Union does provide uncertainty, of course, in terms of our trade relationship with Britain. But of course that means perhaps great opportunities as well, hence the timeliness of our inquiry and hence the importance of remembering, for example, that the UK provides for many of our industries, despite all of this, a continuing gateway to access the larger continental European Union market. Hence the sensitivities for us going forward in considering challenges in not only trade relationships with the UK but ongoing relationships in the future with the EU.

So the May 2019 deadline for resolving the Brexit arrangements is one that interests us all particularly, including our committee's inquiry. It interests all of Australia, I would suggest. Should it be a hard exit, or a hard Brexit, as some have suggested, that will present certain sensitivities that we need to keep in mind. But, of course, we are where we are. Under the provisions of article 50 of the Lisbon Treaty, the UK is prohibited from negotiating free trade deals with third-party countries, such as us here in Australia, until that Brexit effect takes a hold.

I come back to agricultural issues, particularly when we consider other relationships that the UK maintains and other relationships that are important to the UK. I refer particularly to Ireland, the biggest supplier currently of beef and dairy goods to the UK, which will provide part of the competitive environment in which we must operate in the years to come. We need to recognise those other relationships as well, as this report suggests.

The reality going forward is that there can be no certainty. There can be no guarantee for markets with products currently restricted by EU tariffs and quotas—again, I particularly mention beef, dairy, wine, rice and sugar—and Australian exporters now in negotiations going forward need to be quite sensitive, sensible and strategic. It is obvious that, with the best of intentions—the ongoing joint desire, as I've said—between both countries, there are significant opportunities going forward in the trade relationship between Australia and the EU. I am thrilled that our government, in particular, has been focused on free trade agreements, and I'm sure that that leadership will continue in considering this potential relationship in the years to come. We've heard a lot of evidence. We know that there will be sensitivities, challenges and particularly opportunities going forward.

I thank the submitters. I thank the committee secretariat. I thank my fellow committee members for the consideration of these exciting opportunities and these challenges during our inquiry thus far. I especially applaud the leadership of our chair, Senator Bridget McKenzie, in our deliberations in the inquiry thus far.