House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Home Affairs, the Honourable Clare O'Neil MP)

OUTLINE

The purpose of the Customs Amendment (Australia-United Kingdom Free Trade Agreement Implementation) Bill 2022 (the Bill) is to amend the Customs Act 1901 (the Customs Act) to introduce new rules of origin for goods that are imported into Australia from the United Kingdom of Great Britain and Northern Ireland (the United Kingdom). The amendments to the Customs Act will enable goods that satisfy the rules of origin to enter Australia at preferential rates of customs duty.

Complementary amendments will also be made to the Custom Tariff Act 1995 (the Customs Tariff Act) by the Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation) Bill 2022.

The Free Trade Agreement between Australia and the United Kingdom of Great Britain and Northern Ireland (the Agreement) is a modern and comprehensive free trade agreement delivering outcomes for Australian businesses in trade in goods, trade in services, investment, economic and technical cooperation, digital trade, intellectual property, government procurement, competition and consumer protection and small and medium sized enterprises. The Agreement also affirms Australia's commitments under multilateral environmental agreements, contains provisions aimed at addressing barriers for women to access the benefits of trade and investment and supports a transparent and predictable regulatory environment for businesses.

The Agreement was signed at a virtual signing ceremony on 17 December 2021.

To give effect to the preferential entry of goods under the Agreement, the amendments contained in the Bill provide rules for determining whether goods are originating goods. The amendments to the Customs Tariff Act will provide for the preferential entry of goods that meet those rules.

The amendments contained in the Bill will be operative on the later of the day on which the Bill receives the Royal Assent and the day on which the Agreement signed on 17 December 2021 enters into force for Australia.

FINANCIAL IMPACT STATEMENT

The 2022-23 Budget released in March 2022, estimated that implementing the Agreement will reduce customs duty receipts by $430 million over the forward estimates period.

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

A Statement of Compatibility with Human rights in respect of the amendments contained in the Bill is at Attachment A . The Statement assesses the amendments to be compatible with Australia's human rights obligations.

REGULATION IMPACT STATEMENT

A Regulation Impact Statement in respect of all amendments to give effect to the new rules of origin requirements in accordance with the Agreement and related preferential treatment of custom duty is at Attachment B .

NOTES ON CLAUSES

Clause 1 Short title

1. This clause provides for the 'Customs Amendment (Australia-United Kingdom Free Trade Agreement Implementation) Bill 2022' (the Bill), when enacted, to be cited as the Customs Amendment (Australia-United Kingdom Free Trade Agreement Implementation) Act 2022.

Clause 2 Commencement

2. This clause sets out, in a table, the date on which provisions of the Bill, when enacted, will commence.

3. Table item 1 provides for clauses 1 to 3 and anything in the Bill not elsewhere covered by the table to commence on the day the Bill receives the Royal Assent.

4. Table item 2 provides for Schedule 1 of the Bill to commence on the later of the day the Bill receives the Royal Assent, and the day the Free Trade Agreement between Australia and the United Kingdom of Great Britain and Northern Ireland done on 17 December 2021, enters into force for Australia. However, the provisions do not commence at all if the Agreement does not enter into force for Australia.

5. Table item 2 also provides that the Minister must announce the day on which the Agreement enters into force for Australia by notifiable instrument. The announcement made in the notifiable instrument does not lead to the commencement of Schedule 1, it merely requires the Minister to announce the commencement of the Agreement for public awareness. This instrument is not legislative in character. This instrument is declared by the Bill to be a notifiable instrument for the purposes of the Legislation Act 2003 (Legislation Act) to ensure it is still required to be made publicly available on the Register. Notifiable instruments are governed by the Legislation Act.

6. Under Article 32.7 of Chapter 32 of the Agreement, the Agreement shall enter into force 30 days after the date on which the Parties exchange written notifications confirming that they have completed their respective domestic requirements necessary for the entry into force of this Agreement, or on such other date as the Parties may agree.

Clause 3 Schedules

7. This clause enables the Schedule of the Bill, when enacted, to amend or repeal provisions of legislation specified in that Schedule in accordance with the applicable items. The Customs Act 1901 (the Customs Act) is being amended by the Bill.

Schedule 1-Amendments

Part 1-UK originating goods

Customs Act 1901

Introductory Comments

8. On 17 December 2021, the then Minister for Trade, Tourism and Investment, and his counterpart from the United Kingdom of Great Britain and Northern Ireland (the United Kingdom) signed the Agreement.

9. The Agreement, on entry into force, provides for new rules of origin to determine whether goods imported into Australia are originating goods (referred to as 'UK originating goods'). Such goods are subject to preferential rates of customs duty under the proposed amendments to the Customs Tariff Act 1995 (the Customs Tariff Act). 'UK originating goods', in accordance with the Agreement, are those goods that satisfy the requirements in new Division 1P of Part VIII of the Customs Act inserted by the Bill.

Item 1 Subparagraph 105B(3)(b)(ii)

10. Subsection 105B(1) of the Customs Act sets out circumstances where the liability to pay import duty on excise-equivalent goods is wholly or partly extinguished. However, subsection 105B(3) of the Customs Act provides that the liability to pay import duty will not be wholly or partly extinguished if the excise-equivalent goods are classified to subheading 2207.20.10 (denatured ethanol) or 3826.00.10 (biodiesel) of Schedule 3 to the Customs Tariff Act, or an item in the table in Schedule 4A, 5, 6, 6A, 7, 8, 8A, 8B, 9, 9A, 10, 11, 12, 13 or 14 of that Act that relates to a subheading mentioned.

11. As part of the implementation of the Agreement, a separate Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation) Bill 2022 (the Customs Tariff Amendment Bill) will insert a new Schedule 15 into the Customs Tariff Act. New Schedule 15 will, provide for excise-equivalent rates of duty on certain alcohol, tobacco, fuel petroleum products in accordance with the Agreement, and the related preferential rates of customs duty.

12. This item amends subparagraph 105B(3)(b)(ii) of the Customs Act to insert a reference to Schedule 15 of the Customs Tariff Act. The purpose of this amendment is to ensure the collection of the correct customs duty for biofuels and biofuel blends imported under the Agreement.

Item 2 Subsection 105B (4) (paragraph (b) of the definition of biofuel blend )

13. Subsection 105B(4) of the Customs Act defines 'biofuel blend', as goods classified to certain subheadings under Schedule 3 of the Customs Tariff Act or an item in the table in the Schedules relating to originating goods under free trade agreements (FTAs) that relate to the relevant subheadings.

14. This item amends the definition of 'biofuel blend' under subsection 105B(4) of the Customs Act to insert a reference to new Schedule 15 of the Customs Tariff Act.

15. As for item 1 of the Bill, the purpose of this amendment is to ensure the collection of the correct customs duty for biofuels and biofuel blends imported under the Agreement.

Item 3 After Division 1N of Part VIII

16. This item amends Part VIII of the Customs Act to insert new Division 1P.

17. New Division 1P is titled 'UK originating goods' and sets out the new rules for determining whether goods are UK originating goods and therefore eligible for a preferential rate of customs duty under the Customs Tariff Act. These new rules give effect to Chapter 4 of the Agreement.

18. New Division 1P contains seven Subdivisions, being Subdivision A to Subdivision G, as set out below.

Subdivision A-Preliminary

19. Subdivision A contains a simplified outline of new Division 1P and the interpretation provision for this Division.

New section 153ZRA Simplified outline of this Division

20. New section 153ZRA sets out a simplified outline of Subdivision B to Subdivision G of new Division 1P.

New section 153ZRB Interpretation

21. New subsection 153ZRB(1) sets out the definitions for the purposes of new Division 1P as follows:

Agreement means the Free Trade Agreement between Australia and the United Kingdom of Great Britain and Northern Ireland, done on 16 and 17 December 2021, as amended from time to time. While the Agreement was signed in Australia on 17 December 2021, this definition accounts for the fact that, due to time differences, the Agreement was signed on 16 December 2021 in the United Kingdom. The note to this definition indicates that as at 2022, the text of the Agreement is accessible through the Australian Treaties Library on the AustLII website.

aquaculture has the meaning given by Article 4.1 of Chapter 4 of the Agreement.

Australian originating goods means goods that are Australian originating goods under a law of the United Kingdom that implements the Agreement.

Convention means the International Convention on the Harmonized Commodity Description and Coding System done at Brussels on 14 June 1983, as in force from time to time. The note to this definition indicates as at 2022, the text of the Convention is accessible through the Australian Treaties Library on the AustLII website. This term is necessary and is referred to in the definition of 'Harmonized Commodity Description and Coding System'.

customs value of goods has the meaning given by section 159 of the Customs Act. In most cases, this will be the transaction value but there are other valuation methods if this value cannot be ascertained.

declaration of origin means a declaration that is in force and that complies with the requirements of Article 4.18 of Chapter 4 of the Agreement.

enterprise has the meaning given by Article 1.4 of Chapter 1 of the Agreement.

Harmonized Commodity Description and Coding System means the Harmonized Commodity Description and Coding System (the HCDC System) that is established by or under the Convention.

The Agreement uses the tariff classification codes of the HCDC System. In particular, Annex 4B to Chapter 4 of the Agreement identifies goods that must satisfy the product specific rules by reference to their tariff classification codes under the HCDC System. The tariff classification codes in the Agreement are the codes from the version of the HCDC System in place immediately from 1 January 2017, commonly referred to as the 2017 version of the HCDC System.

The HCDC System is a structure for classifying goods based on internationally agreed descriptors for goods and related six-digit codes administered by the World Customs Organization (the WCO). This six-digit classification system uniquely identifies all traded goods and commodities and is uniform across all countries that have adopted the HCDC System. The WCO reviews the system every five years to reflect changes in industry practice, technological developments and evolving international trade patterns.

This term is referred to in the definition of 'Harmonized System', which sets out the HCDC System on which the Agreement, particularly the product-specific rules, is based.

Harmonized System means:

(a)

Harmonized Commodity Description and Coding System as in force on 1 January 2017; or

(b)

if the table in Annex 4B to Chapter 4 of the Agreement is amended or replaced to refer to Chapters, headings and subheadings of a later version of the HCDC System, the later version of the HCDC System.

Paragraph (a) of the definition of 'Harmonized System' in new subsection 153ZRB(1) of the Customs Act will therefore incorporate into subordinate legislation the version of the HCDC System on which the Agreement was based (being the version in place on 1 January 2017).

Paragraph (b) of the definition allows later versions of the HCDC System to be incorporated into the Customs Act if Annex 4B to Chapter 4 of the Agreement is updated, amended or adopted to reflect such later versions in line with Article 4.29 of the Agreement.

While each signatory to the Convention is required to implement and reflect related amendments to the HCDC System in their domestic legislation simultaneously on the date when the amendments enter into force, the pace at which the amendments are implemented varies from country to country and this is reflected in the FTAs with other countries.

While Australia has implemented, and currently uses, the latest HCDC System of 2022, many of our established FTAs still utilise other versions of the HCDC System for their product specific rules of origin. In light of this, and to avoid causing any disruption to international trade, Australia, through the Australian Border Force, publishes the changes between each HCDC System update and relevant concordance associated with those updates on its website so that anyone can readily identify the appropriate tariff classification codes for importing goods from other countries into Australia.

The HCDC System is incorporated by reference into the Customs Act through this definition. This incorporation by reference is also used for the purposes of section 153ZRE and other definitions in subsection 153ZRB(1), including the definitions of 'Interpretation Rules', and 'remanufactured goods'. As per the notes for the definition of HCDC System above, updates to that System are undertaken every 5 years.

The definition of 'Harmonized System' will expressly recognise, in the Customs Act, the version of the HCDC System on which the Agreement was based, and allow subsequent versions of that System to also be recognised when the relevant Annex of the Agreement is updated, amended or adopted.

The 2017 version of the Harmonized System is available free of charge on webpages administered by the WCO ( www.wcoomd.org ).

Annex 4B to Chapter 4 of the Agreement is available free of charge on the webpage in relation to the Agreement that is administered by the Department of Foreign Affairs and Trade, and on the Australian Treaties Library on the AustLII website (www.austlii.edu.au). Any revisions to Annex 4B to Chapter 4 of the Agreement will also be made available free of charge on the internet.

indirect materials means:

(a)

goods or energy used in the production, testing or inspection of goods, but not physically incorporated in the goods; or

(b)

goods or energy used in the maintenance of buildings or the operation of equipment associated with the production of goods;

including:

(c)

fuel (within its ordinary meaning), catalysts and solvents; and

(d)

gloves, glasses, footwear, clothing, safety equipment and supplies; and

(e)

tools, dies and moulds; and

(f)

spare parts and materials; and

(g)

lubricants, greases, compounding materials and other similar goods.

This definition reflects the Article 4.1 definition of 'indirect materials' in the Agreement.

Interpretation Rules means the General Rules for the Interpretation of the Harmonized System (The General Rules) (as in force from time to time) provided for by the Convention.

The General Rules are available free of charge on webpages administered by the WCO ( www.wcoomd.org ). The General Rules can also be found on the official platform of the World Customs Organisation, known as WCO Trade Tools ( https://www.wcotradetools.org ).

non-originating materials means goods that are not originating materials.

Non-originating materials are goods that are not originating materials because they do not satisfy the requirements of new Division 1P in their own right. See paragraph (1)(k) of Article 4.1 of the agreement.

For example, where frozen crumbed fish fillets processed in the United Kingdom (a Party to the Agreement) from fish caught in the territory of the United Kingdom, are coated with herbs and spices that are produced in the United States of America (which is not a Party to Agreement), the fish would be originating materials and the herbs and spices would be non-originating materials for the purposes of Division 1P.

non-party has the same meaning as it has in Chapter 4 of the Agreement.

This term is referred to in new section 153ZRH, which deals with the consignment of UK originating goods (see notes below for new section 153ZRH).

originating materials means:

(a)

UK originating goods that are used in the production of other goods; or

(b)

Australian originating goods that are used in the production of other goods; or

(c)

recovered materials derived in the territory of Australia, or in the territory of the United Kingdom, and used in the production of, and incorporated into, remanufactured goods; or

(d)

indirect materials.

In some circumstances, in order to determine whether goods that are imported into Australia are UK originating goods, and therefore eligible for a preferential rate of customs duty, it may be necessary to have regard to the goods from which the final goods are produced (see the notes for new Subdivision C and Subdivision D).

person of the United Kingdom means:

(a)

a national within the meaning, so far as it relates to the United Kingdom, of Article 1.4 of Chapter 1 of the Agreement; or

(b)

an enterprise of the United Kingdom.

production has the meaning given by Article 4.1 of Chapter 4 of the Agreement.

In Article 4.1, 'production' is defined as operations including growing, cultivating, raising, mining, harvesting, fishing, trapping, hunting, capturing, collecting, breeding, extracting, aquaculture, gathering, manufacturing, processing, or assembling a good. This list is non-exhaustive and the term 'production' is capable of capturing any other process that falls within the meaning of 'operations', including any currently existing methods that have not been listed and any new methods, which may arise in the future.

production value has the meaning given by Article 4.1 of Chapter 4 of the Agreement. For the purposes of subsections 153ZRE(4) and (8), importers may choose to rely on the customs value or the production value of goods when determining if goods are originating.

Article 4.1 of the Agreement defines production value as the price paid or payable to the producer of the good at the place where the last production was carried out, and must include the value of all materials. If there is no price paid or payable or if it does not include the value of all materials, the value of the good:

(a)

must include the value of all materials and the cost of production employed in producing the good, calculated in accordance with accounting principles which are generally accepted in the Party of the producer; and

(b)

may include amounts for general expenses and profit to the producer that can be reasonably allocated to the good

recovered materials means materials comprising one or more individual parts that:

(a)

have resulted from the disassembly of used goods; and

(b)

have been cleaned, tested or processed as necessary for improvement to sound working condition.

remanufactured goods means goods that:

(a)

are classified to any of Chapters 84 to 90 (other than headings 87.02, 87.03, 87.04 or 87.05, 87.11 or 87.16 or subheading 8701.20), or heading 94.02, of the Harmonized System; and

(b)

are entirely or partially comprised of recovered materials; and

(c)

have a similar life expectancy, working condition and performance to new goods:

(i)

that are so classified; and

(ii)

that are not composed of any recovered materials; and

(d)

have been given a warranty that in substance is the same as that applicable to such new goods.

territorial sea has the same meaning as in the Seas and Submerged Lands Act 1973. This definition is taken from Articles 3 and 4 of United Nations Convention on the Law of the Sea.

territory of Australia means territory within the meaning, so far as it relates to Australia, of Article 1.4 of Chapter 1 of the Agreement.

territory of the United Kingdom means territory within the meaning, so far as it relates to the United Kingdom, of Article 1.4 of Chapter 1 of the Agreement.

UK originating goods means goods that, under this Division, are UK originating goods.

22. New subsection 153ZRB(2) provides that the value of goods for the purposes of new Division 1P is to be worked out in accordance with the regulations and that the regulations may prescribe different valuation rules for different kinds of goods. The value of goods is relevant, for example, in determining whether goods satisfy the tolerance requirement in Article 4.10 of Chapter 4 of the Agreement. This concept is also known as de minimis in other FTA. The value of goods in this context is distinguished from the customs value of goods, which is to be worked out under section 159 of the Customs Act.

23. New subsection 153ZRB(3) provides that, in specifying tariff classifications for the purposes of new Division 1P, the regulations may refer to the Harmonized System. The product-specific rules of origin in Annex 4B to Chapter 4 of the Agreement refer to the tariff classifications of the Harmonized System.

24. New subsection 153ZRB(4) provides that subsection 4(3A) of the Customs Act does not apply for the purposes of new Division 1P. Subsection 4(3A) provides that a reference in the Customs Act to the tariff classification of goods is a reference to Schedule 3 to the Customs Tariff Act, which is not the case in new Division 1P.

25. New subsection 153ZRB(5) provides that, despite subsection 14(2) of the Legislation Act, regulations made for the purposes of Division 1P may make provision in relation to a matter by applying, adopting or incorporating, with or without modification, any matter contained in an instrument or other writing as in force or existing from time to time.

26. Subsection 153ZRB(5) will override subsection 14(2) of the Legislation Act should it be necessary in order to implement the Agreement by applying, adopting or incorporating an instrument or other writing that is not an Act or disallowable legislative instrument. Any instrument and other writing so incorporated will be limited to those that are required for the operation of the Agreement and will be accessible through the Department's website, and free of charge, to ensure they are readily available and at no cost to persons concerned.

27. Where such references are made in regulations, the explanatory material will explain the basis on which such references are made and indicate where the material referred to can be located by the public.

Subdivision B-Goods wholly obtained or produced in a Party

28. Subdivision B contains new section 153ZRC, which sets out the rules in relation to goods that are wholly obtained or produced in a Party.

29. The Agreement provides three options an importer can rely on with respect to providing evidence of whether goods are 'UK originating goods'. Firstly, an importer can furnish a declaration of origin at the time the goods are imported. Secondly, an importer can provide other documentation based on the importer's knowledge or reasonable reliance on the producer that the good is originating. Alternatively, Australia may waive the requirement for a declaration of origin for goods and by extension other documentation.

Section 153ZRC Goods wholly obtained or produced in the United Kingdom or in the United Kingdom and Australia

30. New subsection 153ZRC(1) provides that goods are UK originating goods if they are wholly obtained or produced in the United Kingdom or in the United Kingdom and Australia, and at the time of importation, of the following applies:

(a)

importer of the goods has a declaration of origin (or a copy of one);

(b)

the importer has other documents to support that the goods are originating; or

(c)

Australia has waived the requirement for a declaration of origin.

31. New subsection 153ZRC(2) provides that goods are wholly obtained or produced in the United Kingdom or in the United Kingdom and Australia if, and only if, the goods are:

(a)

plants, plant goods or fungus grown, cultivated, harvested, picked or gathered in the territory of the United Kingdom or the territory of the United Kingdom and Australia; or

(b)

live animals born and raised in the territory of the United Kingdom or the territory of the United Kingdom and Australia; or

(c)

goods obtained from live animals raised in the territory of the United Kingdom; or

(d)

animals obtained by hunting, trapping, fishing, gathering, or capturing in the territory of the United Kingdom, but not beyond the outer limits of the territorial sea of the United Kingdom; or

(e)

goods obtained from aquaculture conducted in the territory of the United Kingdom, but not beyond the outer limits of the territorial sea of the United Kingdom; or

(f)

minerals, or other naturally occurring substances, extracted or taken from the territory of the United Kingdom; or

(g)

fish, shellfish or other marine life taken from the sea, seabed or subsoil beneath the seabed:

(i)

beyond the outer limits of the territorial sea of the United Kingdom; and

(ii)

within the territory of the United Kingdom;

by vessels that are registered in the United Kingdom and are entitled to fly the flag of the United Kingdom; or

(h)

fish, shellfish or other marine life taken from the sea, seabed or subsoil beneath the seabed:

(i)

beyond the outer limits of the territory of the United Kingdom and the territory of Australia; and

(ii)

in accordance with international law, outside the territorial sea of non-parties;

by vessels that are registered in the United Kingdom and are entitled to fly the flag of the United Kingdom; or

(i)

goods produced, from goods referred to in paragraph (g) or (h), on board a factory ship that is registered in the United Kingdom and is entitled to fly the flag of the United Kingdom; or

(j)

goods, other than fish, shellfish or other marine life, taken or extracted by the United Kingdom, or a person of the United Kingdom, from the seabed or subsoil beneath the seabed:

(i)

outside the territory of the United Kingdom and the territory of Australia; and

(ii)

beyond areas over which non-parties exercise jurisdiction;

but only if the United Kingdom, or the person of the United Kingdom, has the right to exploit that seabed or subsoil in accordance with international law; or

(k)

waste or scrap that:

(i)

has been derived from production in the territory of the United Kingdom; or

(ii)

has been derived from used goods that are collected in the territory of the United Kingdom and that are fit only for the recovery of raw materials; or

(l)

goods produced in the territory of the United Kingdom, or in the territory of the United Kingdom and the territory of Australia, exclusively from goods referred to in paragraphs (a) to (k) or from their derivatives.

32. New section 153ZRC gives effect to Article 4.3 of Chapter 4 of the Agreement in respect of rules of origin for goods wholly obtained or produced in a Party to the Agreement. The purpose of this new section is to enable goods that satisfy relevant requirements to be subject to preferential treatment of customs duty in accordance with the Agreement.

Subdivision C-Goods produced in the United Kingdom, or in the United Kingdom and Australia, from originating materials

Section 153ZRD Goods produced in the United Kingdom, or in the United Kingdom and Australia, from originating materials

33. Subdivision C contains new section 153ZRD, which sets out the rules in relation to goods that are produced exclusively from originating materials. As with paragraph 153ZRC(1)(b), paragraph 153ZRD(b) similarly provides that goods will be considered UK originating goods, if, at the time of importation, the importer has either a declaration of origin (or a copy of one), other documentation to support that the goods are originating, or Australia has waived the requirement for a declaration of origin.

34. New section 153ZRD gives effect to Articles 4.2, 4.15, 4.18 and 4.21 of Chapter 4 of the Agreement in respect of rules of origin for goods produced exclusively from originating materials. The purpose of this new section is to enable goods that satisfy relevant requirements to be subject to preferential treatment of customs duty in accordance with the Agreement.

Subdivision D-Goods produced in the United Kingdom, or in the United Kingdom and Australia, from non-originating materials

35. Subdivision D contains new section 153ZRE, which sets out the rules in relation to goods produced from non-originating materials.

Section 153ZRE Goods produced in the United Kingdom, or in the United Kingdom and Australia, from non-originating materials

36. New section 153ZRE gives effect to Articles 4.2, 4.4, 4.5, 4.9, 4.18 and 4.21 of Chapter 4 of the Agreement in respect of rules of origin for goods produced from non-originating materials. The purpose of this new section is to specify the requirements that must be satisfied in order for goods to be subject to preferential treatment of customs duty in accordance with the Agreement.

37. New subsection 153ZRE(1) provides that goods are UK originating goods if:

(a)

they are classified to a Chapter, heading or subheading of the Harmonized System that is covered by the table in Annex 4B to Chapter 4 of the Agreement; and

(b)

they are produced entirely in the territory of the United Kingdom, or entirely in the territory of the United Kingdom and the territory of Australia, from non-originating materials only or from non-originating materials and originating materials; and

(c)

the goods satisfy the requirements applicable to the goods in that Annex; and

(d)

one or more of the following applies:

(i)

the importer of the goods has, at the time the goods are imported, a declaration of origin, or a copy of one, for the goods; or

(ii)

the importer of the goods has, at the time the goods are imported, other documentation to support that the goods are originating;

(iii)

Australia has waived the requirement for a declaration of origin for the goods.

38. This provision applies the product-specific rules by direct reference to Annex 4B to Chapter 4 of the Agreement. This applies both the product-specific rules and any product specific process rules. The direct application of Annex 4B does not change the operation of these rules as set out in that Annex. Rather, as the Agreement is defined to be the Agreement as amended from time to time, this will ensure that the current Annex in the Agreement will be applied. It will also ensure that any updated version of the Annex that would be contained in the Agreement when the Parties implement later versions of the HCDC System will be applied as soon as any provisions of the Agreement and any of Australia's domestic treaty-making procedures that pertain to the adoption of an updated Annex are completed.

39. New subsection 153ZRE(2) provides that, without limiting paragraph 153ZRE(1)(c), a requirement may be specified in the table in Annex 4B to Chapter 4 of the Agreement by using an abbreviation that is given a meaning for the purpose of that Annex. For example, the abbreviation of RVC40 in the Annex means a regional value content of at least 40 per cent. Another example of an abbreviation in the Annex is 'CC', which is an abbreviation for Change of Chapter.

Change in tariff classification

40. New subsection 153ZRE(3) refers to the first of several requirements that may be prescribed in regulations made for the purposes of Subdivision D. The subsection provides that, if a requirement that applies in relation to the goods is that all non-originating materials used in the production of the goods must have undergone a particular change in tariff classification, the regulations may prescribe when a non-originating material used in the production of the goods is taken to satisfy the change in tariff classification.

41. The regulations made under this head of power include provisions to give effect to the accumulation rules of origin contained in Article 4.9 of Chapter 4 of the Agreement where the non-originating materials that are used or consumed in the production of the good do not satisfy the change in tariff classification.

42. The concept of the change in tariff classification requirement applies to non-originating materials. Goods that have been sourced outside a Party to the Agreement and that are used in the production of other goods are non-originating materials. Goods sourced from a Party to the Agreement that have not fulfilled the requirements of new Division 1P,or are not Australian originating goods under a law of the United Kingdom, and that are used in the production of other goods are also non-originating materials.

43. Non-originating materials used to produce other goods may not have the same classification under the Harmonized System as the final good. For example, non-originating materials used to produce a good may be classified to one tariff classification before the production process, and the final good may be classified under a different tariff classification after the production process. To satisfy the requirement of classification change, and therefore satisfy a requirement for the purposes of claiming preferential treatment of customs duty in accordance with the Agreement, the goods concerned must be sufficiently transformed such that they can be classified to a different tariff classification to that of the non-originating materials from which they are produced.

44. For example, frozen fish fingers (classified to tariff heading 0304) are produced from fish caught in the United Kingdom and combined with herbs and spices produced in Peru (which is not a Party to the Agreement) (classified to tariff headings 0907 to 0910) to make crumbed fish fingers (classified to tariff code 1604 in Chapter 16 of the Harmonized System). The applicable tariff change for crumbed fish is 'a change to Chapter 16 from any other chapter'. As the herbs and spices are classified to Chapter 9 of the Harmonized System, these non-originating materials meet the tariff change requirement, considering that the fish concerned is produced by the United Kingdom, and is therefore an originating material and is not required to change its classification.

45. As per the above example, it is necessary for the tariff classification of the final good and each of the goods that are non-originating materials used in the production of the final goods to be known in order to determine the applicable change in tariff classification.

46. New subsection 153ZRE(4) provides that, if:

(a)

a requirement that applies in relation to the goods is that all non-originating materials used in the production of the goods must have undergone a particular change in tariff classification; and

(b)

one or more of the non-originating materials used in the production of the goods do not satisfy the change in tariff classification;

then the requirement is taken to be satisfied if:

(c)

in the case of goods classified to any of Chapters 1 to 24 or 50 to 63 of the Harmonized System:

(i)

the total weight of the non-originating materials covered by paragraph (b) does not exceed 10% of the total weight of the goods; or

(ii)

the total value of the non-originating materials covered by paragraph (b) does not exceed 10% of the customs value of the goods; or

(iii)

the total production value of the non-originating materials covered by paragraph (b) does not exceed 10% of the total production value of the goods; or

(d)

in the case of goods classified to any of Chapter 25 to 49 or 64 to 97 of the Harmonized System: -

(i)

the total value of the non-originating materials covered by paragraph (b) does not exceed 10% of the customs value of the goods; or

(ii)

total production value of the non-originating materials covered by paragraph (b) does not exceed 10% of the total production value of the goods.

47. This provision allows for the change in tariff requirement to be satisfied if the total value of all of the non-originating materials used in the production of the goods that do not satisfy the particular change in tariff classification of the goods, does not exceed 10 per cent of the total value or production value of the goods. This provision gives effect to the tolerance requirements under paragraph 1 of Article 4.10 of Chapter 4 the Agreement. This concept is also known as de minimis in other free trade agreements.

48. The value of non-originating materials for the purposes of subsection 153ZRE(4) is to be worked out in accordance with the method that will be included in the regulations. Regional value content

49. New subsection 153ZRE(5) provides that, if a requirement that applies in relation to the goods is that the goods must have a regional value content not less than a particular percentage worked out in a particular way:

(a)

the regional value content of the goods is to be worked out in accordance with the Agreement; or

(b)

if the regulations prescribe how to work out the regional value content of the goods, the regional value content of the goods is to be worked out in accordance with the regulations.

50. This provision provides the head of power to prescribe formulae for calculating regional value content and gives effect to Article 4.4 of Chapter 4 of the Agreement.

51. New subsection 153ZRE(6) provides that if:

(a)

a requirement that applies in relation to the goods is that the goods must have a regional value content of not less than a particular percentage worked out in a particular way; and

(b)

the goods are imported into Australia with accessories, spare parts, tools or instructions or other information materials; and

(c)

the accessories, spare parts, tools or instructional or other information material are classified and delivered with, and not invoiced separately from, the goods; and

(d)

the quantities, value and type of accessories, spare parts, tools or instructional or other information materials are customary for the goods;

the regulations must provide for the following:

(e)

the value of the accessories, spare parts, tools or instructional or other information materials to be taken into account for the purpose of working out the regional value content of the goods;

(f)

the accessories, spare parts, tools or instructional or other information materials to be taken into account as originating materials or non-originating materials, as the case may be.

52. New subsection 153ZRE(6) gives effect to paragraph 1(b) of Article 4.12 of Chapter 4 of the Agreement and provides that, if a requirement that applies in relation to the goods is that the goods must have a regional value content of not less than a particular percentage worked out in a particular way, the regulations must provide for the following:

(a)

the value of the accessories, spare parts, tools or instructional or other information materials to be taken into account for the purposes of working out the regional value content of the goods;

(b)

the accessories, spare parts, tools or instructional or other information materials to be taken into account as originating materials or non-originating materials, as the case may be.

53. To avoid any doubt, subsection 153ZRE(7) clarifies that section 153ZRG is to be disregarded in circumstances where accessories, spare parts, tools or instructional or other information materials fall under the scope of subsection 153ZRE(6).

54. The note to this subsection indicates that the value of accessories, spare parts, tools or instructional or other information materials is to be worked out in accordance with the regulations.

Goods put up in a set for retail sale

55. New subsection 153ZRE(8) gives effect to Article 4.16 of Chapter 4 of the Agreement in relation to goods put up in a set for retail sale.

56. New subsection 153ZRE(8) provides that if:

(a)

goods are put up in a set for retail sale; and

(b)

the goods are classified in accordance with Rule 3(c) of the Interpretation Rules;

the goods are UK originating goods under this section only if:

(c)

all of the goods in the set, when considered separately, are UK originating goods; or

(d)

the total customs value of the goods (if any) in the set that are not UK originating goods does not exceed 20% of the customs value of the set of goods; or

(e)

total production value of the goods (if any) in the set that are not UK originating goods does not exceed 20% of the production value of the set of goods.

57. The note to this subsection provides an example of the operation of this subsection in relation to a set that contains a mirror, brush and comb, which have been classified under Interpretative Rule 3(c) to the tariff classification for combs. The effect of paragraph (c) of this subsection means that the origin of the mirror and brush must be determined in accordance with the origin requirements for mirrors and brushes respectively. Subsection 153ZRE(8) gives effect to subsections (2) - (4) of Article 4.16 of the Agreement. Otherwise, those goods will be captured by subsection 153ZRE(1), which reflects the process for goods that would generally fall under subsection (1) of Article 4.16 to the Agreement.

Section 153ZRF Packaging materials and containers

58. New section 153ZRF gives effect to Article 4.13 of Chapter 4 of the Agreement in relation to packaging materials and containers for retail sale.

59. Subsection 153ZRF(1) gives effect to paragraph (a) of Article 4.13 of Chapter 3 of the Agreement and provides that, if:

(a)

goods are packaged for retail sale in packaging material or a container; and

(b)

the packaging material or container is classified with the goods in accordance with Rule 5 of the Interpretation Rules; then the packaging material or container is to be disregarded for the purposes of this Subdivision.

60. However, in accordance with paragraph (b) of Article 4.13 of Chapter 4 of the Agreement, new subsection 153ZRF(2) provides one exception to subsection 153ZRF(1). This exception applies where the goods are required to have a regional value content worked out in a particular way. In this circumstance, the regulations must provide for the value of the packaging material or container to be taken into account as originating materials or non-originating materials, as the case may be, for the purposes of working out the regional value content of the goods.

61. Without this provision, the value of packaging materials and containers would normally not form part of the value of materials that are used in the production of the goods. Therefore, subsection 153ZRF(2) establishes a head of power requiring that regulations be made to specify the value.

62. The note to subsection 153ZRF(2) explains that the value of packaging materials and containers for the purposes of this subsection is to be worked out in accordance with the regulations.

Subdivision E-Goods that are accessories, spare parts, tools or instructional or other informational materials

Section 153ZRG Goods that are accessories, spare parts, tools or instructional or other information materials

63. New section 153ZRG gives effect to paragraph 1(a) Article 4.12 of Chapter 4 of the Agreement in relation to goods that are accessories, spare parts, tools and instructional or other information materials. Section 153ZRG provides for accessories, spare parts, tools or instructional or other information materials to be UK originating goods when they are imported with other UK originating goods, not invoiced for separately and their amount is customary for the other UK originating goods. This effectively disregards their origin when imported in this way with the other UK originating goods.

Subdivision F-Consignment

64. Subdivision F contains new section 153ZRH, which deals with the consignment requirements applicable to UK originating goods in accordance with the Agreement.

Section 153ZRH Consignment

65. New subsection 153ZRH(1) provides that goods are not UK originating goods under Division 1P if the goods are transported through the territory of one or more non-parties and either or both of the following apply:

(a)

the goods undergo further production or any other operation in the territory of a non-party (other than unloading, reloading, separation from a bulk shipment or splitting of a consignment, storing, repacking, labelling or marking required by Australia or any other operation necessary to preserve the goods in good condition or to transport the goods to the territory of Australia);

(b)

the goods are released to free circulation in the territory of a non-party.

66. New subsection 153ZRH(2) provides that section 153ZRH applies despite any other provision of new Division 1P. This means that even if goods are UK originating goods in accordance with any other provisions of Division 1P, if they come within the terms of subsection 153ZRH(1) they will not be UK originating goods.

67. The section gives effect to Article 4.17 of Chapter 4 of the Agreement which deals with transportation of goods through non-parties.

Subdivision G-Regulations

68. Subdivision G contains new section 153ZRI, which provides a head of power to prescribe regulations to make provisions for and in relation to determining whether goods are UK originating goods under new Division 1P.

Part 2-Verification powers

Item 4 After Division 4L of Part VI

69. This item amends Part VI of the Customs Act to insert new Division 4M, which is titled 'Exportation of goods to the United Kingdom'.

70. New Division 4M contains new sections 126ARA, 126ARB, 126ARC and 126ARD. These new sections impose obligations on people who export originating goods to the United Kingdom and who wish to obtain preferential treatment of customs duty in respect of those goods in that Party, and on people who produce such goods. These provisions give effect to Article 4.23 of Chapter 4 of the Agreement.

Section 126ARA Definitions

71. New section 126ARA defines the term 'Agreement', 'customs authority', 'producer', 'production', 'territory of the United Kingdom' and 'United Kingdom customs official' for the purposes of new Division 4M. With the exception of the terms 'customs authority', 'producer' and 'United Kingdom customs official', the terms have the same meaning as defined in new Division 1P of Part VIII of the Customs Act, inserted by item 3 of Part 1 of the Bill.

72. 'United Kingdom customs official' is defined under this section to mean a person representing the customs authority for the United Kingdom. The term 'customs authority' is defined to have the meaning given by Article 1.4 of Chapter 1 of the Agreement, so far as it relates to the United Kingdom, and means any authority that is responsible under the law of the United Kingdom for the administration and enforcement of its customs laws and regulations. The term 'producer is defined to mean a person who engages in the production of goods.

Section 126ARB Record keeping obligations

73. New section 126ARB inserts a head of power to prescribe record keeping obligations. These record keeping obligations will apply in respect of goods that are exported from Australia to the territory of the United Kingdom.

74. New subsection 126ARB(1) enables regulations to prescribe record keeping obligations that apply in relation to goods that are exported to the territory of the United Kingdom and that are claimed to be Australian originating goods, in accordance with Chapter 4 of the Agreement, for the purpose of obtaining a preferential tariff in the United Kingdom.

75. It is intended that the method of keeping the documents, such as the length of time for which they must be kept and the manner in which they must be kept, will be similar to current record keeping obligations under the Customs Act. However, the type of documents that will be required to be kept will be much broader than current requirements. The requirements will extend to all records relating to the origin of the goods for which preferential tariff treatment is claimed and may include, amongst other things, records associated with the tariff classification of the goods and the origin or value of the materials used to produce the goods.

76. New subsection 126ARB(2) provides that the regulations made for the purpose of subsection 126ARB(1) may impose obligations on an exporter or producer of goods.

Section 126ARC Power to require records

77. Under Article 4.24 of Chapter 4 of the Agreement, the importing party may take action to verify the eligibility of goods for preferential treatment, including requesting the supply of information relating to the production or export of the goods. New section 126ARC gives effect to this Article by imposing a requirement on exporters and producers to produce records to authorised officers, and empowering authorised officers to disclose records to United Kingdom customs officials.

78. Subsection 126ARC(1) provides that an authorised officer (as defined in section 4 of the Customs Act) may require a person who is subject to record keeping obligations under regulations made for the purposes of section 126ARB to produce to the officer such of those records as the officer requires.

79. The note to new subsection 126ARC(1) indicates that, where an authorised officer has requested a person who is subject to record keeping obligations under regulations made for the purposes of section 126ARB, a failure to produce documents or records by that person may be an offence under section 243SB of the Customs Act. The note also indicates that, under section 243SC of the Customs Act, a person does not have to produce a record if doing so would tend to incriminate the person.

80. New subsection 126ARC(2) provides that an authorised officer (as defined in section 4 of the Customs Act) may disclose any records so produced to a United Kingdom customs official for the purpose of verifying a claim for a preferential tariff in the United Kingdom. Records obtained by an authorised officer under new section 126ARC may be 'Immigration and Border Protection information' within the meaning of the Australian Border Force Act 2015 (the ABF Act).

81. Section 42 of the ABF Act prohibits the disclosure of Immigration and Border Protection information except, amongst other things, where the disclosure is authorised by or under a law of the Commonwealth.

82. By including an express provision in the Customs Act to permit the disclosure of information that may be Immigration and Border Protection information to a United Kingdom customs official, the disclosure of such information is required or authorised by a law of the Commonwealth for the purposes of Part 6 of the ABF Act.

Section 126ARD Power to ask questions

83. New subsection 126ARD(1) provides that an authorised officer (as defined in section 4 of the Customs Act) may require a person who is an exporter or producer of goods that:

(a)

are exported to the territory of the United Kingdom; and

(b)

are claimed to be Australian originating goods, in accordance with Chapter 4 of the Agreement, for the purpose of obtaining a preferential tariff in the United Kingdom;

to answer questions in order to verify the origin of the goods.

84. The power to ask questions in the circumstances set out in this section is considered a necessary adjunct to the power to require records in new section 126ARC.

85. The note to new subsection 126ARD(1) indicates that, where an authorised officer has requested a person to answer questions in order to verify the origin of goods in accordance with this subsection, a failure to answer questions by that person may be an offence under section 243SA of the Customs Act. The note also indicates that, under section 243SC of the Customs Act, a person does not have to produce a record if doing so would tend to incriminate the person.

86. Subsection 126ARD(2) enables an authorised officer (as defined in section 4 of the Customs Act), for the purpose of verifying a claim for a preferential tariff in the territory of the United Kingdom, to disclose any answers to questions answered in accordance with new subsection 126ARD(1) to a United Kingdom customs official.

87. The answers to questions obtained by an authorised officer under new section 126ARD may also be 'Immigration and Border Protection information' within the meaning of Part 6 of the ABF Act and therefore cannot be disclosed to a United Kingdom customs official except as allowed by Part 6. By including an express provision in the Customs Act allowing for this information to be disclosed to a United Kingdom customs official, the disclosure is required or authorised by a law of the Commonwealth for the purposes of Part 6 of the ABF Act.

Part 3-Application provisions

Item 5 Application provisions

88. This item operates such that amendments made by Part 1 of Schedule 1 to the Bill, when enacted, apply in relation to:

(a)

goods imported into Australia on or after the commencement of that Part; and

(b)

goods imported into Australia before the commencement of that Part, where the time for working out the rate of import duty on the goods had not occurred before the commencement of that Part.

89. This item also provides that the amendment made by Part 2 of Schedule 1 to the Bill, when enacted, applies in relation to goods exported to the Party on or after the commencement of that Part (whether the goods were produced before, on or after that commencement).

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Customs Amendment (Australia-United Kingdom Free Trade Agreement Implementation) Bill 2022

The Customs Amendment (Australia-United Kingdom Free Trade Agreement Implementation) Bill 2022 (the Bill) is compatible with human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Bill

The purpose of the Bill is to amend the Customs Act 1901 (the Customs Act) to give effect to the Free Trade Agreement between Australia and the United Kingdom of Great Britain and Northern Ireland (the Agreement), signed on 17 December 2021 by introducing new rules of origin for goods that are imported into Australia from the United Kingdom of Great Britain and Northern Ireland (the United Kingdom).

The amendments to the Customs Act will enable goods that satisfy the rules of origin to enter Australia at preferential rates of customs duty. In particular, the Bill will:

•

implement rules of origin to determine goods eligible for preferential tariff treatment in accordance with the Agreement. Goods that satisfy the rules of origin under the Agreement are referred to as 'UK originating goods';

•

enable regulations to prescribe record keeping obligations on exporters that export goods to the United Kingdom and who make a claim that the goods exported are originating goods in accordance with the Agreement, and producers of such goods;

•

enable an authorised officer (as defined in subsection 4(1) of the Customs Act) to disclose information (including personal information within the meaning of the Privacy Act 1988 (the Privacy Act) and Immigration and Border Protection information within the meaning of the Australia Border Force Act 2015 (the Australian Border Force Act)) to customs officials of the United Kingdom for the purposes of verifying the claims for origin of goods exported to the territory of the United Kingdom under the Agreement. Customs official means a person representing a customs authority of the United Kingdom.

Complementary amendments will also be made to the Custom Tariff Act 1995 (the Customs Tariff Act) by the Customs Tariff Amendment (Australia-United Kingdom Free Trade Agreement Implementation) Bill 2022.

The amendments contained in the Bill will be operative on the later of the day on which this Act receives the Royal Assent and the day on which the Agreement, done on 17 December 2021, enters into force for Australia.

Human rights implications

This Bill engages the right to not be subjected to arbitrary or unlawful interference with privacy in Article 17 of the International Covenant on Civil and Political Rights to the extent that the Bill will allow for the collection and disclosure of personal information.

Article 17(1) sets out:

No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation.

Under Article 4.18 of Chapter 4 of the Agreement, a 'Declaration of Origin' document completed by the importer or the exporter or producer or an authorised representative of the exporter or producer shall support a claim that goods are eligible for preferential tariff treatment in accordance with the Agreement. The key information that must be included in a 'Declaration of Origin' document is detailed in Articles 4.18, 4.19, and Annex 4A, of Chapter 4 of the Agreement and includes personal information, that is the exporter and/or the producer's name, address, email address and telephone number.

The Bill in part inserts new sections 126ARB, 126ARC and 126ARD into the Customs Act to enable:

•

regulations to prescribe record keeping obligations that apply in relation to goods that are exported to the United Kingdom and are claimed to be Australian originating goods, in accordance with Chapter 4 of the Agreement, for the purpose of obtaining a preferential tariff in the United Kingdom;

•

an authorised officer to require a person subject to record keeping obligations under the regulations to produce those records;

•

an authorised officer to disclose the records to a United Kingdom customs official in order to verify a claim for a preferential tariff;

•

an authorised officer to require an exporter or producer of goods to answer questions in order to verify the origin of the goods; and

•

an authorised officer to disclose the answers to a United Kingdom customs official in order to verify a claim for a preferential tariff.

Additionally, the record keeping obligations to be prescribed by the regulations will reflect the obligations set out in Articles 4.23 and 4.24 of Chapter 4 of the Agreement in respect of the retention of records and the verification of origin.

The new sections allow the United Kingdom to verify the origin of goods exported from Australia that are claimed to be originating goods. For example, this may include the collection and disclosure of personal information set out in a 'Declaration of Origin' document, to a customs official from the United Kingdom for the purpose of verifying a claim for a preferential tariff.

The verification of the eligibility for preferential treatment is required under the Agreement and the measures in the Bill are directed at the legitimate purpose of facilitating and supporting Australia's economic and international trade objectives and implementing the international legal obligations under the Agreement. The collection and disclosure of personal information is authorised under the Privacy Act and, where applicable, the Australian Border Force Act, with the Bill clarifying that authorised officers may require exporters or producers of goods to produce records or answer questions, which records or answers may be disclosed to officials of the United Kingdom for the limited purpose of verifying a claim for a preferential tariff. The Bill will not alter the existing Australian domestic law protections.

This collection and disclosure is for the limited purpose of verifying a claim made by a person for preferential tariff treatment and the records captured by the new sections only to relate to goods that are exported to the United Kingdom and are claimed to be Australian originating goods for those purposes. As such, the amendments are a reasonable and proportionate response to the legitimate purpose described above. The collection and disclosure of personal information in these circumstances will not constitute an unlawful or arbitrary interference with privacy.

Conclusions

The Bill is compatible with human rights because to the extent that it may engage the right to privacy, will not constitute an unlawful or arbitrary interference with privacy.

Attachment B FREE TRADE AGREEMENT BETWEEN AUSTRALIA AND THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND

REGULATION IMPACT STATEMENT

FINAL ASSESSMENT

25 November 2021

INTRODUCTION

1. This Regulation Impact Statement (RIS) relates to the Free Trade Agreement between Australia and the United Kingdom of Great Britain and Northern Ireland (AU-UK FTA).

2. In accordance with the Australian Government's Guide to Regulatory Impact Analysis, the Department of Foreign Affairs and Trade (DFAT) has completed this RIS to analyse the impact of the decision to sign a bilateral free trade agreement with the United Kingdom (UK). A RIS to inform the decision to commence negotiations was prepared by DFAT in consultation with the Office of Best Practice Regulation (OBPR) in 2019.

3. On 17 June 2020, the then Minister for Trade, Tourism and Investment Simon Birmingham launched negotiations for an FTA with his UK counterpart, the then Secretary of State for International Trade, Elizabeth Truss. Five formal rounds of negotiations were held through a virtual format. The first round of negotiations was held from 29 June to 10 July and the second round from 21 September to 2 October 2020. The third round of negotiations was held from 23 November to 4 December 2020, the fourth round from 22 February to 5 March 2021, and the fifth round from 4 May to 2 June 2021. From July to November 2021, rolling negotiating sessions were held. The Minister for Trade, Tourism and Investment, Dan Tehan, negotiated elements of the agreement with his UK counterparts (Secretary of State Truss, and following her appointment on 15 September 2021, Secretary of State for International Trade Anne-Marie Trevelyan) in regular virtual meetings over the course of negotiations and when he visited London in April and October 2021.

4. At the April 2021 Ministerial discussions in London, Minister Tehan and then Secretary of State Truss agreed that the UK and Australia would expedite negotiations with the aim of announcing an 'Agreement in Principle' (AiP) immediately after the G7 Summit. On 16 June 2021, Australian Prime Minister Scott Morrison and UK Prime Minister Boris Johnson announced that an agreement in principle had been reached on core elements of the free trade agreement negotiations. (See Attachment A - AU-UK FTA negotiations - Agreement in Principle (AiP)). The AiP undertakings are reflected in the final agreement.

5. The proposed AU-UK FTA is a trade agreement covering 32 Chapters. These include trade in goods, trade in services, investment, digital trade, intellectual property, government procurement, competition policy, state-owned enterprises, labour, environment, innovation, development and small and medium sized enterprises.

PROBLEM IDENTIFICATION - WHAT POLICY PROBLEM ARE YOU TRYING TO SOLVE?

6. Australia and the UK are close partners. Our relationship is underpinned by our shared heritage, common values, including democracy and the rule of law, closely aligned strategic outlook and trade and investment links. Brexit, and the UK's resulting independent trade policy, has served to strengthen our ties and revitalise our bilateral relationship to focus on new opportunities.

7. Australia and the UK have complementary trading economies. In 2019-20, 78 per cent of Australia's goods exports were primary products^[1], while more than 85 per cent of the UK's goods exports were manufactures.^[2] As the Joint Standing Committee on Foreign Affairs and Trade outlined in its Inquiry into Australia's trade and investment relationship with the UK, the UK's robust economy and growing population will continue to drive demand for Australian food, education, and services. ^[3] An FTA between the UK and Australia will further open opportunities to grow this trade.

8. Australia's liberal trade policy settings have underpinned our ongoing economic growth. Our open economy and support for rules-based international trade have contributed to the high standard of living Australians enjoy. In 2019, Australia reached its 28th consecutive year of economic growth and was the 13th^[4] largest global economy despite having only the 54th largest population.^[5]

9. The COVID-19 pandemic in 2020 however, led to Australia experiencing two consecutive negative growth quarters in 2020, the first since 1991.^[6] The proposed AU-UK FTA forms part of the Government's strategy to address the economic impacts of COVID-19 and to support an export-led recovery. This includes growing Australia's exports through market diversification and expanding trade opportunities for businesses, in particular SMEs.^[7]

10. Expanding foreign investment, including from the UK, also plays an important role in our COVID-19 economic recovery. The proposed AU-UK FTA contributes to Australia's international competitiveness as it will help encourage new businesses to enter Australia and create new connections into other markets. Increased UK investment into Australia will also encourage competition and increase innovation by bringing new technologies and services to the Australian market.

11. In 2020, an Inquiry by the Joint Standing Committee on Trade and Investment Growth into Diversifying Australia's Trade and Investment Profile concluded in a report entitled 'Pivot'^[8], that there was a need to diversify Australia's trade. The first recommendation was:

a.

That the Australian Government develop and release a plan for trade diversification, with:

i.

a focus on maintaining relationships with existing close trading partners as well as expanding trade with other countries; and,

ii.

a plan for diversifying Australia's range of goods and services exports.

12. The Government's formal response to this recommendation^[9], released in August 2021, notes that it is delivering a comprehensive suite of measures to support Australian exporters to diversify their markets. This includes through creating new export opportunities by negotiating new trade agreements. The report references the mid-June 2021 announcement by Prime Minister Morrison and UK Prime Minister Johnson that agreement had been reached on the core elements of a bilateral FTA.

13. Under the proposed FTA, agricultural exports are a key example of the trade diversification and expansion that will be possible due to the significant tariff and quota reduction and elimination either at entry into force or over a phased period. Commitments associated with the Temporary Entry for Business Persons Chapter broaden the demographic for participation in mobility opportunities between our two countries, and commitments on services provide transparency and certainty for services suppliers, all contributing to maintaining our strong links with the UK and increasing two-way trade.

14. The UK is an important partner with which to expand trade as the world's fifth largest economy^[10], and as a driver of global trade and investment. The UK is our fifth-largest two-way trading partner, with A$31.8 billion in goods and services trade in 2020. ^[11] It is also Australia's fifth-largest merchandise trading partner, with two-way goods trade worth A$21.9 billion in 2020, and our third-largest services trading partner, with two-way services trade worth A$9.9 billion in 2020. The UK is also Australia's third-largest source of foreign direct investment, with foreign direct investment (stocks) valued at A$123.5 billion in 2020, and the second-largest source of foreign investment in terms of total stocks, valued at A$737.6 billion in 2020. Graphs 1-4 and Tables 1-5 provide detail regarding Australia-UK goods and services trade and the investment relationship over the last decade.

Graph 1 : Goods and Services Trade between Australia and the United Kingdom

Source: Office of the Chief Economist, DFAT based on ABS data catalogue 5368.0

Graph 2: Goods Trade between Australia and the United Kingdom

Source: Office of the Chief Economist, DFAT based on ABS data catalogue 5368.0

Graph 3: Services Trade between Australia and the United Kingdom

Source: Office of the Chief Economist, DFAT based on ABS data catalogue 5368.0

Graph 4 : Australia-UK investment relationship Source: Office of the Chief Economist based on ABS data catalogue 5368.0

Table 1: Australia's services trade with the United Kingdom

Source: ABS (cat. no. 5368.0 and 5368.0.55.004) and unpublished ABS data with DFAT adjustments

Source: ABS (cat. no. 5368.0 and 5368.0.55.004) and unpublished ABS data with DFAT adjustments

Source: ABS (cat. no. 5368.0 and 5368.0.55.004) and unpublished ABS data with DFAT adjustments

Source: ABS (cat. no. 5368.0) and unpublished ABS data with DFAT adjustments

15. In 1973 when the UK acceded to the European Communities (EC, which ultimately became the European Union in 1993), trade data between Australia and the UK indicates that UK membership to the EC had a very negative impact on two-way trade. It resulted in increased trade restrictions, particularly high tariffs and quotas on Australia's agricultural products. Table 6 shows between financial years 1972/73 and 1975/76 key Australian agricultural export commodities dropped by as much as 40 to 100 per cent. Volumes of apple exports to the UK dropped by 40 per cent, beef by 90 per cent, sheep meat by 70 per cent, cheese by 80 per cent, sugar by 85 per cent, rice by 60 per cent, wheat by nearly 90 per cent and butter exports stopped completely.

Table 6: Australian exports of selected commodities to the UK, 1972-73 to 1975-76

Source: ABS export data

16. In recent decades, Australia's agricultural exports to the UK have remained relatively low (A$723.6 million in 2020, or 1.5 per cent of Australia's total agricultural exports). ^[12] Submissions received by industry throughout the AU-UK FTA negotiations, confirm that duties and quotas are the greatest barriers to trade with the UK on major agricultural exports such as beef, sugar, wine, dairy, sheep-meat, extra-virgin olive oil and nuts. In the absence of improved market access through a trade agreement, Australian exporters would continue to face high tariffs into the UK for these key products.

17. Stakeholders have also called for an FTA that will complement and support other agreements that Australia has struck with the UK since Brexit. These include the Wine and Mutual Recognition Agreements that Australia signed in 2019. These agreements ensure recognition of Australian wine making techniques and common testing certifications for products such as medical devices, machinery and automotive products. This was an important step in Australia's post-Brexit preparations as industry called to minimise disruptions to trade flows and for as much certainty for exporters as possible. Having achieved this, industry now calls for the proposed AU-UK FTA to streamline standards further and remove other barriers to trade.

18. Enhanced arrangements for temporary entry, in particular the mobility of professionals such as in legal, accounting, engineering and architecture professions, were also a key ask of stakeholders in the lead up to the proposed AU-UK FTA negotiations. These issues are addressed in the FTA's Temporary Entry of Business Persons and Professional Services chapters and associated commitments, as outlined in more detail in the Benefits and Impact Analysis section.

Australia's economic outlook

19. Australia has responded to the COVID-19 pandemic by providing fiscal and monetary responses to support economic activity. Sustainability challenges remain. A durable recovery from the pandemic includes increasing opportunities for businesses to invest and diversify trade,^[13] assisted through the conclusion of new FTAs such as the proposed AU-UK FTA.

20. The Reserve Bank of Australia (RBA) has predicted that the Australian economy will transition from recovery to expansion phase earlier than expected, but this is contingent upon vaccination rates rising. The RBA also predicted that the outlook was likely to be uneven across industries, reflecting the emergency period that has been in place since 18 March 2020 including closing borders to protect Australians during the COVID-19 pandemic which will continue until 17 December 2021^[14]. This emergency period has resulted in supply disruptions and restrictions in parts of the services sector such as retail and education.^[15]

21. The closure of Australia's international border and the related drop in migration has reduced growth in services sectors, especially tourism and international education.^[16] It has also constrained labour supply in sectors where temporary migrants have been a substantial share of the workforce, such as in the agriculture sector, the aged and disability care and hospitality sectors.^[17] The AU-UK FTA is looking to address, in part, some of these challenges.

UK's economic outlook

22. UK's economic outlook is improving after disruptions associated with Brexit and COVID-19. In 2020, UK GDP contracted 9.9 per cent, the largest annual fall on record. However, in the fourth quarter of 2020, GDP growth exceeded Bank of England expectations, rising by 1 per cent with increases in services, production and construction output. Analysts now expect the UK economy to return to pre-COVID levels by the middle of 2022, largely due to the vaccination roll-out and the UK Government's easing of lock-down restrictions. ^[18]

23. There are many opportunities to use the proposed AU-UK FTA as a vehicle for economic recovery from COVID-19 for both countries. These are explained in more detail in subsequent sections below.

WHAT ARE THE PURPOSE AND THE OBJECTIVES OF GOVERNMENT ACTION

24. The purpose of signing the proposed AU-UK FTA is to open up new opportunities, and to ensure existing access is maintained, for goods and services trade and investment with the UK. The broad objective of signing the proposed AU-UK FTA is to expand economic opportunities for Australian businesses and consumers and, ultimately, to contribute to maintaining and improving the living standards of Australians.

25. This is consistent with Australia's 2017 Foreign Policy White Paper ^[19], which suggests that the purpose of signing new FTAs is to contribute to diversifying Australia's trade and guarding against the risk of discriminatory trade blocs that could damage Australia's economic and security interests. FTAs also put pressure on the multilateral trading system to further liberalise and to broaden the range of issues the multilateral system engages with, as has happened with environmental goods and digital trade. Signing an FTA with the UK will also send a signal to the world of Australia's ongoing commitment to trade liberalisation, helping to counter protectionist sentiment during a period of geopolitical uncertainty and trade tensions.

26. A key objective for committing to the AU-UK FTA is to secure UK agreement to remove barriers that were impeding trade in goods, for example, while the UK was a member of the European Union. Some of the barriers to goods trade include tariffs and quotas on exports and imports. Reducing or eliminating these quotas and tariffs means that trade can flow more freely, resulting in more competitively priced products for consumers in both countries and improved standards of living. Removing tariffs on UK goods, for example UK manufactured vehicles, will provide more choices for Australians as they will have greater access to competitively priced motor vehicles.

27. A selection of key goods market access outcomes, which provide further practical examples of the purpose and objectives of committing to an FTA with the UK, are provided in the Agreement in Principle (AiP) at Attachment A to this RIS.

WHAT ARE THE OPTIONS TO ACHIEVE THESE OBJECTIVES?

28. This RIS considers two options: to sign or not to sign the proposed bilateral AU-UK FTA.

29. If the Government does not sign the proposed AU-UK FTA, this would be a missed opportunity for Australian exporters and investors to benefit from an improved trading relationship. It is in Australia's interest to ensure the competitiveness of its agricultural and industrial exports into the UK, particularly at a time when many of Australia's trade competitors are negotiating preferential access with the UK, including through bilateral FTAs and through the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) as the UK formally requested accession on 2 June 2021. Signing the proposed AU-UK FTA will protect and improve Australia's competitive position relative to other trading partners, open new commercial opportunities for Australian businesses and exporters, and contribute to Australia's COVID-19 economic recovery.

30. Not signing the proposed AU-UK FTA would also mean that Australia would be trading with the UK on Most-Favoured Nation (MFN) terms as in the World Trade Organization (WTO). While the UK's global tariff schedule indicates that its tariffs are relatively low, they are high for key products of interest to Australia for example wine, beef and sheep meat. The UK maintained trade restrictions on goods and services of interest to Australia while it was part of the EU. Without the proposed AU-UK FTA to reduce these restrictions, Australian exporters would be constrained in their ability to capitalise fully on the opportunities presented by the UK's departure from the EU.

31. Finally, not signing the proposed AU-UK FTA would also mean that Australia would not be able to benefit from the market access outcomes nor the chapter text commitments that will likely serve to attract investment and support mobility for business people and professionals in the post-COVID-19 recovery environment.

BENEFITS AND IMPACT ANALYSIS

32. There are multiple influences on international trade and investment flows, such as current economic conditions, exchange rate fluctuations, supply and demand factors, and environmental issues such as natural disasters. This has an impact on determining a 'cause and effect' relationship between an FTA and trade and investment outcomes.

33. Measuring what would have happened if the FTA had not entered into force is complex. Data considered in isolation may not always reveal the full picture. Comparisons between Australian and partner-country trade data can be difficult, reflecting valuation differences, transhipments through third-party countries, and timing issues. The impact of recent disruptions to trade due to COVID-19 and the effects of trade tensions also add to the complexity. If we do not sign the proposed AU-UK FTA, trade will likely continue on its current growth trajectory, but the opportunity cost may be significant: DFAT considers that the benefits to Australia in signing the AU-UK FTA, as explored in detail below, are greater than not signing.

34. DFAT's qualitative assessment is that signing the proposed AU-UK FTA will result in a net benefit for Australia. This is due to the likelihood of increased business activity and confidence, a greater range of competitively priced goods imported from the UK for consumers, and improved access and competitiveness of Australian goods and services into the UK, which is good for Australian business.

35. This assessment is supported by recent studies. In 2018, DFAT commissioned an independent study on business utilisation of Australia's FTAs. The FTA Utilisation Study^[20] undertaken by PricewaterhouseCoopers (PwC) found Australia's FTAs, focusing on our FTAs with China, Japan and Korea, found FTAs were being widely used and were having a positive impact on business confidence, activity, strategy, expansion planning, and international investment, including in services sectors.

36. The PwC research highlighted the 'head turning' effect of Australia's trade agreements with China, Japan and Korea, contributing to the positive perception of Australia as a place to invest and do business. It also noted businesses reporting increases in domestic demand for goods and services from businesses trading internationally.

37. DFAT estimates that it is likely that the proposed AU-UK FTA will have a similar effect on Australian markets resulting in an overall net benefit for Australian businesses and consumers. More detailed evidence supporting this proposition is provided below:

The impact of key goods market access outcomes for Australia

38. Under the proposed AU-UK FTA, almost 99 per cent of Australian goods exports (valued at A$9.2 billion on average over the period 2017 to 2019^[21]) will enter the UK duty-free on entry into force. Barriers that have been in place for just under 50 years on Australian exports will be removed across a range of key products including wine, motor vehicle parts, clothing, seafood, grains, fruit and vegetables, honey, nuts and olive oil. Under the AU-UK FTA, tariff reductions will be locked in, providing certainty for Australian exporters.

39. This is highly relevant as Australia is one of the top 15 agricultural exporters in the world (WTO 2020a), with the agricultural sector exporting about 70 per cent of production to 192 countries (ABS 2020). It has been assessed that this international success could not have been achieved without government and industry partnerships to secure market access in global markets. Negotiated outcomes in multilateral forums, such as the World Trade Organization (WTO), and preferential trade agreements^[22] have also helped secure market access outcomes over time.

40. Of particular significance are commitments secured under the proposed AU-UK FTA for immediate access to transitional duty-free quotas on beef, sheep meat, dairy and sugar, with tariffs eliminated after 10 years for beef and sheep meat and phased tariff elimination for dairy and sugar, and for elimination of tariffs on wine and short and medium grain milled rice immediately on entry into force. Expanding access to imports lowers prices for imported goods, and in turn contributes to capital accumulation, productivity, and job creation. Removal of these tariffs and quotas is likely to increase trade, stimulate economic activity and provide more choice for consumers in both countries.

41. These outcomes will result in a marked improvement to Australia's goods market access to the UK and allow Australia's agricultural producers to compete on an equal footing with competitors including the European Union, which already enjoys duty free access to the UK market.

42. Table 7 summarises the agreed tariff elimination schedule that will apply to Australia's major goods exports to the UK. Table 8 details the main dutiable Australian exports to the UK.

Table 7 : Elimination schedule of UK tariffs on imports of Australian goods

Table 8 : Key dutiable Australian exports to the UK

43. For a very limited number of products - 103 lines in total comprising long grain rice, poultry, pork, processed meats, and eggs - the UK has not offered to eliminate tariffs.

Wine

44. Currently, wine is Australia's largest dutiable export to the UK by value, with exports valued at A$443 million per annum in the period 2017-19. Current UK tariffs on Australian wine range between Great British Pound (GBP) 10 and 26 per hectolitre, equating to customs duties of around A$43 million each year, or an ad valorem equivalent of around 10 per cent. The UK will eliminate these tariffs immediately on entry into force.

45. The full elimination of these tariffs under the AU-UK FTA offers Australian wine producers an opportunity both to increase their profitability and expand existing trade by reducing financial costs and administrative burdens associated with exporting to the UK.

46. Providing further opportunities for Australian wine producers to diversify their export markets is vital. With reduced demand from China and other disruptions to the wine industry from the 2020 bushfires and the global pandemic, the UK has been an important driver of recovery for the Australian wine industry. Wine Australia estimates exports to the UK increased by 40 per cent to A$255 million in the first half of the 2020-21 financial year and by 8 per cent to A$218 million in the second half.^[23] This places the UK first in terms of destination for exports by volume (increasing by 16 per cent to 269 million [30 million 9-litre case equivalents] in 2020-21) and second by value (increasing by 23 per cent to A$472 million and volume in 2020-21)^[24].

47. While this represents an encouraging area of growth, our overall wine exports by value and volume globally remain low (down 10 per cent in value to A$2.56 billion, and 5 per cent in volume to 695 million litres [77 million 9-litre case equivalents], compared with the previous financial year). An FTA with the UK could support a rebound in the industry by reducing the financial and administrative barriers for Australian producers outlined above, and demonstrate our commitment to trade diversification in the wine industry with a focus on the UK as an important export market.

Beef

48. Tariffs on Australian exports of beef to the UK will be eliminated after ten years. During the transition period, Australia will have immediate access to a duty-free quota of 35,000 tonnes, rising in equal instalments to 110,000 tonnes in year 10. In the subsequent five years, a safeguard in the form of a duty of 20 per cent will apply for the rest of the calendar year to beef imports exceeding a 122,000 tonne threshold, which will rise in equal instalments to 170,000 tonnes in year 15.

49. The availability and use of large areas for farming in Australia advantage Australian beef producers globally, as well as relative to the UK. However, despite our position as one of the top exporting countries for beef globally, the UK as an export destination currently makes up a very small proportion of Australia's total exports. Industry estimates that in 2020, the UK imported 314,000 tonnes of beef, of which just 1567 tonnes came from Australia, approximately 0.15 per cent of all Australian beef exports.^[25]

50. Although global demand was impacted by the pandemic over this period, this figure represents an overall trend for UK beef imports, the vast majority of which come from Ireland (80 per cent of total UK imports) and other European countries.^[26] Physical proximity explains some of this, while the UK's membership of the EU also acted as a barrier to trade with non-European countries such as Australia.

51. Now that the UK has left the EU, there is scope for the UK to diversify its imports and reduce dependency on Ireland to meet the UK's domestic beef consumption needs. An FTA with the UK not only offers Australian beef producers the opportunity to expand and diversify its exports, it also offers UK importers and consumers an alternative source of high-quality and competitively priced beef.

Sheep meat

52. Tariffs on Australian exports of sheep meat to the UK will be eliminated after ten years. During the transition period, Australia will have immediate access to a duty-free quota of 25,000 tonnes, rising in equal instalments to 75,000 tonnes in year 10. In the subsequent five years a safeguard will apply on sheep meat imports exceeding a volume threshold of 85,000 tonnes, rising in equal instalments to 125,000 tonnes in year 15, levying a tariff safeguard duty of 20 per cent for the rest of the calendar year.

53. In 2020, the UK imported 67,500 tonnes of sheep meat, about 14 per cent of which came from Australia.^[27] Despite falling lamb consumption over time, 2020 saw a shift in consumption patterns in the UK, with lamb retail volumes up 4 per cent in the year.^[28] The UK also remained one of the top global importers of lamb, fourth behind France, the US, and China.^[29]

54. A recent report by the UK's Agriculture and Horticulture Development Board (AHDB) recognises that UK sheep meat farmers need to be ready to compete with Australian sheep meat exporters.^[30] Currently, the primary market for UK sheep farmers and producers, aside from the domestic market, are countries in the EU. The AHDB report calls for increased market access for UK sheep meat into alternative overseas markets other than the EU. As the UK is currently negotiating new trade agreements with a number of economies, it is possible that alternative export market opportunities will arise for UK sheep farmers, which could in turn create a gap in the UK market for Australian exporters. As Graph 5 illustrates, the global strength of Australia's sheep meat export industry suggests that industry is ready to fill that gap.

Graph 5: Major sheep meat exporters and importers (in tonnes)

55. Additionally, as with beef, Australian producers have an advantage over UK producers, with larger farming areas and lower farming costs (such as more ewes managed per full-time labour unit, and lower costs for machinery and buildings).^[31] Although Australia remains a top exporter, we face a number of challenges. Like our other exports, overall impacts from the COVID-19 pandemic have affected the sheep meat industry, but other industry-specific issues have affected production as well. Drought in 2018 and 2019 led to diminished flock, which remains an issue into 2021, and with China's domestic sheep meat production on the rise in coming years, Australian producers are facing increased competition globally.^[32] As with other commodities, an FTA with the UK could go some way to helping Australian farmers and sheep meat producers diversify and expand their export markets over time.

Sugar

56. Tariffs on Australian sugar exports to the UK will be eliminated over eight years. During the transition period, Australia will have immediate access to a duty-free quota of 80,000 tonnes, rising by 20,000 tonnes each year, reaching 220,000 tonnes in year eight. The estimated increase in Australian trade value for sugar is A$47 million in year one, rising to A$130 million in year 10, assuming the duty-free quota is filled. Removal of tariffs reduces barriers to trade and enhances Australia's position as a competitive international source of sugar.

57. This was echoed by the Australian Sugar Milling Council, which states it is "vital to continue to grow market options for the future of the industry" outside of Australia's existing export markets in Asia.^[33]

58. Expanding market opportunities for Australian sugar producers is also likely to have a regional effect in Australia, with the vast majority (95 per cent) of Australian sugar produced in Queensland. ^[34] An FTA with the UK will therefore have a direct impact for sugar cane producers in Australia whose prospects are improving after the 2019-20 droughts affected yields.^[35] Most sugar producers in Australia are also experienced exporters, with around 80 per cent of all sugar produced in Australia exported overseas^[36].

59. Australian sugar exports could also help meet consumer demand in the UK. With consistently low yields over the last few years, sugar beet production in the UK and the EU has remained low, leading to a trade deficit in sugar.^[37] Additionally, Australian sugar producers primarily grow sugar cane, offering the UK both an alternative source of sugar imports and farming options, which could further fill gaps in the UK domestic market due to recent diseases in sugar beet crops in both the UK and EU.

Dairy

60. Tariffs on Australian dairy exports to the UK will be eliminated over five years. During the transition period, Australia will have immediate access to duty-free quotas:

•

for cheese, of 24,000 tonnes, rising in equal instalments to 48,000 tonnes in year five, representing A$136 million in increased trade in year one, rising to A$272 million in year five, if the quota were filled

•

for non-cheese dairy, of 20,000 tonnes each year, representing an additional A$52 million in trade each year, if the quota were filled

•

for butter, of 5,500 tonnes, rising to 11,500 tonnes in year five, representing estimated additional trade of A$35 million in year one, rising to A$76 million in year five, if the quota were filled.

61. The dairy industry is the fourth largest rural industry in Australia, generating around A$4.8 billion in farmgate value in 2019-20.^[38] Most of Australia's export markets for dairy products are in Asia.^[39] As such, an FTA with the UK could help Australian dairy producers further diversify their export markets.

62. Given the volatility of dairy products generally (due to the perishable nature of most goods, and susceptibility of production to unforeseeable events such as adverse weather conditions and disease), having greater diversity in our export markets could help reduce vulnerability to shocks. As Dairy Australia notes, "although most Australian dairy is consumed domestically, international markets and events have a major influence on Australian farmgate milk prices."^[40] Supporting Australian dairy farmers and producers to expand their export markets could also help the many dairy farmers and producers who were affected by drought early in the 2019-20 season.^[41]

63. In addition to the benefits of diversifying trade for Australian dairy exports, the UK faces high domestic demand for dairy products and new challenges to meet that demand. Australian exports of dairy could help fill the domestic supply-demand gap in the UK. Like Australia, the majority of dairy products produced in the UK are for domestic consumption, though the UK does export some milk, cheese, cream and butter.^[42]

64. There is a general trend of a trade deficit in the UK for dairy, amounting to £1.16bn (A$31.2) for all dairy products in 2020.^[43] Cheese and butter - two goods that an FTA with the UK would cover - have seen trade deficits in the UK for years, where imports outstrip exports. Unless domestic production is able to meet demand, there could be a gap in the market for Australian exporters in the UK. That gap may increase considering the UK's FTA negotiation agenda and increasing global demand for dairy products^[44], which may see more UK dairy exported to new markets and create a further domestic gap in the UK that Australian dairy could fill.

Rice

65. UK tariffs on Australian short and medium grain milled rice will be eliminated on entry into force. Tariffs on broken rice will be eliminated after four years, with access to a duty-free transitional quota of 11, 500 tonnes per year. Australia will also have access to a permanent duty-free quota of 1,000 tonnes per year for long grain milled rice.

66. According to SunRice Chairman, Laurie Arthur, the removal of quota and tariff arrangements under an FTA for short and medium grain varietals "will drastically increase the attractiveness of the United Kingdom as an export destination for our Australian rice products."^[45]

67. The UK is a net importer of rice, importing the equivalent of A$678m worth of rice in 2019.^[46] Rice imports in the UK are primarily from India (A$154m) and Pakistan (A$127m), though some rice also comes from Italy (A$70.4m) and Spain (A$63.5m).^[47] Although the 2020 pandemic and adverse weather conditions affected rice trade globally, these countries have largely remained the UK's main import markets for rice. However, with ongoing trade issues as a result of Brexit, it is possible that Australian producers may be able to fill gaps in the UK market left by EU exporters from Italy and Spain.

68. Additionally, as with Australian sugar producers, Australian rice producers are experienced exporters, with an average of 350,000 tonnes per year of rice exported between 2010-11 and 2019-20.^[48] This represents the majority of Australia's total rice crop, around 74 per cent in 2020.^[49] As with other commodities, providing opportunities for Australian rice producers to further diversify their export markets could help expand the industry and reduce its vulnerability to shocks.

Seafood

69. UK tariffs on most Australian seafood will be eliminated on entry into force of the agreement, with remaining tariffs eliminated after three years. Tariffs eliminated on entry into force include those on all finfish as well as the 12 per cent tariff on fresh and frozen rock lobster.

70. As Australian fisheries exports are dominated by high-value products, such as rock lobster^[50], this outcome is expected to have a positive market impact. The elimination of tariffs provides an opportunity for an alternative export market to grow.

71. As Graph 6 illustrates, there was a drop in rock lobster exports in 2020. Economists suggested that this was primarily due to a reduction in export trade with China and freight disruptions due to the global pandemic. ^[51] China accounted for around 91 per cent of Australian rock lobster exports in 2019 and 2020.^[52]

Graph 6 : Outlook for rock lobster exports ^[53]

72. There are uncertainties around the projections, for example demand from China, but it is understood that removing tariffs under the AU-UK FTA will incentivise exporters and will contribute to a bounce back in overall exports. This would result in an overall net benefit to Australia, which is reinforced in Austral Fisheries submission to the proposed AU-UK FTA negotiations which stated that 'a reduction in tariffs would increase demand for Australian seafood creating a significant increase in value added production and Australian jobs.'^[54]

Honey

73. The UK's 16 per cent tariff on Australian honey will be eliminated on entry into force of the agreement. The Australian Honey Bee Industry Council (AHBIC), the peak body for beekeeping in Australia, stated in a submission to a Senate enquiry into the future of beekeeping, that Australian beekeepers are disadvantaged by tariffs imposed on honey exported from Australia. It states, 'Beekeepers incomes are being held back by the imposition of these tariffs on honey exported to those countries'.^[55] Removal of these tariffs based on industry interests is a net benefit for Australia as Australian beekeepers have the opportunity to expand further into the UK market without the financial imposition of tariffs.

Horticulture

74. UK tariffs on most Australian fruits and vegetables will be eliminated on entry into force of the agreement, with tariffs on other products of Australian export interests eliminated after three years and all remaining tariffs eliminated after seven years. Tariffs eliminated after three years include those on apricots, nectarines, peaches, strawberries, asparagus, beans, tomatoes, apples (except cider apples) and pears (except perry pears).

75. Tariffs eliminated on entry into force include those on:

•

almonds, macadamias, and other nuts; and

•

avocados, cherries (except sour cherries), dried fruits, citrus fruits, carrots, and table grapes.

76. In 2019-2020 the horticulture sector overall exceeded A$15 billion in production value and employed over 60,000 people.^[56] Of that, the value of exported fresh and processed fruit, vegetables and nuts was over A$3.1 billion. Australia exports over half of its agricultural produce^[57] and the Australian Food and Grocery Council has commented that Australia produces enough food to feed 75 million people.^[58] Drought and disruptions to international freight as a result of COVID-19 have had a detrimental impact on the productivity of Australia's horticulture sector.

77. Figures in Graph 7 show that, despite this, trade continues to increase, albeit at a slower pace. Further opening of markets such as the UK through tariff removal is likely to be a contributor toward the horticultural sector's post-COVID economic recovery. This is very important considering its productivity potential. This will also benefit UK consumers as greater choice will likely reduce costs while greater access to a wider variety of horticultural products that have a reputation for being high-quality, reliable and safe will benefit UK consumer health.

Graph 7 : Trade in horticulture from 2010-2020 ^[59]

78. The outcome under the proposed AU-UK FTA in horticulture is also consistent with what industry has called for, for example, a request to eliminate tariffs on nut exports on entry into force. The Australian Nut Industry Council confirmed that the UK does not grow nuts commercially and it would be in UK consumer interest to have access to a greater choice of nut imports.^[60] This is also reflected through the views of Horticulture Innovation Australia in its commentary on the AU-UK FTA: 'The Australia-UK free trade negotiations present an exciting opportunity for our economies. The Australian horticulture sector is always looking for ways to improve trade links in accessible international markets.'^[61]

Wheat/Barley - Other cereals

79. For wheat, Australia will have immediate access to a duty-free quota of 80,000 tonnes per year on entry into force of the agreement, equating to an additional A$28.5 million in trade value per year if the quota is filled. Tariffs will be eliminated after four years. Tariffs on barley will also be eliminated after four years, with a transitional duty-free quota of 7,000 tonnes per year, equating to an additional A$2.2 million in trade value per year if the quota is filled. Australia has existing WTO duty free access to the UK for durum and high-quality wheat, canola and chickpeas.

80. Drawing out wheat as a key example, Australia is a significant exporter, with most of the wheat produced in Australia sold overseas. As with other agricultural commodities, drought, increased mice populations along eastern Australia and COVID-19 have seen a recent dip in productivity as illustrated in Graph 8. Economists are predicting that global COVID-19 economic recovery is on track, and when combined with predicted favourable seasonal conditions in Australia, there is a high likelihood that the Australian market will start to bounce back in 2021/22.^[62]

Graph 8 : Australian wheat supply 2000-2021 ^[63]

81. Another contributing factor is that supply from other key wheat exporters such as the Russian Federation and the EU is mixed due to unfavourable seasonal conditions.^[64] It is possible that demand for wheat will outstrip supply globally. While wheat production in the UK is also forecast to increase from the drought affected low of the previous season it will also be impacted by a wet finish.^[65] The duty-free quota secured under the AU-UK FTA for wheat will likely provide an excellent opportunity for Australia's wheat exporters to meet the demand in the UK that might not be met from other markets given the high possibility of market change as illustrated above.

82. Furthermore, the grains and cereals industry has reinforced, through consultations on the AU-UK FTA, that liberalising markets and removing trade distortions in the global trade system is of crucial importance to both Australian grain farmers and the Australian economy as a whole. GrainGrowers, a grain farmer representative group, has commented that development and implementation of positive international trade and market access outcomes for the Australian grains industry and its customers is a priority.

Processed foods

83. UK tariffs on most Australian processed food exports will be eliminated on entry into force of the agreement. Key outcomes include the following high tariffs being removed:

•

biscuits (eight per cent), breakfast cereals (eight per cent and a range between two per cent + 16 GBP/100kg and four per cent + 38 GBP/100kg), chocolate (eight-14 per cent), and pasta (a range from eight per cent to 45 GBP/100kg)

•

confectionary (six-12 per cent) and food supplements (eight-12 per cent) and

•

olive oil (102-112 GBP/100kg).

84. Removal of these tariffs will assist in improving export potential for Australian processed food companies. It will also support the competitiveness of Australia's processed foods in the UK. This provides options for Australia's processed food exporters and reduces the concentration risk of supplying to a single market or region. This has been reported as an issue in the past including in a Parliament of Australia publication entitled "The Future of the Australian Processed Food sector"^[66]. This publication suggests that in order for the sector to flourish, it must become more internationally competitive in a variety of markets.

85. The proposed AU-UK FTA outcomes, removing tariffs on processed foods relevant to Australia, contributes to fulfilling that recommendation. It is consistent with recommendations by a Senate Inquiry into Australia's food processing sector^[67] including resolution of factors that inhibit export market access, growth and development and that the government continue to lobby for the reduction of tariff, non-tariff barriers and subsidies in export destinations.

Industrial products

86. Under the proposed AU-UK FTA, the UK will immediately eliminate its tariffs on all Australian origin industrial goods, except ammonia and aluminium, where tariffs of up to six per cent will be removed in year four.

87. This is predicted to lead to a duty saving of A$14 million per year on existing Australian exports to the UK, including on vehicle parts, clothing, electrical machinery, plastic products, and electrical lighting. This saving will likely have a positive impact on Australia's industrial goods exports as it will open the market for new growth and increased income for industrial goods exporters. The case of complementary trade on vehicle parts from Australia and vehicle exports from the UK to Australia is likely to have an overall positive cyclical effect.

Key market access outcomes for the UK

88. Australia's merchandise imports from the UK were worth, on average, A$7.1 billion per annum over the period 2017 to 2019.^[68] Under existing arrangements, 42 per cent of UK imports entered Australia duty free, while the remaining 58 per cent, or A$4.1 billion, were subject to MFN import duties not exceeding 5 per cent, including cars, whisky, confectionery, biscuits and cosmetics. Cars (passenger vehicles as per Table 11) made up by far the largest share of imports from the UK subject to import duties.

89. On entry into force of the FTA, 98 per cent of Australian merchandise imports from the UK will be permitted to enter Australia duty-free. Tariffs on all remaining imports from the UK (steel and dairy) will be eliminated within five years. Tables 10 and 11 summarise the market access outcomes Australia will grant the UK under the proposed AU-UK FTA.

90. Australian consumers will benefit from increased competition, greater choice and lower prices as a result of this tariff elimination. While the removal of tariffs on Australian merchandise imports will result in reductions in tariff revenue, this will likely be offset, over time, by the resultant effects of increased economic activity.

91. The competitive impacts on Australian businesses of the reduction in tariffs on imports from the UK are expected to be marginal. Firstly, tariffs are low and Australian producers benefit from natural protection because of the cost of transporting items from the UK to Australia. Secondly, Australia already provides duty free access on these products to our other FTA partners, including North Asian and South East Asian countries, and the United States. Australian producers already operate in a competitive marketplace and the chief change from the FTA is to allow UK producers to compete on a level playing field in that marketplace. Key imports from the UK also constitute inputs into Australian production processes, such as construction machinery, so the small reductions in tariffs may also benefit Australian businesses where such costs are passed on.

92. Passenger vehicle imports have the highest import value and would therefore, in theory, have the biggest impact on local industry. As Australia no longer participates in large scale passenger vehicle manufacturing, this will not impact local producers. The tariff removal will likely have a positive impact on Australian consumers and businesses if passed on by importers.

93. The removal of the 5 per cent tariff on whisky is likely to have a minimal impact on the whisky industry in Australia. As evidenced in Table 9, Australia is already a top 10 export destination for Scotch whisky meaning that Australian distilleries are already competing and yet have a steady growth trajectory. A study from Deloitte^[69] noted that there has been a distinct Australian consumer trend toward premium spirits such as whisky in recent decades. Australia's whisky industry has responded to this. In 2015, there were reportedly around 30 whisky distilleries across Australia, of which 11 were located in Tasmania.^[70] In 2021, there are estimated to be 333 distilleries spread across NSW, ACT, South Australia, Victoria, Queensland, Western Australia and Tasmania producing not just whisky but gin, vodka, rum and other spirits, indicating that it is a strong and diversified domestic industry that Australian consumers support.^[71]

Table 9: Largest export destinations for Scotch whisky in 2020^[72]

Table 10 : Elimination schedule of Australian tariffs on imports of UK goods

Table 11 : Key goods market access outcomes for the UK

94. Table 11 indicates the third highest Australian import from the UK by value is in bread, pastry, cakes and biscuits. This is an increasingly international market and Australian manufacturers of baked goods, which are spread across the country, are already competing domestically with famous UK baked goods such as McVities and Nairns. These are common on Australian supermarket shelves. It is important to note that the reduction in Australian tariffs on UK products of 5 per cent will be matched by a reduction in complex UK tariffs ranging up to 16 per cent plus 26 GBP per 100kg on Australian exports of these products to the much larger UK market.

95. Australian baked goods producers have indicated they see the balance of outcomes in their favour. Arnotts Group is a major employer in the baked goods industry and has already indicated its support of the proposed AU-UK FTA, citing the potential growth in local manufacturing as a result of lowering tariffs.^[73] Other key Australian producers are increasingly integrated into global supply chains.

96. An extensive stakeholder consultation process was undertaken for the proposed AU-UK FTA negotiations, as detailed in the 'Who did you consult and how did you incorporate their feedback' section of this RIS, with feedback incorporated into negotiating positions. Industry groups and businesses did not raise specific concerns over increased competition consequent on the removal of Australian tariffs on UK imports, although some sectors, such as the steel industry, considered that it was important that tariffs and other protection be eliminated on a reciprocal basis.

97. The Regulatory Burden Estimate is at Attachment B. The impact of key goods chapter outcomes Impact on rules of origin procedures

98. The Chapter on Rules of Origin specifies the rules under which goods imported from a Party are considered eligible for preferential tariff treatment. It includes liberal rules of origin that will facilitate market access and reflect modern production processes and existing and future global value chains.

99. Liberal Product Specific Rules (PSRs) are designed to support Australian and UK economic and production interests. The efficient and low-cost processes to prove originating status of goods will reduce the amount of paperwork at the border for traders and customs authorities. These improved procedures allow for Declarations of Origin (DOO) to be either self-declared by the producer or exporter or completed by an authorised issuing body. Importers will also be able make a claim for preferential tariff treatment without the need for a DOO based on 'importers knowledge'.

Impact on customs procedures

100. The Chapter on Customs Procedures and Trade Facilitation (CPTF) makes commitments for efficient and transparent customs procedures to facilitate increased bilateral trade. The Chapter builds on the commitments both Parties have agreed to in the WTO Trade Facilitation Agreement. It provides greater certainty, transparency and predictability for Australian traders with commitments for goods to be released within 48 hours from customs and within six hours for both perishable goods and expedited shipments.

101. This provides greater predictability for Australian traders on how their goods will be treated through clear timeframes for the issuance of advance rulings on tariff classification and on whether their good is originating.

Impact on sanitary and phytosanitary (SPS) rules

102. The SPS Chapter is designed to help facilitate trade. It reaffirms the Parties' commitments in the WTO SPS Agreement, and includes detailed commitments on regionalisation, equivalence and verification. It preserves Australia's right to continue to implement a robust, science-based biosecurity regime.

Impact on technical barriers to trade (TBT)

103. The TBT Chapter builds on the close institutional relationships between Australia and the UK by increasing cooperation and information exchange. It includes commitments on conformity assessment, international standards and technical regulations that build on the WTO TBT Agreement to further facilitate trade and enhance transparency. The chapter includes a cosmetics annex, with information sharing requirements and commitments on animal testing.

104. The proposed AU-UK FTA will also address contemporary issues such as animal welfare and combatting antimicrobial resistance which have not previously been addressed in Australian FTAs. Impacts include:

-

promoting enhanced cooperation, consultation and information exchange on animal welfare issues of mutual interest, including through a Joint Working Group

-

recognising each Party's right to establish its own policies and priorities for the protection of animal welfare and to adopt or modify its laws, regulations and policies, while also recognising that it is inappropriate to encourage bilateral trade by weakening or reducing animal welfare protections, and that the Parties should endeavour to continue to improve such protections

-

recognising the serious global threat to human and animal health posed by antimicrobial resistance and promoting enhanced bilateral cooperation in international fora

-

agreeing to facilitate the exchange of information, expertise, and experiences in the field of combatting antimicrobial resistance, and identifying common views, interests, priorities and policies in this area.

The impact of key services chapter outcomes

105. The Australia-UK services relationship is already strong, as evidenced in tables 11-15. UK services exports to Australia are growing at over 10 per cent per year.^[74] The proposed AU-UK FTA will serve to reinforce and improve this already strong relationship by expanding opportunities for Australian businesses and consumers. This comes at a time when Australia and the UK are looking for a multi-faceted COVID-19 economic recovery package, which includes expanding and improving upon existing export markets.

Impact on cross-border trade in services

106. The proposed AU-UK FTA will not create additional or substantively modify existing obligations for businesses, community organisations or individuals that relate to the import or export of services. The agreement will instead impose obligations on the Australian and UK Governments to 'lock-in' and not adversely modify existing regulation in particular services sectors.

107. The Cross-Border Trade in Services Chapter will establish rules for the supply of services between the parties, including obligations to provide access to foreign service suppliers (market access), to treat local and foreign suppliers equally (national treatment) and to treat service suppliers of the other Party at least as well as suppliers of any non-Party (most-favoured nation (MFN)). This Chapter also includes local presence, payments and transfers, and recognition provisions broadly in line with our previous FTAs. The Chapter incorporates two annexes which will establish commitments by both parties specific to express delivery services and international maritime transport services.

108. Australia and the UK will make commitments on impartiality, transparency and responsiveness of competent authorities to ensure that their requirements, procedures, and technical standards do not constitute unnecessary barriers to trade across the whole economy, except on sensitive matters where we have scheduled limitations against the reservable disciplines.

109. All of these commitments are consistent with the regulatory practice that exists across Australia's jurisdictions.

Impact on financial services

110. Australia's strengths in the financial services sector complement those of the UK. Financial services is one of the fastest growing UK services exports to Australia, growing at over 10 per cent per year from 2009-10 to 2019-20.^[75] This is approximately three times the pace of average services-export growth in the UK and signals exceptional future growth opportunities for UK entrepreneurs into Australia, expanding Australia's innovation potential through increased competition and benefiting consumers through greater choice. The proposed AU-UK FTA offers great potential to build on this growth further as well as increased opportunities for exports into the UK.

111. The proposed AU-UK FTA will include a chapter with specific rules on financial services that build on existing commitments in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Australia-Hong Kong FTA, giving financial service suppliers greater certainty and transparency regarding the rules that will apply to them when providing services to UK clients.

112. The Financial Services Chapter will include obligations to provide access to foreign service suppliers (market access) and to treat local and foreign suppliers equally (national treatment), along with obligations regarding local presence, payment and clearing systems, data flows and localisation and back-office functions broadly in line with our previous FTAs.

113. The Financial Services Chapter will help to fast track the regulatory process Australian financial services firms currently face when operating in the UK. For example, the Chapter includes provisions that promote transparency in the authorisation procedures necessary to supply financial services and improves access to self-regulatory organisations, where access is necessary to supply a financial service in the UK.

114. Financial technology (FinTech) services continue to develop rapidly in both Australia and the UK. Provisions on innovative financial services will enable new financial services or financial services delivered via new technologies to be supplied in each other's territory, subject to domestic regulatory requirements.

115. A dedicated sectoral Regulatory Cooperation Annex will further enhance the relationship between our financial services regulators, promote financial stability, fair and competitive markets and will enable increased cooperation on emerging issues in the sector. A sustainable finance provision will set out an inclusive list of environmental considerations financial service suppliers may consider as part of their business model.

116. Both the UK and Australia will make high-quality negative list financial services commitments in the FTA, including at the State and Territory level. Commitments against ratchet will capture any future liberalisation in the sectors committed thus future-proofing the FTA. The UK and Australia will also make new cross-border market access commitments in the insurance sector, including in credit and suretyship, land vehicles, fire and natural forces and general liability sectors as well as commitments in the portfolio management services. These commitments will expand opportunities for suppliers to provide cross-border financial services into Australia and into the UK.

Impact on telecommunications services

117. Australia and the UK have agreed to 'lock-in' rules that ensure service suppliers of both countries have access to and use of public telecommunications networks or services. The commitment includes access that is timely and on reasonable, transparent and non-discriminatory terms and conditions. Other commitments in the telecommunications chapter improve the position for new market entrants as they provide competitive safeguards and approaches to regulation that prevent anti-competitive practices including through ensuring non-discriminatory treatment. This is an improvement on the status quo as it provides new market entrants from both countries with a guarantee of the conditions that will be in place when they enter each other's market and access to this information in one location.

118. In addition, the chapter includes provisions that promote transparent and reasonable international mobile roaming (IMR) rates and provisions that provide steps to ensure that retail rates and alternatives to roaming are easily accessible for consumers and businesses. These provisions do not require Australia to change any of its existing settings and are unlikely to significantly impact mobile network operators or consumers in Australia. The provisions are consistent with existing legal obligations on mobile network operators in Australia, in particular regarding transparency. This includes the Telecommunications Consumer Protection Code and the 2019 IMR Determination.

Impact on professional services

119. As well as services market access commitments, the agreement provides a practical best-practice framework for professional bodies to draw on when working with their counterparts to improve the two-way movement of professionals. Current behind the border barriers, particularly licensing and registration requirements and processes, can impose barriers for professional service providers. The proposed agreement will provide a practical framework for professional services regulatory and accreditation bodies to use to reduce or eliminate these barriers through direct collaboration with their counterparts.

The impact of key services and investment market access outcomes

Effect on the cross-border import and export of services

120. Australia's high-quality, negative list services commitments in the agreement exceed the commitments we made to the UK under the WTO General Agreement on Trade in Services (GATS) but are broadly consistent with Australia's commitments for the central level of government in our modern FTAs.

121. Our State and Territory commitments against the Market Access discipline are listed through individual entries across both Annex I (which covers existing measures) and Annex II (which provides policy space for future and existing measures) for the first time. This approach reflects regulatory practice across the States and Territories and does not represent a shift in existing obligations for businesses, community organisations or individuals that relate to the import or export of services.

122. The UK's services market access commitments represent improvements beyond GATS in sectors of key commercial interest for Australian business, including business, communication and broadcasting, construction and related engineering, environmental, tourism and travel related, and transport services.

123. The UK has agreed to lock-in and not adversely modify existing regulatory practice across most services sectors, subject to some limited reservations. Commitments against MFN and ratchet, which protects Australia's competitive position if the UK extends more beneficial treatment to another party, will also capture any future liberalisation in these sectors and pass on to Australian service suppliers the benefits of the UK's future FTAs.

Effect on inbound and outbound investment across all sectors

124. As with services, the commitments outlined above are made subject to existing law, regulation and policy. The AU-UK FTA will not create additional or substantively modify existing obligations for businesses, community organisations or individuals that relate to investment. The agreement will instead impose obligations on the Australian and UK Governments, including to 'lock-in' current levels of liberalisation and not modify existing regulation in particular economic sectors in a way that would lessen that level of liberalisation. Further improvements in liberalisation levels would be captured by the agreement Australia will make high-quality, negative list investment commitments which represent our most complete commitments in an FTA.

125. For the first time in an FTA, our State and Territory commitments against the investment market access rule, as well as against national treatment, MFN, and the rules on senior managers and boards of directors will be listed through entries across both Annex I (which exempts listed existing measures) and Annex II (which provides policy space for future and existing measures). This approach reflects current regulatory practice across the States and Territories and does not represent a shift in existing obligations for businesses, community organisations or individuals that relate to the investment.

126. The approach adopted in the agreement, as outlined above, provides transparency about the treatment investors can expect, and a guarantee that favourable treatment will be maintained outside those areas where Governments have reserved their future freedom of action.

127. Australia screens certain foreign investments to balance the need to welcome foreign investment against the need to reassure the community that the national interest is being protected by identifying and managing risks. The agreement includes provisions to preserve this balance, but to reduce unnecessary costs that may inhibit investment from the UK and the benefit it can bring to the Australian economy, both direct and indirect. On one hand, the agreement maintains Australia's Foreign Investment Framework (Framework) and excludes recourse to the dispute settlement mechanism on decisions and requirements under the Framework, ensuring the government retains its discretion to review potentially sensitive foreign investment proposals, on national interest and national security grounds. On the other, the agreement proposes to apply national interest screening of less sensitive acquisitions by UK non-government investors at the same threshold at which it screens less sensitive acquisitions by agreement partner investors from CPTPP countries, that is at A$1.216 billion (indexed), rather than A$281 million.

128. This increased screening threshold value is expected to have positive effects on UK investor interest in Australia, serving to promote investment beyond the effects anticipated through the other commitments outlined above. It is one of the investment-enhancing potential features of the proposed agreement that were highlighted by stakeholders of both Parties. Acquisitions by UK investors which qualify for the higher screening threshold will incur reduced cost compared to the pre-existing situation. Such costs include fees for screening, but also the cost of preparing applications, of the time required to secure approval, and of compliance with any conditions. Such reduction in the cost of undertaking less sensitive investments should decrease the cost of capital in Australia, at a time when foreign capital is expected to make an important contribution to our COVID recovery.

129. A reduction in the screening of UK investors' acquisitions of less sensitive businesses would be expected to reduce the revenue obtained through application fees. At the same time, however, this reduction will also allow Australia to more efficiently focus resources on the screening of acquisitions that warrant the higher level of scrutiny, whether by UK investors or others. This is because there would be no change in screening thresholds for sensitive businesses, such as media, telecommunications, transport and defence-related industries, or on grounds of national security.

130. While the UK is already a significant investor in Australia, with the third highest stock of foreign direct investment (A$123.5 billion in 2020), the beneficial effect of preferential Foreign Investment Review Board screening thresholds, combined with added certainty through the commitments Australia has made, could result in even higher levels of UK investment across the Australian economy.

131. The agreement extends the investment protections Australia has provided to other trade and investment partners to the UK on a reciprocal basis. These include a requirement to accord UK investors a minimum standard of treatment and an obligation not to expropriate investments without compensation, in accordance with principles of customary international law. Both Parties must also allow investors to make transfers relating to their investments. These provisions are complemented by modern safeguards regarding the State's right to regulate. These features of Australia's practice in relation to substantive investment protection provisions have been welcomed by stakeholders, including in responding to a call for submissions on the reform of Australia's Bilateral Investment Treaties. In the course of this consultation, stakeholders called for Australia to update those treaties to reflect the more modern practice embodied in the agreement's investment protection provisions, which better preserve the balance between protecting investors' interests and encouraging investment on one hand, and preserving the government's legitimate right to regulate on the other.

The impact of key investment chapter outcomes

132. The investment outcomes in the agreement support an existing strong investment partnership and establish a foundation to maintain and grow that relationship. The strength of this investment relationship shows mutual confidence in each other's economy and commercial potential. The proposed AU-UK FTA provides high levels of guaranteed access to each other's investment markets, high levels of investment protections and significant transparency regarding treatment for investors in each other's markets.

133. The certainty these elements bring to the Australia-UK investment relationship can encourage investment and support future investment growth by reinforcing Australia and the UK's reputation as attractive investment destinations. Importantly, the investment chapter includes portfolio as well as direct investment, a first for UK FTA practice which is significant given the substantial stake of Australian funds managers in the UK.

134. As with cross-border service supply, Australia and the UK make commitments to investors of the other Party to regulate them as favourably as Australian investors and those of other countries (national treatment and MFN), guaranteeing best treatment to each other's investors.

135. Commitments not to introduce new regulation that may distort investment decisions and discourage investment are also included. These include affirmation of Australia's existing commitments not to impose economic performance requirements as a condition of investment, including technology transfer. While such requirements are intended to secure the spill over benefits of foreign investment to the economy, they may in fact discourage the investment that would otherwise generate such benefits. Australia and the UK may continue to provide incentives to invest in return for commitments that do not restrict or distort trade in goods.

136. Australia has agreed to match the treatment the UK provides Australian investors in this regard in certain additional areas, where imposing such requirements may unjustifiably inhibit investment and cause net loss to the economy. These are requirements not to require an investor to conduct a specified value of research and development or to headquarter an enterprise in Australia. As with existing performance requirement commitments, accepted means of encouraging positive spill overs - for instance the provision of tax incentives to encourage research and development - are not affected by these rules. Australia and the UK have also agreed to clarify their commitment not to restrict, on the basis of nationality or residency, the choices each other's enterprises make when employing senior managers or appointing directors.

137. This clarification increases certainty for investors and can lead to economic benefit where enterprises are free to retain the most appropriate managers and board members. At the same time, Australia's existing measures on the residency and nationality of such personnel, for instance under the Corporations Act, or for iconic companies like Qantas, are preserved.

138. The proposed AU-UK FTA includes commitments not to introduce certain quantitative restrictions on access to the market for enterprises of the other party, such as limits on the number of enterprises in a sector. This is a longstanding commitment in relation to investors in the supply of services with its origin in the WTO. It will now extend to the benefit of Australian or UK investors across the whole economy.

139. The agreement will not include an Investor-State Dispute Settlement Mechanism.

The impact of key mobility outcomes

140. Australia and the UK's historical connections and high-level of cooperation across many sectors means there are already significant levels of mobility between the two countries. In 2019/20, personal travel, measured as a services export to the UK, was valued at A$1.4 billion and professional, technical and other business travel was valued at A$1.3 billion. In 2019/20, personal travel, measured as a services import from the UK, was valued at A$2.9 billion and professional, technical and other business travel was valued at A$1.5 billion^[76]. This data points to the value of strong mobility outcomes to continue to grow these people-to-people links between the UK and Australia.

141. In the year ending June 2021, the UK was Australia's 3rd largest market by short-term visitor arrivals. More recently, border closures as a result of COVID-19 have had an impact on short-term visitor arrivals. In the year ending June 2021, there were only 8,100 short-term visitors from the UK to Australia, a decrease of 98.6 per cent on the previous year and representing a 5.38 per cent share of the market. By contrast, in the year ending June 2020, there were 562,300 visitor arrivals from the UK, representing a 7.8 per cent share of the market.^[77]

142. Equally, the UK is Australia's 3rd highest source for short-term resident returns. In the year ending June 2021, 10,400 Australian residents returned from the UK following a short-term visit, representing 4.6 per cent of the resident return intake. In the year ending March 2020, 528,000 Australian residents returned from the UK (occupying a 6.0 per cent share of total).^[78] This data, also detailed in Tables 12 and 13 below, indicate that movement of natural persons between our two countries is relatively balanced.

143. To support growth in mobility, the Chapter on Temporary Entry for Business Persons includes provisions that enhance opportunities for business travel and encourage people to travel and work in each other's territory. These provisions provide certainty on visa pathways for businesses and professionals working across our countries. The commitments provide improved access for a range of Australian and UK skilled service providers, investors and business visitors, supporting investment and providing business with greater certainty. These commitments build upon those made by both countries in the WTO.

144. The UK and Australia make commitments which specify the conditions for entry and temporary stay, including length of stay, for each category of business persons identified. For Australia, the categories include business visitors, installers and servicers, intra-corporate transferees, independent executives and contractual service suppliers. For the UK, the categories include business visitors for establishment purposes, short term business visitors, investors, contractual service suppliers, independent professionals and intra-corporate transferees.

145. The FTA also includes reciprocal commitments to waive requirements for economic needs testing on businesses wanting to employ an Australian in the UK, or a UK national in Australia, for the categories of business person identified in the FTA. This will reduce red tape for Australian companies and bring treatment of UK nationals in Australia to the same level enjoyed by nationals of other FTA partner countries. It also provides certainty around short-term entry of service suppliers across a range of sectors, subject to entrants meeting necessary skills and experience requirements, and having contracts to supply a service in place.

146. The Chapter on Temporary Entry for Business Persons includes provisions that provide certainty around application procedures, transparency regarding provision of information and dispute settlement procedures. Commitments alongside the FTA go further to encompass a broader demographic, foster stronger mobility outcomes, skills transfer and mutual economic gain. A side letter to the FTA sets out future improvements to Australian and UK Working Holiday and Youth Mobility programs, to allow participation up to the age of 35 and for three years, without specified work requirements. In a Joint Declaration, Australia and the UK detail extensive mobility pathways available for citizens to work in agriculture and agribusiness in each country. Australia also establishes an Innovation and Early Career Skills Development Pilot to pioneer, subject to numerical limits, streamlined mobility opportunities for UK citizens. The results of the pilot will be considered in a review, including the possibility of implementation on a reciprocal basis.

147. As mobility between the two countries is already high, the mobility outcomes are designed to reinforce existing arrangements and give certainty to business. As a result of the FTA, Australians will gain access to the UK equivalent to that provided to EU citizens, excluding the Republic of Ireland, and the UK access to Australia better than any of our trading partners excluding New Zealand. These settings are designed to support a bounce-back in two-way mobility once international borders re-open.

148. The net benefit for Australia in the mobility commitments includes greater certainty on mobility pathways, reduced red tape through the removal of labour market testing, and new mobility pathways for Australian Contractual Service Suppliers and Independent Professionals to the UK. Other benefits include streamlined access for UK citizens under Australia's pilot, and the likelihood of stronger youth mobility flows following the enhancements agreed to those programs. These increased opportunities are designed to build even stronger people-to people links and improve collaboration and skills transfer between our countries for many years to come. Without these arrangements, mobility between the UK and Australia will likely trend in the same way, once borders re-open, but with these arrangements, the enhanced certainty and increased opportunities are more likely to increase mobility and professional collaboration between our countries.

Table 12 : Short term visitor arrivals number of movements

Source: Office of the Chief Economist

Based on Home Affairs - Overseas Arrivals and Departures data

Table 13 : Short term resident returns number of movements

Source: Office of the Chief Economist

Based on Home Affairs - Overseas Arrivals and Departures data

The impact of key digital trade outcomes

149. The AU-UK FTA helps to facilitate digital trade, enabling Australian consumers and businesses to take advantage of new opportunities in the growing global digital economy. The agreement contains rules to enable the free flow of data across borders and prevent unjustified data localisation requirements, whilst ensuring appropriate protections for data privacy and legitimate public policy objectives. These data rules will assist businesses operating in both countries by facilitating access to data and increasing their competitiveness in local and international markets.

150. Competition and innovation will also be strengthened through rules protecting source code and ICT products that use cryptography from unjustified disclosure requirements, subject to legitimate scrutiny by appropriate authorities.

151. Barriers to digital trade will also be reduced through commitments to recognise electronic contracts and methods of electronic authentication, including electronic signatures, except in specific circumstances, and to ensure domestic regulations are consistent with model international laws. Improved efficiency through paperless trading will be enabled by a commitment to facilitate electronic trade administration documents. To support SMEs engaged in digital trade, Australia and the UK have committed to establish interoperable electronic invoicing frameworks, which will increase efficiency and accuracy of commercial transactions.

152. The agreement seeks to enhance certainty and trust for businesses and consumers engaged in digital trade through a commitment to protect against misleading, deceptive and fraudulent commercial practices online. Other commitments require Parties to minimise unsolicited commercial electronic messages (spam), and to encourage interoperability and cooperation on personal information protection.

153. The agreement also provides Australia with a framework for cooperation with the UK on important digital issues that have an impact on trade, including cybersecurity, data innovation, digital identity, women's economic empowerment and international standards. In order to encourage the use of government information for economic, social and research benefit, the agreement also commits Australia and the UK to endeavour to improve the accessibility of publicly available, anonymised government information.

The impact of key intellectual property outcomes

154. One of the fastest growing UK exports to Australia is in intellectual property (IP) such as music and entertainment, growing by over 10 per cent per year from 2009-10 to 2019-20.^[79] The UK is also a keen importer of Australian services. Imports of IP - including licensing fees for software and commercial brands - have almost tripled over the past decade.^[80] The IP chapter recognises that Australia and the UK have high standards of protection for IP rights and robust legal systems underpinning these rights. The chapter reflects Australia's core interests in ensuring IP settings are balanced, proportionate and transparent. This is key for Australian businesses - both those who own or use IP rights, and those who operate alongside them and need to understand the scope of their freedom to operate without infringing an IP right.

155. Australia's existing IP settings strike an effective balance between the interests of IP rights holders, consumers and third parties. The vast majority of the chapter is consistent with Australia's existing FTA obligations and IP settings. In relation to the online enforcement of IP, the text is more specific than previous FTAs but the commitments are within Australia's current IP settings. The chapter does not require any immediate regulatory changes, however, there are commitments to work towards the implementation of two reforms.

156. Australia will make all reasonable efforts to become a party to the Hague Agreement Concerning the International Registration of Industrial Designs (the Hague Agreement), which makes it easier for designers to file their application for design protection in other countries. The most significant regulatory change that would result from joining this agreement is increasing Australia's maximum term of design protection from 10 to 15 years.

157. An economic cost-benefit analysis of joining the Hague Agreement (PWC, Updated economic analysis of estimated impacts of Australia acceding to the Hague Agreement for designs) concluded that there is likely to be a net present value cost to the Australian economy of between A$44.3 million and A$48.7 million over 16 years. The highest impact is on consumers, with an estimated likely net present value cost of A$45.4 million to A$46.1 million over 16 years, as a result of the extended term of protection. However, the report also found that Australian designers would benefit immediately from Australia joining the agreement, and that benefits should increase over time, particularly as more of Australia's trading partners also join. To illustrate this, the report analysed the costs and benefits with both the current membership of the agreement plus China (which has started the process to join but is not yet a member - Case A) and with the addition of New Zealand (Case B) - see Table 14.

Table 14 : Net economic cost/benefit in each Case ($million, 16year present value, seven per cent discount rate)

Source: PWC, Updated economic analysis of estimated impacts of Australia acceding to the Hague Agreement for designs

158. Australia and the UK have also agreed to commence discussions on enabling reciprocal access to their respective Artist Resale Royalty (ARR) schemes, which ensure artists receive a portion of the sale price when their work is resold through an art market professional such as an auction house or art dealer. Australian artists cannot currently access the UK's ARR scheme, so this agreement will allow them an additional source of income.

159. The Copyright Agency Ltd administers Australia's ARR scheme and collected data in 2012 on the resale of Australian works in the UK (Table 15). Using this data, the average sale amount can be calculated as US$15,716, which converts to A$22,316 (assuming a conversion rate of AU/US 0.70). The UK's ARR scheme uses a sliding scale to calculate the royalty payable from each sale. Sales between the sterling equivalent of €1,000 and €50,000 receive a four per cent royalty, so the royalty paid on the average sale would be around A$892.

Table 15 : Resales in the UK of Australian works

Source: The Copyright Agency Ltd

160. There will be a small additional administrative cost on art market professionals, mostly auction houses. These entities already have an obligation under the Resale Royalty Right for Visual Artists Act 2009 to report all resales over A$1,000, so the reciprocal arrangement will not change this administrative cost. However, there will be additional administration in relation to collecting and remitting royalties from resales of works by UK artists. These organisations have already built the necessary processes into their systems for the purposes of the ARR. According to the Copyright Agency Ltd, between 2007 and 2011 there were 16 sales of works by UK artists in Australia, meaning the impact of this change is expected to be small.

161. The details of the reciprocal arrangement will be determined in consultation with key stakeholders. Amendments to the Resale Royalty Right for Visual Artists Act 2009 and/or Resale Royalty Right for Visual Artists Regulations 2021 will be needed to implement the arrangement.

162. There is also a third commitment that will potentially result in changes to the protection of Geographical Indications (GIs) in Australia. The UK sought changes to Australia's system of protection for GIs. Australia and the UK agreed to review the current GIs provisions in the proposed AU-UK FTA if Australia makes changes to the GIs system following an international agreement with a third party.

163. This is intended to allow the UK the same treatment on GIs as the third party. If no such changes to Australia's GIs system are introduced within two years after entry into force of the proposed AU-UK FTA, the GIs provisions in the agreement will be reviewed by Australia and the UK. Any new GIs system that would require changes to relevant IP legislation would be assessed through the normal parliamentary processes.

The impact of key government procurement outcomes

164. The proposed AU-UK FTA provides legally binding rules and access for Australian goods, services and construction suppliers of all sizes - including SMEs and Indigenous-owned businesses - to the government procurement market of the UK, worth an estimated half-a-trillion dollars annually.

165. The chapter on Government Procurement includes commitments that go beyond the benefits Australia already receives under its membership of the WTO Agreement on Government Procurement (GPA), creating more opportunities for our industries to secure more contracts in the UK - which in turn will support more Australian jobs.

166. Australian businesses will have the guaranteed right to bid for UK government procurement opportunities in a wide variety of goods and construction services, including public works concession contracts, at the national and sub-national levels. They will also have the guaranteed right to tender for a greater range of services contracts than the UK currently offers under the WTO GPA. Some of these services will be subject to the UK's national treatment regime, with differing monetary thresholds.

167. Australia has maintained its standard exceptions in priority public policy areas, such as SME and Indigenous procurement, the protection of essential security, health and welfare services, and other specific exceptions requested by State and Territory Governments. These exceptions are consistent with Australia's existing trade agreements, and the commitments made will not require any substantive changes to Australia's existing government procurement policies and systems.

The impact of key State-owned Enterprises and Designated Monopolies (SOEs) outcomes

168. Australian exporters, investors and consumers will benefit from increased certainty through rules aimed at providing for open and fair competition between commercially oriented SOEs and private businesses. Australia and the UK will also work together to improve rules on SOEs in global trade, including cooperating in international fora such as the WTO and the OECD. This is in recognition of the importance of the development of transparent, robust and effective international trade rules to ensure open and fair competition between state-owned and privately-owned enterprises in global trade.

WHO DID YOU CONSULT AND HOW DID YOU INCORPORATE THEIR FEEDBACK?

169. DFAT is committed to transparency and maintains a highly consultative approach throughout trade negotiations. We lead Australia's whole-of-government negotiations and our positions rely on input provided by stakeholders. Stakeholders are invited to express their views throughout the negotiations in public meetings, industry specific consultations, or written submissions. Feedback is fed directly to the leads of the relevant chapter or market access negotiation and forms part of the negotiation strategy for the Australian negotiating team.

The stakeholder engagement process in the AU-UK FTA negotiations

170. At the conclusion of every negotiating round, the Australian and UK negotiating teams participate in briefings hosted by the Australia-UK and Australia-British Chambers of Commerce to discuss outcomes from the rounds, respond to questions and invite further input to the negotiation process. Some of these briefings have been held jointly with the UK.

171. The Australian negotiating team also holds stakeholder consultations at the conclusion of every round for other Australian stakeholders, including worker representatives such as trade unions and other entities such as peak bodies as requested. These consultations are key to nuancing our negotiating positions and making sure we are getting the right outcomes for Australians to diversify our trade and drive an export-led recovery.

172. The Government also convenes meetings of the Ministerial Advisory Council on all Free Trade Agreement negotiations. Participants in these meetings include representatives from peak industry bodies and civil society. The AU-UK FTA has been discussed many times in this forum in the last 12 months.

Business, Industry and Civil Society

173. In the last 12 months alone, DFAT has communicated with at least 140 organisations and participated in over 250 meetings regarding the AU-UK FTA negotiations. The organisations are listed in the table below. They include private organisations, individuals, consumer groups and peak bodies.

174. DFAT also received over 70 separate formal submissions from organisations and individuals regarding the proposed AU-UK FTA negotiations. Public submissions can be viewed on the submissions webpage on the DFAT website here .

175. Regarding goods exports, stakeholder views, compiled from meetings and submissions, are summarised as follows:

a.

secure the complete removal of tariffs, quotas and other barriers immediately after entry into force between Australia and the UK

i.

particularly for key Australian exports such as wine, spirits, cane sugar, beef, rice, sheep-meat, dairy, olive oil, nuts, grains and oilseed (wheat)

b.

improve the settings that enable export of high-quality, sustainable Australian products to UK customers

c.

improve regulatory harmonisation in the mutual recognition of goods export standards

d.

seek modern customs and trade facilitation provisions and streamlined rules of origin

e.

free trade for manufacturing products as well as reducing regulatory requirements for raw materials in commercial use

f.

tariff free access for Australian Extra Virgin Olive Oil in the UK

g.

as the UK is Australia's number one export destination for wine by volume (219 million litres in the 12 months ending March 2020), the elimination of tariffs on all imported Australian wine into the UK is crucial. At present, all Australian wine is subject to trade restrictive import duties

h.

elimination or reduction of non-tariff barriers, such as the VI-1 export certificate, for wine

i.

a streamlined process for recognising new winemaking practices to replace the current lengthy process, as well as allowing in market processing in the UK (carbonation, sweetening, blending)

j.

that the FTA include references to animal welfare and take into account the strong link between welfare standards and trade.

176. Many of these views have been incorporated into the agreement through commitments in tariff reductions by Australia and the UK - key outcomes are outlined in Attachment A - Agreement in Principle - and through commitments in chapter text including the Trade in Goods, Customs Procedures and Trade Facilitation and Rules of Origin Chapters, which are explained in detail in the Benefits and Impact Analysis section of this RIS.

177. The announcement of the outcomes in the Agreement in Principle (AiP) that are part of the proposed AU-UK FTA resulted in positive stakeholder reactions. Examples include:

a.

The Business Council of Australia welcomed the announcement of the outcomes in AIP for the proposed AU-UK FTA, describing it as a "record setting deal ..." that paved "the way for more ambitious trade outcomes in our region and globally."^[81]

b.

The National Farmers' Federation assessed the announcement of the outcomes in AIP for the proposed AU-UK FTA as a "significant leap forward in Australia's market access."^[82]

c.

Meat and Livestock Australia has warmly welcomed the announcement of the outcomes in AIP for the proposed AU-UK FTA, stating the outcomes enhance '...the long-term partnership between the British meat trade, British consumers and the Australian red meat industry'.^[83]

d.

Regarding the announcement of the outcomes in AIP for the proposed AU-UK FTA, peak industry group Canegrowers said immediate and substantial up-front tariff-free access was a 'significant boost' and would 'deliver a positive economic benefit'.^[84]

e.

The Australian Dairy Industry Council (ADIC) welcomed the announcement of the outcomes in AIP for the proposed AU-UK FTA, observing the agreement positioned Australian dairy manufacturers to '...actively explore market opportunities that they would previously have never considered possible'.^[85]

f.

SunRice Group has strongly supported the increased market access announced as part of the outcomes in AIP for the proposed AU-UK FTA, stating it reflected the 'most significant market access outcome for Australian rice exports in any of the recent FTAs that the Government has delivered'.^[86]

178. Financial services stakeholder views, compiled from meetings and submissions, include requests that the FTA streamline regulatory requirements in the services sector including the mutual recognition of digital document authorisation for financial services (eg a financial services "passport").

179. These views have been incorporated into the agreement through a financial services chapter that streamlines regulatory requirements and addresses behind the border barriers to financial services trade. Financial service suppliers from the UK and Australia will have increased opportunities to provide financial services into the UK market, including for example the provision of financial services that utilise new technology or are delivered via new methods.

180. Australia and the UK have also agreed to enhance regulatory cooperation in financial services, including commitments to cooperate on emerging issues and commitments to work towards and develop dialogues on regulatory deference. The proposed AU-UK FTA also includes specific obligations on transparency relating to financial services regulations, and rules allowing business to transfer information across borders.

181. Professional services stakeholder views, compiled from meetings and submissions, are summarised as follows:

a.

Develop a framework for the mutual recognition of professional qualifications, licensing, registration and authorisations; and

b.

Professions, including from the accountancy, architecture, engineering, health (doctors, medical specialists, dentists, radiologists), and legal sectors have called for the agreement to provide for improved recognition of the right to practise and the reduction of time and costs in gaining a right to practise, including, non-burdensome visa conditions for independent service providers and intra-corporate transferees.

182. These views have been incorporated into the agreement through the Professional Services Chapter. Australia and the UK have agreed to establish a best practice framework to improve the two-way movement of professionals and professional services. This includes provisions to support mutual recognition of professional qualifications; and promote transparent qualification recognition, licensing and registration processes, as well as a work program for peak bodies to engage to further streamline and guarantee easier access for professionals between Australia and the UK.

183. Telecommunications stakeholders have been consulted throughout the negotiations. There have been a number of joint consultations with Government and Australian industry on issues in the telecommunications chapter including international mobile roaming (IMR), international submarine cable systems and licensing and authorisation processes.

184. Due to a particular focus by the UK on international mobile roaming and divergent text, DFAT held a number of stakeholder consultations with Australian mobile network operators and relevant regulators to inform the negotiations and to find a pathway forward.

185. We also held an AU-UK Telecommunications Regulators and Industry IMR Roundtable in December 2020 where both the UK and Australian negotiators, regulators and industry shared information regarding systems and processes and industry indicated its commercial priorities. With the benefit of this exchange of objective information about our respective systems, we were able to explore what we could do in cooperation and collaboration regarding IMR and negotiators were able to close the IMR article. The result, consistent with our recent FTA practice, is a forward-looking IMR article that is based on industry preference and is consistent with our domestic system.

186. Regarding Temporary Entry, stakeholders requested the following:

a.

ambitious temporary entry commitments that allow for greater movement of people between Australia and the UK, and of dependants, intra-corporate transferees, contractual service suppliers, and investors between the two countries

b.

easier access to skilled work visas to address the shortage of skilled workers including agricultural workers in Australia

c.

current visa holders to be able to switch or extend visas in-country and options for short-term visas to be extended beyond their initial term in both countries, to foster greater mobility of talent

d.

address ongoing revisions to visa programs and labour market testing that create barriers for attracting sector expertise to Australia; FTA should allow for greater mobility of skilled workers

e.

an "E3" type visa for Australian professionals in the UK with reciprocal offerings for UK professionals, which would facilitate temporary entry for speciality occupations.

187. The requests of stakeholders are incorporated into the proposed FTA through the commitments made by the UK and Australia. These allow for greater movement of professionals in the categories that have been committed in addition to their dependants. The proposed FTA also includes waiving of labour market testing, which has been requested by stakeholders in both countries, and new mobility pathways to the UK consistent with those it has extended to the EU following Brexit. Australia's Innovation and Early Career Skills Development Pilot enables 1000 UK citizens rising to 2000 UK citizens to enter Australia to take up specified opportunities in a streamlined way, meeting requests of business, and reciprocates commitments the UK has made on intra-corporate graduate trainees and specialists across all economic sectors in the FTA. A review will see the program assessed in its second year of operation and recommendations made on future implementation, including potentially by the UK.

188. Stakeholder views have also been incorporated into the agreement through commitments that will result in changes to existing Youth Mobility Schemes in both countries. These changes include making such schemes available to nationals no older than 35 for a total stay of up to 3 years, without having to undertake specified work including regional work, for example on a farm.

189. The commitments made regarding the movement of natural persons are consistent with Australia's existing visa framework and Australia's migration policy as they support an open, prosperous and united Australia. This is consistent with the Key Performance Indicators defined in the Department of Home Affairs Annual Report 2019/20^[87]

190. Investment stakeholder views, compiled from meetings and submissions, are summarised as follows:

a.

the agreement should support and encourage a strong bilateral investment relationship through up-to-date investment protections and liberalisation commitments

b.

the importance of the Australia-UK investment relationship warrants Australia extending higher preferential screening thresholds to UK investors to encourage investment

c.

requests that the investment chapter not include an ISDS mechanism.

191. These views have been reflected in the agreement through the investment chapter and the Parties' schedules. Australia and the UK have agreed to a best practice suite of investment commitments that will underpin the already strong investment relationship between our two countries. Commitments will cover all investment, portfolio and FDI and include ambitious market access commitments. Investors will get fair treatment and protection from expropriation of assets, while the right of states to regulate in the public interest will be preserved.

192. The agreement will not include an Investor-State Dispute Settlement mechanism. The deal also includes higher investment screening thresholds for UK investors in Australia, meaning fewer UK investments are subject to review by the Foreign Investment Review Board.

193. Digital trade stakeholder views, compiled from meetings and submissions, are summarised as follows:

a.

that the Australia-Singapore DEA digital trade commitments act "as a minimum starting point" that maximise opportunities to enhance the bilateral digital trade landscape, including adequacy arrangements to maximise cross-border data flows and no data localisation requirements.

b.

calls for ambitious digital trade provisions including the mutual recognition of privacy regimes, online services and e-authentication

c.

updating IP protection: copyright; trade secrets; government use of legal software

d.

promoting trust and security: encryption; international standards; cyber-security; SOEs; no forced tech transfer; AI; open government data; no customs duties; open digital architecture and tech choice

e.

encourage the FTA to increase the ability to knowledge share, bilaterally advance technologies and share information on best practice digital regulation to advance the sector.

194. In a rapidly evolving area like digital trade, stakeholder feedback plays a critical role in determining Australia's trade policy priorities, identifying barriers to entry in international markets and ensuring that our trade rules are fit-for-purpose in a digitalising global economy. Importantly, this feedback enables the design of rules which not only facilitate trade and support business in accessing global digital markets, but also ensure the protection of Australian consumers participating in digital trade.

195. Key stakeholder priorities reflected in the agreement include rules to facilitate the cross-border movement of data, rules to limit forced tech transfer and enable business to leverage digital technologies in goods and services trade, and rules to promote trust in the online environment, including through the protection of consumers and personal data.

196. Regarding intellectual property, stakeholders requested the following:

a.

no changes to Australia's safe harbour arrangements for copyright and confirmation that both Australia and the UK's copyright settings facilitate the legitimate use of creative works, and fairly compensate rightsholders

b.

no changes to our IP settings that would impact on pharmaceuticals

c.

FTA outcomes which support the enforcement of IP rights online, and transparency in the collective management of copyrights to the benefit of artists.

197. These views have been incorporated into the agreement through Australia and the UK agreeing to provisions that do not change Australian or UK existing copyright settings and the inclusion of provisions relating to the online enforcement of IP rights. IP provisions will not require regulatory changes and will not affect the price of medicines in either country nor have an impact on our IP settings on pharmaceuticals.

198. Government procurement stakeholder views, compiled from meetings and submissions, are summarised as follows:

a.

to aim for full and comprehensive access to GP opportunities in the UK, noting that "Australia must remain open to comprehensive access from the UK"

b.

maintain existing government procurement exceptions for SMEs, indigenous enterprises and local government.

199. These views have been factored into Australia's market access negotiations. Businesses will, on entry into force of the FTA, have new bound market access to goods, services and construction opportunities across both countries' lucrative government procurement markets - at both the national and regional levels of government (for Australia, the latter being our state and territory governments). The effect of these outcomes is to create new opportunities for suppliers of all sizes to secure competitive contracts - including SMEs and Indigenous-owned businesses - thereby supporting jobs in Australia and the UK.

200. These views have been incorporated into the agreement by guaranteeing that existing GPA/FTA exceptions are preserved for measures that benefit SMEs and Indigenous Australians. Australia has also excluded local government procurement from the scope of its market access offer to the UK, instead agreeing to a side letter whereby if Australia were to offer local government procurement to another trading partner in future, it would enter into negotiations with the UK on a similar basis.

Australian Government agencies

201. Australian Government departments were extensively consulted throughout the AU-UK FTA negotiations via regular inter-departmental committee meetings, updates on the status of negotiations, as well as participation of relevant agencies in negotiations.

State and territory governments

202. State and territory governments have been consulted throughout the negotiations. These consultations have been undertaken jointly with the consultations for the Australia-European Union Free Trade Agreement (A-EU FTA) negotiations, as many of the issues relevant to states and territories were common to both negotiations. Consultations took place with all states and territories through formal updates prior to negotiating rounds, as well as with individual jurisdictions.

203. A substantial body of work involved the UK (and EU) request that, for the first time, states and territories undertake a Market Access commitment in services and investment, scheduled on a negative list basis. An extensive technical consultation which commenced in June 2019 involved an assessment of each jurisdiction's measures and policy sensitivities. All jurisdictions agreed to a set of Market Access Non-Confirming Measures (Annex I and Annex II) by 20 September 2021.

204. In order to prepare its government procurement market access offer to the UK, the Australian Government consulted closely with state and territory governments and asked them to confirm any additional procuring entities they could commit to cover under the FTA beyond those they already cover under the WTO Agreement on Government Procurement. Consultations took place over a period of two years, beginning under the A-EU FTA negotiations, with states and territories agreeing to cover more than 30 additional entities.

205. The Minister for Trade, Tourism and Investment corresponded with state and territory counterparts prior to the conclusion of the AU-UK Agreement in Principle (in June 2021), with each jurisdiction providing agreement to AIP. The Australian Chief Negotiator for the AU-UK FTA wrote to the head of state and territory agencies which maintain the Standing Committee on Treaties (SCOT) contact point in September 2021 to provide an update on efforts to conclude the negotiations. This correspondence outlined how state and territory interests would be addressed in the proposed AU-UK FTA, including in relation to Market Access (services and investment), an ongoing work agenda on Performance Requirements (Investment) and Government Procurement commitments.

206. States and territories were also consulted in the development of agreement text which went beyond previous FTA practice, particularly an International Maritime Services Annex, and higher ambition commitments on Domestic Regulation. The commitments are consistent with Australia's domestic system but the specific listing of them in the FTA went beyond current FTA practice.

WHAT IS THE BEST OPTION FROM THOSE YOU HAVE CONSIDERED?

207. Signing the proposed AU-UK FTA is the best option when compared to not signing the AU-UK FTA as it will provide for preferential market access for important exports and improve certainty for exporters and importers, service suppliers and investors across the whole economy. If the Government does not sign the AU-UK FTA, Australian exporters and importers, service suppliers and investors will be at a competitive disadvantage relative to other trading partners.

208. One of the advantages in signing the proposed AU-UK FTA for service suppliers and investors is that the agreement 'locks-in' non-discriminatory provisions, ensuring that neither the UK nor Australia can discriminate in favour of its own service suppliers and investors. The agreement is also future proofing through the MFN and ratchet provisions that ensure that the benefits of the UK's future free trade agreements will flow through to Australian service suppliers and investors and that Australia and the UK cannot adversely modify existing regulation in particular services sectors.

209. The agreement will also include a liberal approach to services and investment market access going beyond the UK and Australia's respective best precedents. The proposed AU-UK FTA strikes the right balance in including commitments that reflect the high-quality regulatory approaches of both Governments, while preserving Governments' ability to regulate in the public interest. This includes commitments to impartiality, transparency and responsiveness by regulators, ensuring that their requirements, procedures, and technical standards do not constitute unnecessary barriers to trade across the whole economy.

210. The proposed AU-UK FTA will underpin further opportunities for services and investment. Commitments on access for services suppliers and investors will be substantially enhanced from existing positions under the GATS in the WTO, guaranteeing access for our service suppliers to the UK market. Commitments will cover all investment, portfolio and FDI and ambitious market access commitments matching the best the UK has made. Investors will get guarantees of market access, fair treatment and protection from expropriation of assets, while the agreement preserves the right of states to regulate in the public interest, including Australia's right to screen investment in the national interest.

211. An FTA with the UK will benefit Australian businesses and consumers by increasing access to competitively priced goods, new technologies and innovative practices. Our future prosperity depends upon our economy staying competitive and on Australian businesses continuing to innovate and succeed in new markets.

212. The commitments on confirmation of visa pathways available for the temporary movement of skilled workers in both directions, ensure that businesses in both countries have access to skills and talent from the other country and that Australian nationals have the opportunity to pursue career opportunities in the UK and vice versa. There will not be the same level of assurance without the AU-UK FTA.

HOW WILL YOU IMPLEMENT AND EVALUATE YOUR CHOSEN OPTION?

213. In line with Australia's treaty making processes, once agreed, the text of the AU-UK FTA will be tabled in Parliament. The Joint Standing Committee on Treaties (JSCOT) will then conduct an inquiry into the FTA and report back to the Parliament. Following consideration by the JSCOT, Parliament will consider any legislation or amendments to existing legislation that may be necessary to implement the agreement prior to treaty action being taken.

214. Engagement with stakeholders will continue after the conclusion of AU-UK FTA negotiations to raise awareness of the FTA and its provisions and ensure that businesses and consumers are well placed to access the benefits of the agreement. DFAT and Austrade will undertake proactive advocacy to lift awareness and uptake of the AU-UK FTA benefits from Australian business.

215. Following signing of the proposed AU-UK FTA, DFAT will publish dedicated AU-UK FTA webpages offering a range of practical resources that will help Australian importers and exporters take advantage of the FTA. These will include:

a.

the full text of the AU-UK FTA agreement, plus side letters/initiatives and tariff schedules

b.

outcomes documents, background documents and chapter summaries that provide plain-English descriptions relating to elements of the AU-UK FTA

c.

a news section that provides updates on developments relating to the AU-UK FTA and frequently asked questions.

216. DFAT will also publish additional resources for importers and exporters which will include a guide for business wanting to use the AU-UK FTA to export and import goods, including information about complying with origin documentation requirements.

217. DFAT's social media accounts (such as Twitter, Facebook and the DFAT blog) will be platforms for promoting increased understanding and utilisation of the AU-UK FTA. Once the agreement has entered into force, DFAT will use social media posts to draw tariff outcomes and other benefits of the AU-UK FTA to the attention of the wider public.

218. The proposed AU-UK FTA includes legal and institutional provisions that establish the administrative provisions necessary for its operation and review. This includes the processes by which the agreement will enter into force, and provisions detailing how the agreement may be subsequently amended or terminated and co-exist with existing treaties between the UK and Australia.

219. The agreement includes a structure of regular committee meetings intended to create an ongoing dialogue between Australia and the UK and a built-in agenda of reviews, which provide avenues to address issues and increase two-way trade opportunities. These mechanisms ensure that the agreement remains living and relevant to the bilateral trading relationship.

220. The committees and working groups are designed to monitor implementation and enable technical consultation provisions in relevant chapters of the Agreement. The Committee architecture in the proposed AU-UK FTA is provided below.

RIS - ATTACHMENT A: AU-UK FTA NEGOTIATIONS - AGREEMENT IN PRINCIPLE

FTA Negotiations: Agreement in principle

GOODS

Trade in Goods [Note, see also Goods Market Access]

Australia and the UK commit to establishing mechanisms that will provide for the liberalisation of tariffs on each other's goods and that will address non-tariff barriers to trade between our two countries. Australia and the UK will commit to providing the most liberal possible treatment for goods of interest to both countries, while taking into account product sensitivities.

Commitments in the Trade in Goods Chapter will include:

•

A commitment for the UK and Australia to eliminate customs duties on originating goods of the other country in accordance with the tariff elimination schedules [to be finalised].

•

A commitment on technical consultations on non-tariff measures at the request of either the UK or Australia.

•

Establish a Committee on Trade in Goods.

•

Australia and the UK will share tariff preference utilisation data.

Goods Market Access

Australia and the UK commit to the liberalisation of tariffs on trade in goods between our two countries, while taking into account product sensitivities.

Commitments will include:

•

Full liberalisation of UK originating goods entering Australia.

•

Full liberalisation of Australian originating goods entering UK, while taking account of UK product sensitivities. This includes but is not limited to:

•

Increasing TRQ volumes on beef over 10 years, with access to a duty-free transitional quota of 35,000 tonnes on EIF, rising in equal instalments to 110,000 tonnes in year 10. In the subsequent 5 years (year 11-15 after entry into force) a product specific safeguard will be applied on beef imports exceeding a further volume threshold rising in equal instalments to 170,000 tonnes, levying a safeguard duty of 20% for the rest of the calendar year. Out of quota tariffs will remain at MFN until year 10 and then be eliminated.

•

Increasing TRQ volumes on sheep meat over 10 years, with a duty-free transitional quota of 25,000 tonnes on EIF rising in equal instalments to 75,000 tonnes in year 10. In the subsequent 5 years (year 11-15 after entry into force) a product specific safeguard will be applied on sheep meat imports exceeding a further volume threshold rising in equal instalments to 125,000 tonnes, levying a safeguard duty of 20% for the rest of the calendar year. Out of quota tariffs will remain at MFN until year 10 and then be eliminated.

•

Tariffs on sugar will be eliminated in equal instalments over 8 years with a duty-free quota of 80,000kt tonnes on EIF rising in equal instalments to 220,000 at year 8.

•

Tariffs on dairy will be eliminated in equal instalments over 5 years. There will be a duty-free transitional quota for cheese of 24,000 tonnes rising in equal instalments to 48,000 tonnes in year 5. There will be a duty-free transitional quota for non-cheese dairy of 20,000 tonnes. There will be a further duty-free transitional quota for butter of 5,500 tonnes rising to 11,500 tonnes in year five.

•

There will be a permanent duty-free quota of 1,000 tonnes per year for long-grain milled rice, with tariff elimination on EIF for short and medium-grain milled rice.

•

Transitional quotas will be single quotas for the products indicated above, with no additional conditions. Transitional quotas will be managed by the Australian Government on the same basis as Australia's country-specific quota access under the WTO.

•

Neither side will seek additional access or faster tariff reduction through the UK's accession to CPTPP.

•

Both sides formalise their agreement on splits of TRQs at the WTO and Australia withdraws its objections to the UK's goods schedule (including AMS) in order to provide certainty to traders in both countries.

•

General bilateral safeguard mechanism for all goods to provide a safety net for industry if they face serious injury from increased imports as a direct consequence of the FTA.

Trade Remedies

Australia and the UK commit to including a chapter on Trade Remedies that will affirm both countries' rights and obligations under the WTO framework, including safeguards. This ensures Australian and UK businesses can seek protection from unfair trading practices or unforeseen surges in imports

•

Affirmation of rights and obligations under the WTO Agreements on Safeguards, Anti-Dumping and Subsidies and Countervailing Measures.

•

Application of the "lesser duty rule" consistent with the WTO Agreement when imposing anti-dumping and countervailing duties.

Rules of Origin

Australia and the UK commit to Rules of Origin (RoO) that will facilitate market access and reflect modern production processes, and existing and future global value chains. Commitments will boost efficiency, reduce costs and cut red tape by making it simpler for traders and customs authorities to prove the originating status of goods. They will include rules for specific products that support each country's economic and production interests.

Commitments in the Rules of Origin Chapter will include:

•

Efficient and low-cost processes to prove originating status of goods, reducing the amount of paperwork at the border for traders and Customs authorities.

•

Product Specific Rules (PSRs) which enable traders to make fair use of the reduced tariffs [ongoing].

•

No requirement for verification visits by the importing country to ascertain if goods being imported into its territory are originating.

•

Low value threshold for declarations of origin that allows for Australia to use the value of AUD 1000.

•

PSRs which respect UK sensitivities in agricultural sectors such as fisheries and dairy, and do not include Regional Value Content (RVC) rules for agricultural goods. PSRs which enable UK automotive exports, including an RVC of 25% for cars.

Customs Procedures and Trade Facilitation

Australia and the UK commit to facilitating increased bilateral trade and efficient and transparent customs procedures, while also allowing the UK and Australia to maintain effective customs control. Goods will be released from customs within clear timeframes to provide certainty in the supply chain and reduce costs. Paperwork will be simpler, with more information available electronically. Our systems will boost confidence in the way we trade together, ensuring transparency and predictability at, and away from, the border.

Commitments in the Customs Procedures and Trade Facilitation Chapter will include:

•

Goods to be released within 48 hours of arrival at customs where possible to provide certainty in the supply chain and reduce costs.

•

Simplified paperwork requirements and a commitment to release shipments within 6 hours where possible for expedited shipments (for example fast-track parcels).

•

Release of perishable goods within 6 hours where possible to prevent avoidable loss or deterioration of perishable goods.

•

Time period of 90 days for issuing advance rulings to traders.

•

Commitment not to require the use of customs brokers for import and export procedures.

•

Detail concerning customs procedures to be made easily accessible to traders, including electronically, with review mechanisms available to traders for customs authority decisions.

•

Commitment setting out how the UK and Australia may consider further simplification of customs procedures to benefit traders.

•

A separate bilateral instrument to be negotiated on Cooperation and Mutual Administrative Assistance in Customs Matters (CMAA) intended to be completed to the same timeframe as the FTA (by Autumn 2021) to support and strengthen customs cooperation.

Sanitary and Phytosanitary Measures

Australia and the UK will commit to provisions that facilitate trade while ensuring protection of human, animal and plant life and health. Imports will still have to meet the same respective UK and Australian food safety and biosecurity standards. Both the UK and Australia agree the importance of independent SPS regimes.

The SPS chapter will include trade facilitative provisions that build on WTO commitments relating to human, animal and plant life and health including:

•

Recognition of the principle of equivalence of SPS measures where they achieve the other country's appropriate level of protection.

•

Processes regarding the recognition of regional conditions (regionalisation) to build cooperation and promote confidence in the procedures followed by the UK and Australia. Ensure the UK and Australia can take into account the pest and disease status of areas from which goods may be sourced in setting biosecurity measures and apply all concepts of regional conditions, as appropriate, to trade between them, to facilitate trade.

•

Recognition of the importance of ensuring that respective SPS measures are based on scientific principles.

•

Provisions on transparency and information exchange to facilitate understanding of each other's system.

•

Provisions on verification and certification, to facilitate trade through carrying out verifications and agreeing certification requirements.

•

Establishment of an SPS Committee to monitor the implementation of the chapter and technical consultation provisions for any specific trade concerns regarding SPS measures.

Animal Welfare and Antimicrobial Resistance (AMR)

•

Provisions in a standalone chapter which will cover commitments including:

•

Provisions that affirm Australia and the UK's right to regulate on animal welfare and the right of each of Australia and the UK to establish its own policies and priorities for the protection of animal welfare.

•

Provisions committing Australia and the UK to cooperate in relevant international fora on areas of mutual interest, including to promote development of the best possible animal welfare practices.

•

An Animal Welfare Working Group to provide a forum for ongoing cooperation and initiatives in areas of mutual interest, review of animal welfare developments and to promote high animal welfare practices.

•

Appropriate provisions around non-derogation from respective levels of animal welfare protections for the purpose of encouraging trade and investment between the UK and Australia.

•

Appropriate provisions recognising the importance of high levels of animal welfare protection and non-regression.

•

Appropriate provisions on cooperation on combatting antimicrobial resistance including bilaterally and in relevant international fora on areas of mutual interest.

Technical Barriers to Trade

Australia and the UK commit to provisions that will be aimed at ensuring that technical barriers to trade are non-discriminatory and do not create unnecessary obstacles to trade, while preserving each country's ability to take measures to fulfil legitimate objectives, including for the protection of health, safety and the environment. The commitments in the agreement will result in increased cooperation regarding technical regulations, standards and conformity assessments.

•

Provisions that build on the WTO TBT Agreement and the close institutional relationships already in place between Australia and the UK, through increased cooperation regarding technical regulations, standards, and conformity assessments.

•

Provisions on transparency and information exchange to facilitate understanding of each other's systems.

•

Establishment of a TBT Committee to monitor the implementation of the chapter and with the authority to establish specific working groups.

•

Process to give positive consideration to acceptance of technical regulations where they are found to be equivalent.

•

Commitment on international standards and to encourage respective standards bodies to cooperate.

•

Ongoing discussion of outcomes to address technical barriers to trade in specific sectors that do not constrain public policy making, create new non-tariff barriers or create additional regulatory burdens. This includes continued discussions on UK annex proposals on spirits, cosmetics, medicines, and medical devices, and Australian proposals on wine and organics. Australia and UK commit to use best endeavours to secure agreement in Australia to the UK proposal for a whisky definition in a form enforceable by domestic authorities and to implement in the UK Australia's proposals under the Wine Agreement, both taking account of consultation requirements.

SERVICES

Australia and the UK commit to liberalising services in a manner that strengthens existing bilateral trade, deepens market access and makes it easier for services companies to trade and for professionals to operate in each other's economies. The UK and Australia will commit to high standard rules for all services sectors, including cross border trade in services, professional services, financial services, maritime and delivery services, and telecommunications. This will include full market access to the other market for all UK and Australian service suppliers, including ensuring commitments on services extend to Australian and UK-flagged vessels, except for some specific reservations. The UK and Australia will also commit to Maritime Transport Services and Express Delivery Annexes, a Financial Services Regulatory Co-Operation Annex, and commitments that UK and Australian lawyers can practise in the other country's territory using their original qualifications and title. On Telecommunications, Australia and the UK commit to access for Australian and UK service suppliers to public telecommunications networks and services in the other country on a non-discriminatory basis.

Commitments in the Services Chapter will include:

•

Highly liberal approach to trade in services, including full market access for service suppliers from the other country at central and regional level, except where specific reservations [once regional consultations are complete] are noted in a schedule (i.e. using the "negative listing" approach).

•

Services market access liberalisation going beyond the UK and Australia's respective best precedent to be finalised through a request and revised offer process.

•

Professional services provisions, which will deliver long term benefits for UK and Australian professionals who want to work in each other's territory and have their qualifications recognised without facing unnecessary cost and bureaucracy, primarily through collaboration between UK and Australian accreditation and regulatory bodies aimed at facilitating qualification recognition.

•

Legal services provisions which will both guarantee that UK and Australian lawyers can advise clients and provide arbitration, mediation and conciliation services in the other country's territory using their original qualifications and title, as well as establish and drive collaboration between regulators with the aim of addressing remaining barriers to practise as a local lawyer in the other country's territory.

•

Coverage of UK/Australia-flagged vessels in the services chapter, allowing these to benefit from guaranteed market access and non-discriminatory treatment when operating in Australia/UK and an International Maritime Transport Annex which ensures that UK/Australian shipping companies, vessels and service suppliers have non-discriminatory access to ports and port services, can move empty containers freely and provide feeder services between ports, consistent with each country's cabotage regime.

•

An Express Delivery Services Annex that ensures a level-playing field for express delivery operators by ensuring postal monopolies do not engage in market distorting practices, while allowing the UK and Australia to maintain their universal service obligations.

•

"MFN provisions" which ensure that if UK/Australia provide more generous access to their services markets for other countries, this will be extended to Australia/UK too.

•

Commitments to impartiality, transparency and responsiveness by Australian and UK competent authorities, ensuring that their requirements, procedures, and technical standards do not constitute unnecessary barriers to trade across the whole economy.

•

Non-discrimination provisions, ensuring that UK/Australia cannot discriminate in favour of its own service suppliers.

•

Coverage of the services disciplines where services are supplied by the presence of a national of UK/Australia in the other country.

Financial Services

Commitments in the Financial Services Chapter will include:

•

Ambitious provisions that strengthen our trading relationship, address behind-the-border barriers to financial services trade and expand opportunities for cross-border trade provision of financial services.

•

Commitment ensuring Australia and the UK recognise the importance of allowing financial service suppliers to offshore their back-office functions and avoid the imposition of arbitrary requirements on the performance of those functions.

•

Commitments on the provision of new financial services.

•

Provisions which recognise the importance of transparency in facilitating the ability of financial service suppliers to gain access and operate in each other's markets.

•

A financial services regulatory cooperation annex which includes:

•

commitments to provide a foundation for further enhancing the regulatory cooperation relationship between the UK and Australia

•

commitments on emerging issues

•

commitments on working towards and developing dialogues on mutual compatibility and regulatory deference.

Telecommunications

Commitments in the Telecoms Chapter will include:

•

A commitment to promote competition in our telecommunications markets through adopting and maintaining competitive safeguards and approaches to regulation that prevent anti-competitive practices including through ensuring non-discriminatory treatment.

•

A commitment to ensure that service suppliers of both countries have access to and use of any public telecommunications network or service on a timely basis and on reasonable, transparent and non-discriminatory terms and conditions.

•

Provisions that ensure the independence of telecommunications regulatory authorities, ensuring that suppliers are independent from our regulators - including through commitments on impartiality and transparency.

•

A commitment that any authorisation or licensing requirement will be transparent, while also recognising a country's ability to allow telecoms services and networks to operate without prior authorisation.

•

Promotion of transparent and reasonable international mobile roaming rates, and steps to ensure that retail rates and alternatives to roaming are easily accessible for consumers and businesses.

•

A commitment to a strategic dialogue and partnership on security and diversification in the telecommunications sector, including on infrastructure and technologies.

MOBILITY

Australia and the UK commit to provisions on temporary entry that will support economic recovery, enhance opportunities for business travel, and encourage people to travel and work in each other's territory, on the basis of reciprocity.

Commitments in the Mobility Chapter will include:

•

Companies to sponsor visas committed in the FTA without first having to prove that a national of the country in question could not be hired to do the job, through the reciprocal removal of economic needs tests.

•

Australia and the UK to provide balanced guarantees that are broadly reciprocal to maintain visa pathways for service suppliers for a substantial number of sectors - through the binding of these sectors in the FTA.

A wider range of side initiatives alongside the FTA encompassing broader demographics than Business Mobility including:

•

The UK and Australia will make unprecedented changes to their Youth Mobility Schemes, making them available to nationals no older than 35 for a total stay of up to 3 years, without having to undertake specified work including regional work, for example on a farm. In line with each country's respective immigration system, the parties will further explore opportunities to enhance the ability for citizens to live, work and travel in each country.

•

Agricultural work - the UK and Australia will ensure we can further support agriculture and agribusiness, by outlining visa pathways to facilitate mobility for those involved in agricultural work.

•

Innovation and Early Careers Skills Exchange - the UK and Australia will jointly explore dedicated visa requirements, in line with our respective systems, to further enable workplace exchanges which facilitate early career mobility for those involved in innovation across industry, culture and the arts.

•

These changes will be made within 5 years to allow for a smooth adjustment in respective systems.

Investment

Australia and the UK commit to investment commitments that will underpin the already strong investment relationship between our two countries and boost the recovery from COVID-19. Commitments will cover all investment, portfolio and FDI and ambitious market access commitments. Investors will get fair treatment and protection from expropriation of assets, while the right of states to regulate in the public interest will be preserved. The agreement will not include an Investor-State Dispute Settlement mechanism. The deal also includes higher investment screening thresholds for UK investors in Australia, meaning fewer UK investments are subject to review by the Foreign Investment Review Board.

Commitments in the Investment Chapter will include:

•

Application of Market Access obligation (prohibition of certain quantitative restrictions on investment) at Central and regional level, except where specific reservations [once regional consultations are complete] are noted in a schedule across the whole economy, using the "negative listing" approaches.

•

A new commitment prohibiting all residency and nationality requirements for senior managers and boards of directors, with precise application to take account of the outcome of Australia's consultations, which are seeking to narrow the policy space required as far as possible.

•

Most Favoured Nation provisions (covering services and investment) which ensure that if UK or Australia provide more generous access for investment from other countries, this will also be extended to Australian and UK investors.

•

Protection for UK and Australian investors, including from unfair or discriminatory treatment, or expropriation of assets without due compensation, reflecting the customary international standard of protection, on the CPTPP model.

•

A new provision confirming that economic sanctions are not impacted by the commitment to allow free transfers of funds by investors.

•

The investment chapter will not include Investor-State Dispute Settlement.

•

Includes all Prohibition of Performance Requirements included in the CPTPP.

•

Commitment to consult on the inclusion of additional PPRs (Prohibition of Performance Requirements) to minimise market distortions, potential barriers and bureaucracy faced by investors:

•

Headquarters localisation requirements

•

Mandatory levels of research and development

•

Export restrictions

•

Local hiring requirements

•

Protections applying to investment in Air services, and liberalisation applying except where explicitly noted in a schedule.

•

Investment screening thresholds raised to at least the level Australia gave the US and CPTPP countries.

•

Confirmation that the territorial scope of the "Whole of Economy" Market Access provision is the same as in the UK-Canada agreement through textual clarification, enabling incorporation of the outcomes of consultations.

Digital Trade

Australia and the United Kingdom commit to ambitious commitments that will increase opportunities for digital trade across all sectors of the economy, while also ensuring world-leading standards for personal data protection and for legitimate public policy objectives. These will include strong rules on data flows and the prohibition of unjustifiable data localisation requirements to create a more certain and secure online environment and support increased growth in digital trade between Australia and the United Kingdom. It will also include provisions to ensure the recognition of electronic contracts and signatures and legal frameworks on electronic transactions that facilitate e-commerce.

Commitments in the Digital Trade Chapter will include:

•

Commitment to enable cross-border data flows and avoid unjustified data localisation commitments, whilst ensuring high standards of data protection.

•

Commitment to open digital markets by establishing effective principles that allow businesses to operate fairly and competitively. Recognition that consumers benefit from equal treatment by internet service providers and commitment not to impost customs duties on electronic transactions.

•

Commitment to reduce barriers to digital trade by addressing restrictive practices such as requirements for paper-based trade administration documents and a commitment to accept electronic contracts, except in specific circumstances. These exceptions will be published on a single government website, providing clarity for businesses. The UK and Australia will aim to establish interoperable electronic invoicing frameworks and ensure that electronic transactions regulations are implemented in a manner consistent with international frameworks.

•

Commitment to provide a safe trading environment for both consumers and businesses, through new and innovative ways to establish protections online, including improved enforcement and compliance provisions that support online consumer protection, personal information protection, and discourage unsolicited commercial electronic messages (spam). This includes commitments to cooperate in the development of a Digital Identities framework, and to help users identify themselves online.

•

Commitments to improve the accessibility of publicly available, anonymised government information, for the purpose of economic, social and research benefit.

•

Provisions to protect innovation by preventing the forced tech transfer of Source Code and Encryption Keys, subject to legitimate scrutiny by appropriate authorities.

•

Commitments to support ongoing cooperation on important digital trade issues, including data innovation and emerging technologies, as well as collaboration to improve opportunities for our innovative Regtech enterprises.

•

Commitments to build capabilities and cooperate on evolving cybersecurity threats, helping to shape global standards and effective regulations in digital trade.

Intellectual Property

Australia and the United Kingdom will commit to ambitious intellectual property (IP) provisions that support our vibrant economies through adequate, effective and balanced protection and enforcement of IP rights and that encourage innovation and creativity. The agreement will include provisions on copyright, design rights, patents, trade marks, artists resale rights, trade secrets and test data. These commitments will not lead to increased medicines prices in either country. The deal will also include a commitment that if Australia introduces bespoke GI schemes for spirits and agri-foods, the UK will be able to put forward GIs for potential protection subject to Australia's legal procedures.

Commitments in the IP Chapter will include:

•

Commitments in support of our vibrant creative sectors, including high standard provisions on copyright, designs and the enforcement of IP rights online.

•

Commitments underpinning the IP in our world-leading innovation sectors, including provisions on patents, trade secrets and test data. These provisions will not require regulatory changes and will not affect the price of medicines in either country.

•

A commitment to discuss measures to ensure adequate remuneration for music performers and producers.

•

A commitment for Australia to make all reasonable efforts to join the UK as a member of the multilateral Hague Agreement on Industrial Designs, to provide new benefits for designers in both countries.

•

A commitment to begin a process which will result in reciprocal arrangements for artist resale royalties, to provide new income streams for our visual artists.

•

No other commitments to implement regulatory changes to IP settings for either the UK or Australia.

•

Commitments to protect our much-loved brands and trade marks. The deal will also include a commitment that if Australia introduces bespoke Geographic Indication (GI) schemes for spirits and agri-foods, the UK will be able to put forward GIs for potential protection subject to Australia's legal procedures. If such schemes are not introduced no later than two years after entry into force of the FTA, the GI provisions in the FTA will be reviewed by Australia and the UK. UK GIs that the UK intends to propose for protection may be named in a non-binding sideletter.

•

Provisions on cooperation and working towards a multilateral outcome at the World Intellectual Property Organisation (WIPO) Intergovernmental Committee on genetic resources, traditional knowledge and traditional cultural expressions.

Government Procurement

Australia and the UK will make commitments that maximise opportunities for our suppliers to participate in each other's government procurement markets, and drive value-for-money outcomes. Commitments will go significantly beyond current WTO GPA baselines. The UK and Australia will also include a precedent setting article requiring covered procurement notices to be published electronically, ensuring Australian and UK suppliers will always have access to the same information about procurement opportunities.

Commitments in the Government Procurement Chapter will include:

•

New provisions on integrity in procurement practices.

•

A requirement for all notices related to procurement covered by the chapter to be accessible by electronic means, free of charge.

•

Cooperation to promote the international liberalisation of government procurement markets, including sharing best practices, facilitating greater participation (including by SMEs), exchanging statistics and data, and sharing information about upcoming procurement opportunities of interest to suppliers from both countries.

•

A side letter committing to negotiate local government/smaller administrative unit procurement coverage, should Australia agree to cover local government procurement in another trade agreement.

•

Precedent-setting offers, with final offers to be negotiated.

Competition

Australia and the UK commit to including provisions aimed at competition policy and consumer protection. This chapter will provide for effective competition law and enforcement that will promote open and fair competition, and promote cooperation between national competition authorities.

Commitments in the Competition Chapter will include:

•

Provisions that maintain national competition laws that proscribe anti-competitive agreements, anti-competitive practices by entities that have substantial market power, address mergers with substantial anti-competitive effects, and maintain a national competition authority.

•

Provisions on procedural fairness in the enforcement of Australia and the United Kingdom's national competition law, including a reasonable opportunity to be legally represented.

•

Provisions that recognise the importance of consumer protection.

•

Provisions that recognise the importance of cooperation and coordination between Australia and the United Kingdom's respective competition and consumer protection authorities to foster effective enforcement.

State-owned Enterprises and Designated Monopolies (SOEs)

Australia and the UK commit to including a chapter on SOEs that will provide rules aimed at ensuring fair treatment and will provide for cooperation in improving rules concerning SOEs in multilateral fora.

Commitments in the SOEs Chapter will include:

•

Provisions that provide for open and fair competition between commercially-oriented SOEs and private businesses; for example rules around non-commercial assistance to SOEs and non-discrimination.

•

Provisions that ensure SOEs, particularly those providing public services, can continue to operate as they do now.

•

Commitment that the UK and Australia share information about their SOEs and cooperate, including at the multilateral level.

Labour

Australia and the United Kingdom commit to a chapter on labour that will lock in high domestic protections for our workers, encourage good business practice and corporate responsibility, and advance our mutual ambition to tackle forced labour and modern slavery.

Commitments in the Labour Chapter will include:

•

Provisions that commit the UK and Australia to maintain and effectively enforce their domestic laws and labour standards.

•

Provision recognising the right to regulate of each country, which confirms each country to establish its own levels of domestic labour protection and its own priorities relating to labour, and to establish, adopt or modify its labour laws and policies accordingly.

•

Provision affirming obligations as members of the International Labour Organization (ILO), including those stated in the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up (1998).

•

All substantive commitments in the chapter to replicate the CPTPP formulation to the greatest extent possible, unless otherwise agreed by the UK and Australia.

•

New areas proposed by the UK that are not in the CPTPP Labour Chapter text to contain no new substantive commitments.

•

Replication of the CPTPP consultation and enforcement provisions with minor amendments to ensure alignment with the dispute settlement provisions of the whole FTA.

•

Provision on tackling modern slavery in supply chains.

Environment

Australia and the United Kingdom commit to a chapter on trade and environment that will contain provisions affirming commitments under multilateral environmental agreements including the Paris Agreement, and to maintain and effectively enforce domestic environmental laws and policies across a broad range of issues. Both countries commit to undertaking cooperative activities, including those targeted at key technologies in the transition to a low carbon and climate resilient economy. The chapter will also contain provisions to encourage trade and investment in environmental goods and services that support shared environmental objectives.

Commitments in the Environment Chapter will include:

•

Provisions that commit the UK and Australia to maintain and effectively enforce their domestic environmental laws and policies.

•

Provisions that affirm commitments under multilateral environmental agreements.

•

Provisions to encourage trade and investment in environmental goods and services which support shared environmental objectives.

•

Provision which affirms commitments by each country to tackle climate change, including under the Paris Agreement and acknowledges the role of global trade and investment in these efforts.

•

Provision recognising the right to regulate of each country, based on the language used in the CPTPP environment text with the addition of a reference to climate change, that confirms the right of each country to establish its own levels of domestic environmental protection and its own priorities relating to the environment, and the right to establish, adopt or modify its environmental laws and policies accordingly.

•

Provisions that affirm commitments to combating illegal wildlife trade, conservation, marine pollution and protection of the Ozone Layer.

•

Provisions with commitments on several areas of environmental protection including fisheries, biodiversity, combatting illegal logging and wildlife trade and conservation.

•

Provisions that recognise the importance of, and to cooperate on, sustainable forestry management, circular economy, marine litter and air quality

•

All substantive commitments in the chapter to replicate the CPTPP formulation to the greatest extent possible unless otherwise decided by the UK and Australia.

•

New areas proposed by the UK that are not in the CPTPP environment text to contain no new substantive commitments.

•

Replication of the CPTPP consultation and enforcement provisions with minor amendments, including to ensure alignment with the dispute settlement provisions of the whole agreement.

SMEs

Australia and the UK commit to including a chapter on SMEs which will affirm their critical role in the economies of the countries. The chapter will commit both the UK and Australia to publish information about the Agreement which is considered useful for SMEs, and include provisions that facilitate cooperation between the UK and Australia, including to identify ways to help SMEs take advantage of the FTA.

Commitments in the SME Chapter will include:

•

Establishing and maintaining a website of information for SMEs interested in trading, investing, or doing business with the other country.

•

Facilitating cooperation between the UK and Australia, such as through the exchange of information on programs to assist SMEs participation in global markets.

Good Regulatory Practices

Australia and the UK commit to including a chapter on GRP which will contain provisions that support a transparent and predictable regulatory environment for business. Commitments to make regulatory measures public in plain language and online will ensure they are accessible.

Commitments in the GRP Chapter will include:

•

Provisions on consulting publicly and rigorously assessing information when designing new regulations.

•

Commitment to consider whether public policy objectives can be achieved more effectively when reviewing existing regulations

•

Provisions on publishing information online about regulations and how they are developed.

•

Commitment to encourage regulatory authorities to communicate and cooperate on current and future regulation.

Trade and Gender Equality

Australia and the United Kingdom commit to including a chapter on Trade and Gender Equality that will contain provisions aimed at addressing barriers for women to access the benefits of trade and investment. This will include provisions on co-operative activities on access to markets, business/leadership networks and finance, data collection, and a dialogue mechanism to work together to address barriers.

Commitments in the Trade and Gender Equality Chapter will include:

•

Provisions on Co-operative activities that aim to address barriers for women in trade such as lack of access to markets, business/ leadership networks and finance.

•

Provisions on exchange of information on approaches to data collection, analysis and monitoring of trade and gender equality.

•

A dialogue mechanism to support implementation.

Development

Australia and the UK commit to including a chapter dedicated to development issues, a first for a bilateral FTA between two developed countries, that will include provisions relating to joint activities.

Commitments in the Development Chapter will include:

•

Provisions addressing: bilateral cooperation that may encompass an exchange of information in relation to experiences, best practices, technical assistance and capacity building; and monitoring the FTA that each country will undertake in a way that does not create regulatory burdens.

Cross-cutting (General Provisions and Exceptions, Initial Provisions and General Definitions, Final Provisions)

The United Kingdom and Australia commit to general provisions and exceptions that will support issues such as national security, public health and policy-making discretion in matters of taxation and macroeconomic management, consistent with international best practice in these areas.

Commitments in the Cross-cutting Chapters will include:

•

National Security Exception, that sets out the parameters in which the UK and Australia can take national security related measures that would otherwise violate the terms of the FTA.

•

A standalone provision recalling provisions across the FTA allowing parties to protect their respective public health systems, including the NHS and Medicare.

•

Temporary Safeguard Measures Exception and Taxation Exception to permit policy-making discretion in matters of taxation and macroeconomic management, consistent with international best practice in these areas.

•

Ensuring that the UK-Australia FTA will take into account the effects of the Protocol on Ireland/Northern Ireland.

•

Provisions to explain how the FTA will apply to the four constituent nations of the United Kingdom, the Crown Dependencies and Overseas Territories (including Gibraltar) including a mechanism for future extension.

•

Ensuring that the general exceptions apply to the whole of the investment chapter.

Transparency and anti-corruption provisions

Australia and the UK commit to best-practice transparency and anti-corruption provisions. The UK and Australia want to commit to the promotion of transparency in government decision-making and encourage the participation of the private sector and civil society in these pursuits. Both countries will outline their shared ambition to combat the distorting impact of bribery and corruption in trade and affirm their international obligations on bribery and corruption at the OECD and United Nations.

Commitments will include:

•

The criminalisation of bribery including bookkeeping relating to bribery and corruption, enforcement and a reasonable statute of limitations regarding bribery and corruption offences.

•

Promoting integrity among Public Officials for example through training and promoting transparency in the behaviour of public officials in the exercise of public functions.

•

Encouraging the participation of the private sector and civil society for example through activities and public education programmes.

•

Addressing the harmful effects of facilitation payments; prohibiting the tax deductibility of bribes; whistleblowing.

•

Cooperative provisions on embezzlement and money laundering, and asset recovery.

•

Provisions on the publication of information with respect to matters covered by the FTA, building upon both of our strong domestic processes that are already in place.

Dispute settlement

The UK and Australia commit to an effective and timely dispute settlement mechanism, that will provide a clear avenue and prompt progress to arbitration if required, boosting certainty and flexibility for Australian and UK traders.

Commitments will include:

•

Effective and timely dispute settlement mechanism, that effectively prevents forum shopping and allows prompt progress to arbitration if required, complemented by Rules of Procedure and Code of Conduct that provide certainty and flexibility.

Innovation

Australia and the UK commit to including a world-first innovation chapter in the agreement. The chapter will provide a mechanism for the UK and Australia to discuss the impact of innovation on trade, including regulatory approaches, commercialisation of new technologies, and supply chain resilience, and ensure that our FTA remains fit for purpose as our economies grow.

Commitments will include:

•

Establishment of a Strategic Innovation Dialogue as a standing institution to support trade and economic growth through collaboration between the UK and Australia on innovation and associated trade matters, including regulatory approaches, commercialisation of new technologies, and supply chain resilience.

•

Specific co-operation to encourage the development and adoption of emerging technologies and associated trade.

•

Recognition of the importance of future-proofing the UK-Australia FTA, and commitment to taking developments in innovation into account when updating the FTA.

DISCLAIMER: this document reflects what the UK and Australian FTA negotiating teams have jointly decided as of 15 June 2021 should be included in the FTA once it is finalised. It does not prejudge the outcome of the FTA negotiations or any further proposals for FTA commitments either the UK or Australia may make after this date. It is also not intended to create any treaty obligations.

RIS - ATTACHMENT B: REGULATORY BURDEN ESTIMATE

•

The proposed AU-UK FTA provides rules for traders to access preferential tariff treatment over existing business-as-usual arrangements under the UK's MFN tariffs. As this is the first FTA to cover trade between Australia and the UK, the AU-UK FTA may result in a modest increase in ongoing business compliance costs for Australian exporters to the UK.

•

The origin documentation requirements under the rules of origin in the proposed AU-UK FTA are some of the easiest to meet, for both exporters and importers. Australian exporters and producers have the option to either

a.

complete a Declaration of Origin

b.

provide sufficient information directly to UK importers to enable them to make a claim for preferences - known as 'importer's knowledge'.

•

While the costs of self-declaration are minimal, this requirement does create additional costs to businesses for complying with the agreement's origin documentation requirements compared to making claims under the UK's MFN tariffs.

•

There is a level of uncertainty regarding the number of traders under the FTA and what origin method traders will utilise in respect of Australian exports to the UK. Accordingly, the estimates of the compliance and administrative costs are largely assumption-driven and should be interpreted as such. There is currently an average of 67,330 export transactions from Australia to the UK per year. Based on the available data, it is possible to gain an appreciation of the order of magnitude of these changes.

Declarations of Origin

•

To provide flexibility to exporters and producers, the preferential Declaration of Origin (DOO) can be either self-declared, or completed by an authorised representative such as an authorised issuing body (for example the Australian Chamber of Commerce and Industry or Australian Industry Group) on the exporter or producer's behalf. While we do not expect the latter option to be widely utilised, it may be useful for traders, particularly when a non-preferential certification of origin signed by an issuing body would be required for other purposes, such as to meet specific requirements for letters of credit.

•

Where businesses seek this option, the cost of each DOO varies between A$20 and A$70 at an average of A$33. The cost depends on a range of factors, such as whether an applicant is a member of the issuing body and the level of complexity.

Origin based on 'importer's knowledge'

•

Under the proposed AU-UK FTA, importers can make a claim for tariff preference without the need for a DOO based on 'importer's knowledge'. For the importer to make a claim for preferential tariff treatment based on 'importer's knowledge', the exporter or producer will need to provide supporting documents to the importer that the good is originating.

•

The administrative procedures for business to maintain, store and supply supporting documentation and records may add slight additional administrative costs to business-as-usual practices.

Estimate of Regulatory Burden

•

Some costs will be incurred by traders to understand the requirements and benefits of the FTA. It is estimated that all exporters to the UK will undertake a once off administrative cost of around two hours of time to understand the AU-UK FTA rules. The average number of exporters to the UK from 2016-17 to 2018-19 was 6,511. At a scaled-up labour cost of A$68.79 per hour, this would result in costs of A$895,783 for the first year only.

•

We can assume, based on the trends of similar trading partners, that traders would decide not to utilise the AU-UK FTA for around half of transactions, given the UK already has MFN zero tariffs for many products imported from Australia. As this is business as usual, this would result in an ongoing cost of A$0 per annum.

•

Based on practice under other FTAs that allow exporters and producers to choose whether to complete their own DOO, or for the DOO to be completed by an authorised issuing body, we estimate not more than five per cent of transactions (3,367) would use a DOO from an authorised issuing body. Multiplying this by the average costs of DOOs from an issuing body plus an estimated time of 20 minutes for the trader to complete the document estimated at A$33 per DOO + 1/3 hours x A$68.79 per hour for each transaction, the expected total cost is A$188,316 per annum.

•

It is estimated that the remaining 45 per cent of transactions (30,299 transactions) would be supported by the exporter or producer making a self-declaration or providing supporting documentation to the UK importer. Based on an estimate of completing the self-declaration or providing supporting documentation to the UK importer taking up to 20 minutes, a total cost per year for completion is 30,299 transactions x 1/3 hours x A$68.79 per hour = A$694,756 per annum.

•

Once off costs are A$895,783 in the first year, with additional ongoing costs of not more than A$883,072 per annum. This results in an estimate of total administrative costs of not more than A$9,726,503 over 10 years. It is also important to note that the ongoing administrative costs incurred by a business in preparing declarations of origin or providing supporting origin documentation to importers should reduce over time as traders become more experienced in creating the declarations of origin and start to provide the necessary details to support a claim by 'importer's knowledge' to UK importers as a matter of course.

•

The net effect of this regulatory change would be an increase of A$972,650 per annum, based on estimated costs across a 10-year timeframe.

Regulatory Burden Estimate (RBE) Table