5.1
This chapter examines the barriers and impediments to Australia growing its trade and investment relationship with the United Kingdom, including the concerns some Australians may have about the cultural differences doing business in the UK and Europe. Business people with experience in the UK and Europe provide their views on the perceptions of the bureaucracies, along with an outline of the tariffs and technical barriers to trade that can impact on Australian exports. Other issues examined include the certification, food and product labelling, supply chain costs, and the cost of trade finance. The challenges faced by UK residents to obtain visas to enter Australia for tourism, business or study are outlined.
5.2
To date, the Australian Government has addressed barriers and impediments to trade and investment with the UK in the context of Australia’s overall trade policy relationship with the EU. That reflects the fact that the European Commission has competence for trade policy and negotiations.
A range of barriers have been identified as part of the current Australia-EU FTA scoping exercise. Particular areas of concern include agriculture market access barriers, sanitary and phytosanitary measures, and geographical indications.
5.3
Australia's agricultural exports to the UK, and the broader EU, are restricted by comparatively high out-of-quota tariffs.
These tariffs are imposed on a range of key products of interest to Australia, including beef, sheep meat and sugar. Australia has country specific quotas for some commodities, however the quota volumes are relatively low and well utilised, making it difficult to expand trade.
5.4
In its 2015 trade policy review of the European Union, the World Trade Organisation noted that the EU is generally an open and transparent economy and, as one of the world’s biggest economies plays a critical role in the multilateral trading system.
5.5
The Australian British Chamber of Commerce raised the challenges of the current arrangements for trade and investment between Australia and the UK being under the World Trade Organisation standard rules.
These rules are not the most favoured arrangements for trade and investment for either country with arrangements for other countries enabling significantly better outcomes.
5.6
Following the UK’s decision to leave the EU, it will need to define a sovereign trade policy, which will involve the British Government making decisions on overall levels of protection and support for specific sectors of the UK economy.
Australia will seek to engage with that policy through the Australia-UK Trade Working Group, and will hold consultations with industry and other stakeholders to identify barriers of concern that are inhibiting the development of commercial linkages.
5.7
Trade and Investment Queensland highlighted that Australia’s logistics or physical distance from market will remain a significant impediment for certain commodity exports to the UK compared to Australia’s Asia Pacific regional access, potentially influencing competitiveness with local product.
Major uncertainty surrounding the post-Brexit environment will potentially impede trade and investment growth during the next few years. Potential challenges with emerging independent UK regulatory frameworks, particularly if they no longer align with those in the EU.
5.8
Trade and Investment Queensland also warned that currency movement in the possible strengthening or weakening in the value of the Australian dollar against the British Pound will continue to be an important factor in future trade and investment.
There is potential economic pressures on the strength of Sterling and this will have implications on the relative position of the AUD$ against the GBP which may impact price competitiveness, cost of doing business, and return on investment.
Statistical data on trade between Australia and the UK
5.9
Professor Philomena Murray and Dr Margherita Matera from the University of Melbourne and Dr Laura Allison-Reumann from the Nanyang Technological University have jointly recommended that the Australian Government improve the collection of trade data with the UK independent of the EU trade data to assist with trade access and negotiations.
There is also scope to develop a data set regarding Australia-UK trade in goods over time by sector. This would be useful for the Government as it seeks access for Australian primary producers and producers of simply and elaborately transformed manufactures.
5.10
The Australian British Chamber of Commerce also expressed its concern about the depth and quality of statistical information on two-way trade between Australia and the UK.
…while the headline numbers are strong, the lack of granularity of data prevents the sort of in depth statistical analysis that might prove useful to further understand the relationship.
5.11
The Australian British Chamber of Commerce suggested both the Australian and UK governments need to coordinate a response to improve the collection of trade data
The Chamber recommends the drawing together of government information on both sides through not only the Australian Bureau of Statistics, Office of National Statistics (UK), but also through the Customs and Border Protections agencies, tax offices and immigrations services to provide a more insightful view of the strengths and potential opportunities of the relationship moving forward.
Agricultural commodities
5.12
According to Agribusiness Australia, Australia has a trade deficit with the EU in terms of agriculture and food products. In part, this can be explained by the higher restrictions that are applied by the EU to agriculture and food imports from Australia.
5.13
Agribusiness Australia highlighted the significant disparity between the tariffs faced by Australian agricultural imports into the EU, and EU agricultural imports into Australia. Applied tariffs are those that are estimated to be currently applied, whilst bound tariffs are the maximum tariffs each trading partner is legally able to apply under World Trade Organization (WTO) agreements on a most favoured nation (MFN) basis.
5.14
The Australian British Chamber of Commerce conceded the tariffs and tariff rate quotas under the WTO, accompanied by the subsidies of the EU’s Common Agricultural Policy have made efforts for Australia agricultural exporters challenging.
Red meat
5.15
According to the Australian red meat industry representing the Australian Meat Industry Council, the Red Meat Advisory Council, the Cattle Council of Australia, the Sheepmeat Council of Australia, the Australian Lot Feeders’ Association and the Goat Industry Council of Australia, the UK’s incorporation into the highly restrictive EU import regime in 1973, severely curtailed Australia’s red meat trade volumes via restrictive arrangements, which still operate today. These arrangements currently include:
7,150 tonnes of country (Australia) specific High Quality Beef (HQB) quota access with a 20 per cent in-quota tariff;
shared access (with the US, Uruguay, Argentina, Canada, and New Zealand) to a 48,200 tonne global grainfed beef quota with a 0 per cent in-quota tariff;
access above these quotas via import duties of 12.8 per cent plus up to €3/kg – which for many beef products makes trade above the quotas commercially unviable; and
access (via EU importer held licences) to a shared frozen beef quota and a frozen beef for processing quota - which at varying times source Australian product.
5.17
For sheepmeat and goatmeat:
A 19,186 tonne country (Australia) specific combined sheepmeat / goatmeat quota with a 0 per cent in-quota duty; and
access above this quota via import duties of 12.8 per cent plus up to €3.1/kg - which again effectively stifles most above-quota trade opportunities.
5.18
Additional products:
for offal, tariffs of 12.8-15.4 per cent and / or up to €3/kg apply;
for co-products, tariffs of up to 16.6 per cent or €3/kg apply;
for prepared meat tariffs of up 16.6 per cent or €3/kg apply; and
some live animal tariff lines also incur duties of 3.2-10.2 per cent and / or €80.5-93.1/100kg.
5.19
The Chief Executive Officer of the Australian Food and Grocery Council, Ms Tanya Barden, would like to see the UK embrace no limits on the volume of meat that can exported from Australia to the UK.
…we'd be keen to see greater quotas, or indeed no quotas at all, in being able to enter the UK market.
5.20
Meat exporter Thomas Foods General Manager of Production, Mr David Larkin AM, said the red meat industry was looking for change in the quota system.
The Australian industry is not happy at all with our access in to the EU. We have 7,150 metric tonne of high-quality beef. We have 19,186 metric tonne of sheepmeat quota and the Kiwis have 226,000 metric tonne of sheepmeat quota. It was relative to conditions around the time of the EU and in '73 when it was widened, and there was evidently a multiplication factor applied to the trade conditions at the time of which Australia was not participating in that led to the Kiwis getting the exponential access. In terms of sheepmeat and lamb, we are at a distinct disadvantage in terms of the access. I should make it quite clear that we are not happy with that.
5.21
Mr Larkin said the Australian industry is also competing hard for part of the EU’s global quota for grain-fed beef.
There are 48,200 metric tonne of grain-fed access to the EU, which has largely been carved out by the EU as a global quota in compensation for the Americans use of HGPs. Whilst the HQB quota, the 7,000 tonne and the 19,000 tonne, is a voluntary restraint quota managed by the Australian government at this end, the 48,000 tonne is managed by the customer at the other end. We participate in that on a global basis against global competitors.
5.22
The Head of Corporate and Regulatory Affairs, JBS Australia, Mr John Berry, wants the Australian Government that manage the exporters accessing the Hilton beef quota (HQB) to maximise the value of the quota in a market demanding quality Australian red meat.
Under a global allocation model in beef, the Hilton beef quota, Australia has 7,150 metric tonnes currently in a total of 66,750 metric tonnes. This is a country-specific quota to the Australian government. An allocation to exporters being Australian exporters is based on historical performance. One of the issues that we have raised on many occasions is that the Australian government should be incentivised to maximise the economic rent from the quota through ensuring that the allocation is to exporters who can maximise the value of the product sold into these markets.
Quota management by the Australian Government
5.23
Mr Berry believed the allocation of meat quota to non-packer exporters was an issue needing the Australian Government’s attention.
The quota in New Zealand is handled by the beef and lamb, which is not the government, but it operates under government statute in terms of the allocation of quota. It is allocated on this basis and it is on a three-year rolling average. So as a processor, as your share of the kill goes up or down, your share of the quota goes up or down as well…The problem with the Australian system is that it is based on performance and we have these non-packer exporters that own quota. The only way that you can earn quota is by keeping exporting to the EU, even when it does not make sense. So 20 per cent of what gets exported to the EU now is the lowest value product we have, which is trimmings and flaps, which go to the doner kebab manufacturers. That is because those non-packer exporters can buy that product and export it to the EU and make a small margin, or no margin at times, but keep the quota, and then we buy it off them at 70c a kilo or something ridiculous. So it is a big frustration for us when we have chilled retail business that we want to do at the higher end and we have this impediment brought about by our allocation system.
5.24
The Department of Agriculture and Water Resources’ Quota Manager, Mr Ian Cattle, explained there are two primary functions to quota.
One is certification; one is allocation. The certification process is pretty standard across all quotas. You require a certificate from the Australian government to receive the reduced tariff when you import.
5.25
Mr Cattle said the process of allocation for red meat quota to the EU was different to the dairy quotas for example.
The dairy quotas and the cheese quotas that we have with the EU are currently called first-come, first-served quotas.
5.26
Mr Cattle said the red meat quotas are allocated on the Australian exporter’s shipping history depending on the specific quota.
For example, the high-quality beef quota, the Hilton Quota, is based on your previous three-year shipping history to the EU, under quota. It's a proportional allocation based on applications. If you apply for a quota and last year you shipped 10 per cent of the quota out of all the applications, you would receive 10 per cent. In the last three years, if you did 10 per cent, you would receive 10 per cent allocation.
5.27
Mr Cattle noted that any new entrant as a meat exporter can apply for the EU’s high-quality beef quota, there's a new-entrant capacity in the legislation.
You're allowed to be a new entrant for the first three years. In the first year, you would be allocated 12 tonnes as a minimum allocation.
5.28
The Department’s First Assistant Secretary, Export Division, Ms Louise van Meurs, highlighted that Australia’s high-quality beef quota of 48,200 tonnes was sometimes not filled and only 28 per cent of that quota had been filled in 2016-17 due mostly to wet conditions according to Mr Cattle.
Generally speaking, the Hilton Quota would be 99 per cent filled, but last year it was because of the conditions at the time. It wasn't because of drought conditions; it was because it rained. Everyone held their stock.
5.29
The Chief Executive Officer of the Australian Meat Industry Council Mr Patrick Hutchinson supported the quota process explaining the Department of Agriculture and Water Resources retains up to 500 tonnes of Australia’s 7,150 tonne beef quota for new entrants.
New entrants are eligible for an allocation of up to 36 tonnes [over three years]…While a number of exporters, both non-packer exporters and EU accredited facilities have applied for new entrant quota over recent years, few have been able to use it as a launching pad for establishing a market presence in the EU. The reason is that the new entrant component is too small to be commercially viable in many instances and the quota is held by a limited number of processors simply because of the size of the quota, making expansion difficult.
5.30
Mr Hutchinson stated “While it is politically correct to allow for new entrants in quota controlled markets, in most cases the new entrant EU high-quality beef quota allocation is rarely utilised (given its size) and can in fact disrupt the use of the quota”.
5.31
Mr Hutchinson stated the Department and Australian Meat Industry Council have therefore proposed the amount be increased from 36 to 100 tonnes - but under special conditions.
Given that it is a small quota to begin with, already in limited hands, increasing the new entrant allocation to 100 tonnes is unlikely to change the number of new entrants long term unless they have a plan to purchase quota as well and make a long term investment in the market. Those who currently have the quota have already made that investment and therefore want to protect and build on that market share.
Additionally, as the cost of processing plant accreditation to access the EU market is high, ensuring sufficient access to EU quota is necessary to make the cost of accreditation worthwhile and the business viable.
5.32
The EU sheepmeat / goatmeat quota (19,186 tonnes) operates on a different basis of an 80/20 performance scheme, rather than setting aside a specified tonnage allocation for new entrants, according to AMIC.
The basis of the 80/20 scheme is to let the market decide who should be a new entrant rather than have Government making that decision as part of a special set-aside tonnage allocation.
In the case of sheepmeat/goatmeat, quota allocation each year is based on 80 per cent of an exporters’ shipments to the EU in the previous year and 20 per cent on shipments to global markets. The 20 per cent global component allows a new entrant to generate EU quota by shipping to markets other than the EU first.
If you take 500 tonnes to allocate to new entrants (as per the EU beef quota scheme), it has to come from another eligible exporter’s existing quota entitlement. If the new entrant is a non-packer exporter they still have to go back to the EU accredited packer they took the quota from, to source the product. The 80/20 scheme allows the market to decide that instead.
5.33
The Australian Meat Industry Council (AMIC) supported maintaining the 80/20 scheme that underpins the new entrant component of the EU Sheepmeat and Goatmeat scheme describing it as “a scheme which has worked well for many years”.
5.34
The Sheepmeat Council of Australia (SCA) stated its support for the 80/20 system as a quota allocation mechanism under the current EU sheepmeat market access arrangements.
Wine
5.35
The growth of Australia’s wine exports to the UK is being hampered by the current tariff treatment by the EU according to leading Australian wine producer Treasury Wine Estates and a view shared by the Winemakers’ Federation of Australia and the Australian Wine and Grape Authority (AGWA).
Since 1973, when the UK joined the EU, Australian wine has been subject to tariffs and quotas that have harmed the competitiveness of Australian wine with European wine and some other ‘new world’ suppliers.
5.36
Specifically, imports of Australian wine in to the UK are subject to EU Common Customs Tariff (CCT), as listed in Table 5.1on alcohol strength:
Table 5.1: European Union import duty on wine (euro per litre)
|
|
|
|
|
<13 per cent
|
0.131€
|
0.099€
|
|
13-15 per cent
|
0.154€
|
0.121€
|
|
15-18 per cent
|
0.186€
|
0.154€
|
|
18-22 per cent
|
0.209€
|
0.209€
|
Source: Treasury Wines Estates, Submission 13 & Winemakers’ Federation of Australia, Submission 3
5.37
Based on AGWA’s analysis of exports data, the Treasury Wine Estates estimated that the total direct cost of the EU import duty on Australian wine exports to the UK totalled more than $42 million in 2015. This estimate does not take into account the cost to industry of the reduced competitiveness of Australian wine in the UK.
5.38
The rates of import duty payable in per bottle equivalent in Euros (€), Pounds (£), and Australian Dollars (A$) terms is illustrated in the Table 5.2 below. In the UK, the average price per bottle is £5.40 per bottle – the tariff, depending on alcohol content, represents between 1.3 and 2.2 per cent of this price.
Table 5.2: Impact of EU import duty on a bottle
|
|
|
|
|
|
Alcohol strength
|
€ per bottle
|
£ per bottle
|
A$ per bottle
|
|
<13 per cent
|
0.10
|
0.07
|
0.14
|
|
13-15 per cent
|
0.12
|
0.09
|
0.17
|
|
15-18 per cent
|
0.14
|
0.10
|
0.20
|
|
18-22 per cent
|
0.16
|
0.12
|
0.23
|
Source: Winemakers' Federation of Australia, Submission 3
5.39
Table 5.3 illustrates the total cost of the EU import duty on Australian wine exporters in 2014. The total cost of $58.8 million in 2014 reflects the general decline in volumes shipped to the EU over the past few years when compared with a total import duty of $71.5 million paid in 2010.
Table 5.3: Total cost of EU import duty on Australian wine exports (2014)
|
|
|
|
|
Alcohol strength
|
Bottled
|
Bulk
|
|
<13 per cent
|
$5,654,400
|
$19,975,200
|
|
13-15 per cent
|
$6,975,000
|
$25,399,500
|
|
15-18 per cent
|
$33,480
|
$129,150
|
|
Fortified wine
|
$11,600
|
$516,600
|
|
|
Total
|
$58,794,930
|
Source: Winemakers' Federation of Australia, Submission 3
5.40
The Global Public Affairs Director of Treasury Wine Estates (TWE), Ms Cecelia Burgman, said while the tariff may not seem significant per bottle in the UK it does adds up for the wine exporters competing in a global market.
It is anywhere between seven pence or eight pence a bottle and 16 pence a bottle, depending on the alcoholic strength. But, because of the volumes that we are exporting to the UK, it does add up. I am not sure whether the Winemakers' Federation of Australia or Wine Australia mentioned it this morning, but Australian wine exports to the UK are subject to over $55 million worth of tariffs. So, when you add it up it does make a significant difference to us, and if you are an exporter of significant volume it is not an insignificant amount in terms of the advantage received.
The average price point for Australian wine in the UK is about five to eight pounds per bottle at the moment, but we are seeing a shift, as we are in a lot of other export countries and in Australia as well, up the value chain. In the industry we call it 'premiumisation', but that is not to say that we are at a premium, luxury level; we are talking about a move from the five to eight level to above 10.
5.41
EU member-country wine producers, which are some of Australia’s main competitors in the market – being Italy, France and Spain – are not subject to the Common Customs Tariff. These countries are currently saving approximately $110 million per annum on wine as a result of their nation’s EU membership.
5.42
In addition, Chile has an FTA with the EU which allows tariff free entry for Chilean wine into the UK.
This treatment has seen Chile grow into an increasingly popular and commercially successful player in the UK market, with Concha Y Toro (a Chilean wine producer) now being the third largest wine company in the UK. Zero level tariffs has enabled the company to invest millions into brand marketing campaigns such as sponsorship agreements with Manchester United FC and Sky TV.
5.43
According to Treasury Wine Estates, South Africa’s trade agreement with the EU is more complex, but also provides preferential treatment for South African wine.
As a result, the Australian wine industry stands to gain significantly from a closer trade relationship with the UK, particularly if Australia can negotiate a FTA which secures zero tariff access for wine.
5.44
The Winemakers’ Federation also highlighted a growing market for the export of grape concentrate to the EU for the production of grape juice and non-alcohol beverage sector products. There are two tariff rates for concentrate in the EU dependent on the Brix (sugar content as percentage by mass):
Brix value exceeding 30 but not exceeding 67: 22.4 per cent
Brix value exceeding 67: 40 per cent + 20.60 EUR / 100kg
5.45
The Winemakers’ Federation strongly believes that the Australian Government must make it a priority in any negotiations with the UK to eliminate all import tariffs for wine and grape products.
Any tariff elimination should also recognise that the UK acts as a hub for Australian wine trade to continental Europe and we should seek also to eliminate tariffs of wine packaged in the UK or re-exported from the UK to continental Europe. We believe that this removal of import tariffs for wine and grape concentrate to facilitate trade for Australian exporters has the capacity to greatly increase profitability in this major market.
5.46
The Chief Executive of the Winemakers Federation of Australia, Mr Tony Battaglene, was confident Australian trade negotiators could have the tariffs removed from the EU and the UK markets.
I think we will be able to negotiate zero tariffs into the EU and the UK without any problems. First of all, we are already obviously as an industry in discussions with our counterparts in both these markets. We certainly have an industrywide position on both sides in the EU for zero tariffs immediately, so no phase-out period. That is the way that we will both be talking to our respective governments.
With respect to the UK, it is even more interesting…They see themselves as a trading nation. They are a growing industry and they want to export a high-value product. They will wish to go to zero tariffs immediately.
5.47
Mr Battaglene’s biggest concern about the UK market separating from the EU is how Australia’s wine agreement with the EU will be dealt with in negotiations.
The biggest risk that we run is that it gets too complex for the United Kingdom when they go into Brexit and they just roll everything, and we are left without that wine agreement. That will put some of our product and our flexibility at risk. That is the biggest risk. We know government is well aware of that. We know that our compatriots in the UK are aware of it. That is the biggest risk. Down the track—it is not a high risk—it is if the UK decide that they want to protect their market. At the moment, we know that is not the case.
5.48
The Australian Grape and Wine Authority (AGWA) confirmed the benefits of the Australian Government’s treaty with the European Union ensuring Australian wine exports are not confronted with major technical barriers to trade. The wine agreement covers a range of technical matters and provides, for example:
Acceptance of each party’s authorised winemaking techniques. Practices permitted under Australia’s Food Standards Code are, therefore, acceptable in wine exported to the EU.
Simplified wine certification arrangements. Australian wine need only be analysed for three items, rather than the usual eight, on the ‘VI1 document’ essential for entry into European markets.
Labelling concessions. The alcohol content on an Australian wine label can be expressed to a decimal place, rather than merely a whole or half unit, and is subject to a wider tolerance than wine from other countries. Furthermore, Australian products can be labelled as blends of wine from up to three regions, an option not permitted to others under EU law.
Recognition of the influence of Australian agricultural soils on wine composition thus avoiding the invalid rejection of Australian wine based on its mineral content. Such rejections had been encountered prior to negotiation of the treaty.
5.49
This treaty on wine also includes a ‘standstill’ clause that prevents Europe introducing more restrictive conditions on Australian wine producers through any future review of its domestic wine regulation.
5.50
Despite the treaty, the AGWA highlighted aspects of European law that currently pose problems for Australian wine exporters to the UK.
5.51
A high proportion of Australian wine is shipped to Europe, and particularly to the UK, in bulk containers, rather than in bottle.
Sometimes the customer prefers the wine to display residual sweetness and this request can, legitimately, be satisfied through the addition of concentrated Australian grape juice. In order to prevent possible spoilage during the long voyage to Europe it is preferable to transport the concentrated juice separately from the wine, for subsequent blending prior to bottling at the destination. This practice, however, is prohibited under European law. Imported wine cannot be sweetened with concentrate within Europe. Similarly wines rendered sparkling through the addition of carbon dioxide can only be carbonated prior to export, which presents obvious technical difficulties in the case of wines transported in bulk.
5.52
More generally according to the AGWA, the European concept of ‘coupage’ prevents the blending, within the borders of Europe, of batches of Australian wine of different regional origin.
There are no sound technical reasons for any of these restrictions on the handling of bulk wine and it would be very useful if they did not apply to wine shipments to the UK once they are no longer subject to EU regulation.
5.53
The AGWA highlighted that some European regulators have interpreted the law in a way that prevents Australian sparkling wine being sealed with innovative closures such as crown seals. The AGWA believes this interpretation is “probably wrong” but it hoped following ‘Brexit’ that UK authorities would be “free to adopt a more liberal interpretation”.
5.54
The AGWA stated Australia does not require imported wine from Europe to be accompanied by an official certificate containing the details of often expensive chemical analysis.
Wine shipments to the European Union are subject to this requirement. Ideally, we could negotiate reciprocal arrangements with the UK whereby certificates are not required for wine traded between the two countries.
Dairy
5.55
The Australian dairy industry would like both the EU‐27 and UK to renegotiate their WTO schedules to mirror (be identical) to the existing EU WTO schedule. For dairy, a ‘mirror’ outcome would entail doubling country specific quota access for Australian origin cheddar and processed cheese; to a combined total of 8,422 tonnes.
Australia’s dairy trade relationship with the EU mirrors that with the UK, though the asymmetrical imbalance is substantially higher. EU‐27 imports of Australian origin dairy products totalled 137 tonnes in 2015, down from 15,090 tonnes in 2006.
5.56
The Australian dairy industry highlighted that the barriers to dairy trade prior to ‘Brexit’ are major; both from tariff and non‐tariff perspectives. Under the current WTO access country specific access rights into the EU‐28 consists solely of 4,211 tonnes of cheese.
This is totally unacceptable commercially as:
EU origin cheeses have duty and quota free access into Australia, with the exception of, semi‐hard cheese varieties such as Gouda, Edam and cheddar that compete, especially the latter, with domestic origin make:
The out‐of‐quota tariff of A$1,220/tonne has never been applied as the domestic demand is for EU origin specialty varieties
The quota volume is paltry and fixed until either the Doha Round, or a bilateral agreement, is implemented
Access for cheese is restricted to two tariff lines
An in‐quota tariff rate of Euros 170/ tonne is applied (another impediment to trade)
Quota administration is by the EU Commission rather than the Australian government as occurs for dairy quotas under the Australian‐United States FTA adding to an inflexible system
Time consuming physical inspections are required to approve Australian manufacturing plants for exporting to the EU, rather than having in place a mutual recognition agreement:
Noting Australia’s exemplary food safety track record, and
There are no country specific quotas (CSQs) for other Australian origin dairy products such as butter and milk powders.
Cane sugar
5.57
The Australian Sugar Industry Alliance (ASA) wants the removal of the “prohibitive” Most Favoured Nation import duty of €339 per tonne that is imposed by the EU on imports of Australian cane sugar above Australia’s very small CXL quota volume because the extra cost prohibits British sugar refineries importing Australian sugar into the UK.
5.58
Australia has a small annual WTO tariff rate quota (TRQ) access to the EU including the UK, totalling just 9,925 tonnes of raw cane sugar as shown on the Schedule CXL (European Communities). This 9,925 tonnes is only a small proportion of the EU’s annual sugar import need of between 3 and 3.5 million tonnes of raw, refined and speciality sugar each year.
To put this in context, a commercial scale quantity of sugar for a single cargo to the EU would be in the order of 30,000 tonnes. An in‐quota CXL duty of €98/tonne is also payable on this volume.
Rice
5.59
Australian milled rice exports to the UK are restricted because of the broader EU’s application of Tariff Rate Quotas (TRQ) and the high tariffs on imported volumes above the TRQ levels.
5.60
Leading Australian rice producer SunRice noted that attempting to limit the importation of Australian Japonica rice into the EU and therefore the UK markets through the EU’s TRQs and/or the “prohibitively high” tariffs, significantly increases the costs for value-adding food processing businesses making sushi and rice cake domestically within the UK. Despite increasing demand for Australian Japonica rice, the EU tariff imposed on imports above Australia’s TRQ is set at €175/tonne, and represented a significant additional cost of between 15-20 per cent to the average sales price.
This is a prohibitive cost not willing to be borne by some customers.
5.61
SunRice warned trade limiting measures such as TRQs and tariffs significantly increase costs to Australian businesses that export commodities to the UK, especially considering the freight disadvantages relative to competitor rice growing countries such as the US and Egypt, which could be mitigated through increasing trade volumes and improving economies of scale.
Seafood
5.62
The Chief Executive Officer of Clean Seas Seafood in South Australia, Mr David Head, said the aquaculture business which exports Spencer Gulf Hiramasa kingfish for into top-end restaurants and wholesalers in Europe and the UK faced some challenges.
5.63
One was the minor issue of a EU requirement for raw fish to be frozen before it is served fresh to remove the risk of tape worms or other parasites. Mr Head explained Clean Seas Seafood product being farmed king fish from Spencer Gulf is not exposed to that problem.
Farmed product does not have that same problem because our fish are not consuming other fish, and therefore parasites, and being subject to those risks…The board agreed last week to invest in a new technology in rapid freezing, which we think will give us a competitive advantage in this space. The whole point about freezing product, it is the speed at which you get from zero to minus 10 that impacts on the quality of the product.
5.64
One of Mr Head’s “great challenges” was applying through the Department of Agriculture and Water Resources for the EU accreditation process for Clean Seas Seafood’s brand new processing facility in Adelaide.
I was quite appalled recently to discover that—we were told it was a three-month process, starting from when we got the facility up and running, before we could get the EU accreditation… then I was quite troubled to discover just a matter of weeks ago, when we rang up to find out how the application was going in Brussels, that it had never left Adelaide.
We had failed this financial audit without knowing about it, and our application was still sitting in Adelaide. Nobody had told us. The next day we rapidly sent some money off. We disputed the debt: it was $700 in total, including an application fee, I might add, for the EU accreditation, which they will not process until you have paid.
It has now gone to Canberra. We are now saying to Canberra, 'When is this thing going to get off to EU? I discovered recently, according to the [Department] team, that the reason for this is that Canberra sends them off to Europe in batches…These are the frustrations of doing business, and it has nothing to do with the EU relationship, but with our internal government bureaucracy in Australia.
5.65
The Department of Agriculture and Water Resources detailed its process for export registration and EU listing.
Typically the process from lodging an application for export registration to approval and EU listing will be 4 to 5 months. The quickest EU registration to date is approximately three months.
5.66
The Department of Agriculture and Water Resources’ Assistant Secretary in the Exports Division, Dr Jenny Cupit, outlined that seafood exporters have to be registered for export from Australia.
We will have to make sure that the establishment is able to be fit for purpose, that it can actually export, that there is no debt owed to the Commonwealth, and that the people are fit and proper persons… For seafood, we have qualified auditors who go out and assess to make sure everything's fit for purpose and that they can actually produce their product.
5.67
Dr Cupit said the Department was looking to make changes in management of the process and sends its new listings in batches to the EU monthly.
Unfortunately, this is where the department could improve some of its practices. We do have multiple systems going forward. Sometimes an auditor will come out, do the audit and fill in the documentation with the establishment, and they will, for whatever reason, push it into the right areas of the department at the right time. Other auditors don't necessarily do that.
Scotch Whisky
5.68
Both the Australian British Chamber of Commerce and the Scotch Whisky Association raised concerns about Australia applying an 5 per cent import duty to Scotch Whisky but not on US whiskies or bourbon and wants the issue addressed in the free trade negotiations.
Australian whisky (and other spirits) entering the UK qualifies for a zero tariff. A key objective for any future UK-Australia FTA would be the immediate elimination of the 5 per cent ad valorem import duty which Australia levies on spirits from the UK. With the Australia-US FTA in operation, US whiskies have tariff free access and an advantage over Scotch Whisky.
5.69
The Scotch Whisky Association are disappointed the Australian Government has not removed the import duty as yet and intend raising the issue with the World Trade Organization.
At 5 per cent ad valorem, Australia’s import tariff on spirits is considered in trade parlance as a ‘nuisance tariff’. Its elimination is one of the whisky industry’s top priority objectives for the WTO Doha round. To date, despite highlighting the benefits this would bring including for the Australian consumer and their providers (retailers, wholesalers, distributors etc.), Australian governments have not removed the tariff.
With the Australia-US FTA in operation, US whiskies have tariff free access and an advantage over Scotch Whisky.
5.70
The Scotch Whisky Association is concerned by Australia’s “excise tax discrimination” against imported spirits in favour of locally-produced brandy.
Australia currently differentiates between brandy (of which the majority is locally produced) and other spirits (of which the majority are imported). Our view is that this difference in tax - whisky and other spirits (A$82.27 per lpa) versus brandy (A$ 76.84) - is clearly intended to protect the Australian brandy industry. The difference is of long standing and has been perpetuated by index-linking.
5.71
The Scotch Whisky Association believe Australia is therefore in breach of its WTO obligation under article III.2 and III.4 which require “like” imported and domestic products to be treated identically as regards internal taxation and “directly competitive or substitutable products” to be taxed similarly.
WTO jurisprudence has identified all spirits as either ‘like’ or ‘directly competitive or substitutable’ with one another and defined ‘similarly’ as a differential of no more than 3 per cent.
We would expect that a future UK-Australia FTA would include the early equalisation of the whisky and brandy rates, preferably by lowering the former to the latter level.
5.72
The Scotch Whisky Association also supported Distilled Spirits Industry Council of Australia’s position on a single volumetric tax rate for all alcohol beverages.
Such a tax supports consumers' choices and recognises that all alcohol is the same, regardless of the type of beverage. A single rate volumetric tax would be simpler, fairer, and more efficient, ending the discrimination between drinkers.
5.73
The Scotch Whisky Association believed the definition of whisky contained in Australia’s food standards code could be improved and would like the question of a “legal definition of whisky to be explored in the context of future FTA negotiations”.
The reputation of the whisky category in Australia has been built by traditional whiskies such as Scotch and Irish, and more recently on high quality Australian Whiskies. These spirits are produced from cereals, distilled in a way so that they retain the flavour deriving from their raw materials, and are bottled at 40 per cent alcohol by volume without the addition of artificial flavourings. Australian consumers are accustomed to drinking whisky produced in this way.
5.74
The Scotch Whisky Association claimed the provisions of the Food Standards Australia New Zealand’s code on whisky were loosened and made more ambiguous in 2000 making it difficult to define and enforce what whisky is.
For example whisky is only required to have ‘the taste aroma and other characteristics generally attributable to that particular spirit’ which makes it extremely difficult to prove that a product is non-compliant. The SWA has seen a number of spirits on sale in Australia described as ‘Whisky’ but which do not comply with the traditional definition of whisky. These deceive consumers and compete unfairly with the producers of high quality whiskies, who have built the reputation of the whisky category.
Passenger motor vehicles
5.75
The Federal Chamber of Automotive Industries supports the removal of the existing 5 per cent tariff on all new motor vehicle imports, including those from the UK.
Reducing the tariff to zero will deliver even greater competition to the Australian market, which in turn will provide more safety and environmental features into the Australian market.
Luxury car tax
5.76
The FCAI raised an additional factor that unfairly impacts predominantly on European-sourced motor vehicles - the “unfair application of the Luxury Car Tax (LCT)”, that also affects many models imported from the UK.
For the purposes of the application of the LCT, a luxury car is defined in terms of whether the value of the car exceeds the LCT threshold. The FCAI and member brands consider that the LCT is an inequitable and anachronistic tax.
5.77
The FCAI also noted in the context of advancing vehicle CO2 emissions and improved safety technologies, the LCT serves as a tax on technology and sustainability.
At a time when Australia is considering a mandatory CO2 target and is experiencing a rise in the road toll, the LCT acts as a brake on a wider cross section of the Australian society having access to new environmental and safety technologies.
Rules of origin on vehicles
5.78
Given the multiplicity of free trade agreements Australia now has, the FCAI and member companies consider that as it relates to rules of origin, “greater focus should be given to the origin of a motor vehicle, than its constituent parts”.
As an import-only industry, it makes little sense that componentry for a vehicle may have duty applied to it, because the vehicle itself does not meet the necessary country of origin requirements.
5.79
The FCAI would support further investigation of reforming these hurdles to allow accumulation of eligible content from other countries with which Australia have an FTA or RTA with.
For example, were components from Japan (with whom Australia has an economic partnership) to be shipped to the UK in order be incorporated into vehicles for export to Australia, we would support the Japanese content being treated as eligible content when assessing regional value content. This would be on condition that the component (if re-exported to Australia) would have qualified under the rules of origin between Australia and Japan.
Prohibiting currency manipulation
5.80
Ford Australia submitted that it universally promotes the inclusion of clear and enforceable provisions which “prohibit currency manipulation through intervention by signatory/member countries to all negotiated trade agreements”.
It is important that this issue be considered in the preliminary negotiating phase to ensure these provisions are addressed well before the concluding phase of trade agreement negotiations. Ford also urges appropriate dispute settlement mechanisms and remedies be included up-front to any completed pact alongside transparent and binding currency manipulation provisions.
5.81
Ford Australia claimed the resulting distortion from currency manipulation practices to currency exchange rates has the “very real potential to eliminate any market access benefits gained from the agreed removal of import tariffs”.
The potential impact of currency manipulation on trade competitiveness has escalated significantly in recent years as the traditional barriers to trade – tariffs, import licensing, quotas – have been increasingly removed in developed economies as trade liberalisation has taken hold. Currency now has a substantially higher relative weighting as a trade influencer.
5.82
Australia, as a global leader in trade liberalisation, is “particularly vulnerable to instances of currency manipulation” and that there is a “high level of risk that its industries can be quickly exposed to damage”, according to Ford Australia.
Minerals and energy
5.83
The Minerals Council of Australia acknowledged that market access barriers for minerals and energy products exported from Australia are relatively low under the EU’s existing common external tariff. The EU applies zero tariffs on imports of many of the major minerals commodities which Australia produces. The EU’s Most Favoured Nation applied tariffs on iron ores and concentrates, coal, gold, liquefied natural gas, aluminium ores and concentrates, crude petroleum, copper ores and concentrates, and pearls, for example, are zero. However, there are a number of minerals products where the EU does impose tariffs ranging from around 2 to around 10 per cent. Tariffs at the higher end of this range are imposed on basic metals manufactures such as aluminium, ferro-alloys and a number of base metals such as titanium, zirconium and antinomy.
5.84
While Australia does not export much in the way of quantity of these minerals and metals products to the UK, the Minerals Council wants the Australian Government to seek the removal of these tariffs in any free trade agreements with the EU and the UK to be in line with the zero tariffs negotiated by other countries the EU has entered into preferential trade agreements with.
The EU has cut tariffs on these products to zero in the vast majority of tariff lines in almost all of its FTAs and other preferential trading arrangements with partner countries such as South Africa, Chile, Peru, Mexico, Korea and Turkey.
5.85
According to the Department of Industry, Innovation and Science the 99.85 per cent of lead that is exported from Australia to the UK is unwrought and unrefined and does not face a tariff from the EU. This form of lead that forms the overwhelming majority of Australian lead exports to the UK by value is “unwrought, unrefined form that is not containing by weight antimony as the principal other element” does not face tariffs under TARIC (Tarif Intégré de la Communauté; the Integrated Tariff of the European Communities). The forms of lead exported from Australia to the UK that do face tariffs are oxidised lead (5.5 per cent), some unwrought refined lead (2.5 per cent) and some lead sheets and articles (5.0 per cent).
Health services
5.86
During Aspen Medical’s export experience in the United Kingdom it has experienced a number of soft trade barriers that it understand were implemented because of European Union directives. Most categories of Australian healthcare clinicians are required to be registered through the Australian Health Practitioner Regulation Agency (AHPRA) in order to practice. Obtaining registration is a barrier to delivering healthcare in Australia.
5.87
The UK does not have a single registration body, rather it has a number of profession specific councils that are responsible for ensuring that healthcare clinicians meet national standards and are registered before they can work.
5.88
Aspen Medical has had the greatest interaction with the Nursing and Midwifery Council (NMC) and the General Medical Council (GMC) which registers Medical Officers. These UK registration bodies have provisions within their orders and the Medical Act 1983 respectively which provide pathways for nationals with EU rights to essential ‘fast track’ or simplify the registration process. Clinicians from non-member nations, such as Australia, despite being highly regarded, are not afforded the same pathways. The NMC requires two levels of skills assessment to be completed, part two is only being provided within the UK at NMC approved university test centres.
5.89
The various components of UK registration for Australian-trained nurses are as follows according to Aspen Medical:
IELTS (International English Language Test System)
Application for nursing/midwifery
Part 1 test of competence CBT (computer based theoretical test that can be conducted at any approved centre around the world)
Part 2 test of competence or Objective Structured Clinical Exam (OSCE) only available in the UK through three British universities – the University of Northampton, the Oxford Brookes University or the Ulster University
Admission onto the register
5.90
Aspen Medical noted that the Nursing and Midwifery Council (NMC) was “largely silent” on the time it takes for a suitably Australian qualified and experienced Australian nurse to be registered in the UK.
Anecdotal evidence from our own planning for a relatively recent proposal, suggests anywhere between three to six months with some nursing agencies.
5.91
The NMC’s test of competence or OSCE is designed to assess a nurse’s ability to competently apply their professional nursing or midwifery skills and knowledge in the UK. It is set at the level expected of nurses and midwives as they enter the profession.
5.92
The OSCE is made up of six stations, each lasting 15 minutes with an additional five minutes preparation time. Four stations will be scenario-based and relate to the holistic patient-centred assessment, planning, implementation and evaluation stages of nursing and midwifery care. Two stations will be testing practical clinical skills.
5.93
Aspen Medical noted the complexity and timing challenge of the UK immigration process if an Australian nurse had a sponsor then their sponsorship would formally start from the date (and up to 14 days prior to) of the nurse’s scheduled Part 2 test in the UK. If they don’t have a sponsor then they may enter the country on a visitor visa specifically to take the Part 2 test at the British universities.
The requirement for a nurse to travel to the UK to complete the testing and then wait for an extended period before the registration is obtained is prohibitive.
5.94
Aspen Medical admitted the hard and soft costs of NMC registration make it difficult for an Australian-based company to provide a commercially viable proposal that includes importing Australian nurses as part of the solution.
5.95
Aspen Medical’s outlined the potential cost per individual nurse candidate would include, but not be limited to:
NMC Registration £1,415 or $2385
IELTS (International English Language Test System) circa $330
UK Immigration visa from £200 or $337
5.96
Aspen Medical admitted the time and costs involved in providing a team of suitable Australia-trained nurses or doctors to help with a medical project in the UK health system can be prohibitive.
Add to this the soft but real cost in lost productivity and the opportunity cost from the burden of regulation on the individual then this makes it difficult to construct a viable commercial proposal for a UK delivery solution. The total individual hard cost of approximately AUD$3,052 could be extrapolated out over the proposed workforce for a project (as an example 100 nurses AUD$305,200) but it is noted that the in country lost productivity whilst completing all registration and waiting for registration confirmation is the primary challenge in constructing a commercially viable proposal.
5.97
Aspen Medical believes it would be in the interest of both Australia and the UK to develop mutual recognition of each-others’ registration standards.
This will facilitate the movement of registered health professionals between the two countries. It will make it quicker and cheaper to employ clinicians from Australia in the United Kingdom and vice versa.
5.98
Aspen Medical request consideration by the UK and Australian governments’ respective regulatory bodies to recognise each other’s clinical registration process.
That is, if Australian Healthcare clinicians are registered through the Australian Health Practitioner Regulation Agency (AHPRA) and are current, then they can also practice in the UK.
5.99
The Australian British Chamber of Commerce questioned why there are issues with gaining recognition of qualifications in medicine, nursing and other professions in each country despite the high level of similarity in education and standards between the UK and Australia.
It is a common challenge for practitioners in fields including medicine and law to have to undergo additional training and examinations to practice in Australia. The recognition of qualifications extends to trades and other services in some instances. These are a significant hurdle, which has deprived Australia often of utilising talent. In one example a British heart surgeon accompanying their spouse while living here for a three year term, found the qualification process so overly onerous that they did not enter the workforce to utilise their skills.
5.100
Mutual recognition was the most favourable outcome, according to Aspen Medical, but other options may include:
Remove IELTS requirements on evidence of AHPRA registration
Nominate approved universities within Australia that can provide the Part 2 test of competence.
5.101
Trade barriers, such as favourable registration pathways in the UK for doctors or nurses who are EU nationals, were a part of the price of the UK’s membership of the EU, according to Aspen Medical. It believes ‘Brexit’ provides an opportunity to revise these pro-EU measures and to re-engage with old trading partners like Australia who have similar trading and professional cultures.
These measures that favour the EU unnecessarily increase complexity, time and operational costs that negatively impact on all parties including the UK. Aspen Medical believes that these measures are a trade barrier that represents a very effective, but deleterious form of protectionism.
5.102
Aspen Medical would like to see the Australian and UK governments remove these barriers to these exports and imports of clinicians or health professionals between both countries.
Tourism, skilled migration and working holiday makers
5.103
Qatar Airways submitted that Australia is a long-haul island destination that relies on global air connectivity to access international markets and attract tourists.
In the context of a possible free trade agreement between Australia and the United Kingdom, we believe that an enhancement of capacity for restricted airlines such as Qatar Airways in the four Australian gateways (Brisbane, Melbourne, Perth, and Sydney) can have a multiplier effect on the benefits associated with a free trade agreement.
Travel taxes
5.104
While the Tourism & Transport Forum acknowledged that international air fares are currently the lowest they have been for many years, the “UK’s Air Passenger Duty (APO) is the world's most expensive tax for departing travellers, and Australia's equivalent, the Passenger Movement Charge (PMC), is second most expensive”.
5.105
From 1 April, 2017, the APO will increase from GBP 73 to GBP 75 (AUD $118-$122) for all passengers aged 16 and over, flying from the UK in what is termed the lowest class of travel on a long-haul flight, and from GBP 146 to GBP 150 (AUD $237 - $243) for travel in other classes (Premium Economy, Business and First, or equivalents).
5.106
Then, from July 2017, Australia's PMC will rise from $55 to $60 per passenger aged 12 and over, with both nations’ ‘holiday taxes’ according to the TTF collectively adding the equivalent of AUD $182 for a roundtrip Economy Class flight from the UK to Australia, and AUD$303 for travel in any higher class.
Based on the lowest return air fares available in August between London and Sydney, these taxes together represent more than 10 per cent of the price.
For a family of four, this is $728, which is more than the cost of two nights in a serviced apartment in Sydney, or four nights in a resort apartment on the Gold Coast, based on rates available in August. Such a tax impost is a significant disincentive for price-sensitive travellers, and reduces funds which otherwise could be directly spent in the Australian visitor economy.
5.107
Although the Australia-UK aviation market is growing, the largest airline carrier of passengers to Australia, Emirates, submitted that this growth is constrained by the application of the world’s two highest departure taxes on this route – Australia’s PMC and the UK’s APD.
From a practical perspective, we have seen these taxes making real impacts on market demand; for example, we are increasingly witnessing other European cities being used as gateways by travel agents and tour operators as a way to circumvent the UK’s APD. Given Brexit and its potential impact, there is an opportunity to expand trade and investment between the two countries simply by reducing these taxes.
5.108
While the TTF acknowledged that the Australian Government had legislated a five-year freeze on the PMC from July this year, “this impost still remains a significant addition to the total cost of travel for visitors from the UK, as does the APO, which continues to increase in line with inflation”.
As it has on many occasions, TTF again calls upon the Australian Government to cease its practice of taxing travellers and the travel industry, and instead to focus upon the opportunity for visitors to increase their expenditure and length of stay.
5.109
The Restaurant & Catering Association warned that as a long-haul destination, however, travel to Australia is susceptible to changes in the currency exchange rate and product pricing. It remains concerned over the impact of the $5 increase in the PMC to $60 will have on visitation and the perception of Australia as a destination to holiday and work.
5.110
While the Association has welcomed the Australian Government’s commitment to freeze the PMC for the next five years, the Association believes the market “cannot sustain any further increases, and must be closely monitored to ensure no negative impact is sustained on visitation”.
5.111
The TTF also urged the Australian Government, in any upcoming trade discussions, to “equally impress upon the British Government the disincentive of its high APO, not only for travellers to Australia but for those visiting the UK”.
Immigration preclearance
5.112
The TTF also recommends the Australian Government, as part of its border management reforms, to expedite the introduction of immigration preclearance for trusted visitor markets, enabling security, immigration and quarantine procedures to be conducted by Australian officials at each passenger's point of departure, instead of queuing on arrival in Australian airports.
…a measure which not only would reduce congestion in international terminals but also improve the passenger experience in international terminals.
5.113
TTF has advocated for the introduction of a preclearance trial, beginning as soon as possible with trans-Tasman routes, and then, upon successful completion of trials, adding other trusted markets, including the UK.
To do so would remove more than 700,000 British passengers per year from arrival queues in Australia's international airports, streamlining their passage through the terminals after the long journey from the UK.
5.114
Emirates recommended the Australian Government consider improvements to the British passenger arrival experience by seeking “further enhancements to passenger facilitation at Australia’s gateway airports, including continued investment in biometric technology and automation” and also “regulatory reform including measures to improve the international competitiveness of Australia’s international visa scheme and charges”.
Single trans-Tasman visa for British tourists
5.115
The TTF calls upon the Australian and New Zealand Governments to reconsider a proposal to introduce a single Australasian visa for residents of trusted third-party nations such as the UK to visit both countries, and to include the UK among the first partners in this program.
This initiative would benefit not only British travellers through increased travel opportunities, but also both Australia and New Zealand through potential for UK travellers to either country being able to extend their visit to both.
Skilled migration and working holiday makers
5.116
The Australian British Chamber of Commerce submitted Australia, despite its large UK population is seen as quite a “difficult country to enter for work purposes”.
The 457 visa program and shorter temporary equivalents are seen as taking too long to process and can and have been obstructive for the free and open trade and investment that is broadly encouraged. In particular specialist skills required at short notice for periods extending to a few months go through large volumes of rigour, which delay the process of enabling businesses to move with agility and confidence. It has also proven challenging for businesses looking to start up in Australia to get initial employee transfers confirmed.
5.117
Sydney legal firm Immigration Solutions Lawyers stated Australia is still considered to be one of the world’s major immigration nations, along with New Zealand, Canada and the United States.
Immigration, coupled with the trade and investment opportunities it creates is a significant contributor to the Australian economy.
5.118
Immigration Solutions Lawyers submitted that Australia’s corporate immigration policy has dramatically changed direction in recent years with a renewed focus on skilled workers and business investor programmes.
5.119
On 18 April 2017, the Australian Government announced a series of reforms to skilled migration programmes to be implemented over the coming year. Taking effect from 19 April 2017, the lists of eligible occupations for skilled working visas, such as the Subclass 457 and Subclass 186 and 187 were dramatically reduced by 216 occupations, with access to an additional 59 occupations being restricted.
On 1 July 2017, these lists underwent further reform with occupations changing between the short term and long term lists, as well as the removal of several occupations. These reforms are anticipated to benefit the Australian economy by effectively safeguarding Australian jobs and seeking oversees workers to fill critical skills shortages. Other notable changes to the permanent skilled visas, such as the Employer Nomination Scheme (Subclass 186) visa and Regional Sponsored Migration visa (Subclass 187) include lowering the age restriction and strengthening the English language requirement.
5.120
Immigration Solutions Lawyers queried why from 1 July 2017, the age limit for the Direct Entry stream of the Subclass 186 and 187 visa was lowered from 50 to 45.
In combination with the reintroduction of several occupations which had previously been removed such as; Chief Executive Officers (CEO), scientists, engineers and IT executives, these changes have created considerable uncertainty in relation to Australian immigration policy.
5.121
Immigration Solutions Lawyers stated these eligible skilled occupations lists are anticipated to be updated every six to 12 months, but “without substantial consultation with stakeholders, leading to the creation of greater uncertainty and potential instability in relation to Australian migration”.
The age limit reduction to 45 years old may pose a significant barrier to Australian business and economic growth as we are unable to accommodate highly qualified skilled workers. The average age for a CEO in Australia is estimated at 53 years old, as such these recent reforms restrict the number of skilled professionals who are eligible to migrate to Australia under programmes such as the 186 visa, which further disadvantages Australian businesses and the economy and creates uncertainty in immigration to Australia.
5.122
The Chief Executive Officer of the Australian British Chamber of Commerce, Mr David McCredie, said the changes in the 457 and other related visas have not been welcomed by its members.
…it's been a difficult set of circumstances for people to come in on short-term working arrangements…The processing takes quite a long time to go through. There are commercial imperatives that sometimes mean people need to be here for awkward lengths of time, compared to the visas that are on offer. I remember having a conversation with an oil company who were doing some work on the North West Shelf. For getting people in for the time that they needed that particular set of expertise to do a reconditioning job on an oil rig, where they had to fly them into Perth and then get them up and out to the rig to do the maintenance work required, it just wasn't sufficient, so they had to go to the longer visa, with a longer process and further background checks…We ran a survey earlier in the year, the results of which were very clear that the biggest issues for both Australian companies going to the UK and UK companies coming here was the movement of important staff.
5.123
Sydney property and infrastructure project managers Crown Project Services (CPS), with 30 full time project manager staff, submitted it wants continue the free flow of highly skilled construction managers and project managers between the UK and Australia to help grow the company and bid for work. It detailed its experience with the Australian Government and the challenges for smaller companies to access skilled staff on 457 visas.
5.124
Between 2012 and 2015, CPS, employed two British candidates on 457 visas.
Both candidates were already sponsored and employed with other firms in Australia. Their skills were significantly better than other candidates available at the time and were willing to be employed by CPS provided CPS took on the financial obligations to transfer these people from one firm to another. I recollect this cost some thousands of dollars per person plus salaries which were at the upper end of the range but were warranted because of the skills and experience they offered our clients which were exclusively for government at that time.
5.125
At the end of the three year period CPS had to reapply and in the interim the government changed the requirement for employer sponsorship so that in order to be eligible to be a sponsor, companies needed to show evidence by way of invoices that 1 per cent of gross payroll was spent on training.
CPS does not spend this amount of money of external training and therefore could not comply with these mandatory requirements. Therefore CPS was excluded from accessing this pool of resources which we believed were valuable to all concerned.
Now that the visa category has been discontinued CPS is further disadvantaged as we are not able to assess the pool of skilled people in the UK and elsewhere who may wish to apply for work in Australia and our scale provides no visibility of these people until they land on our shores.
5.126
The Restaurant & Catering Association stressed that the tourism and hospitality industry relies heavily on temporary skilled migration and working holiday makers to alleviate chronic labour shortages in regional and metropolitan Australia.
Workers from the UK represent a significant proportion of Australia’s temporary workforce, and play a vital role in the productivity of the sector.
5.127
According to the Association the UK provides the second largest group of temporary skilled workers (subclass 457) and the largest group of Working Holiday Makers (subclass 417) to Australia. For the period ending 30 June 2016, 7,800 temporary skilled visas were granted to workers from the UK, representing 17.2 per cent of total visas granted. There were also 43,500 working holiday makers from the UK over the same period.
Ensuring our trade relationship with the UK continues to recognise the significant value derived from UK migrants is of vital importance to the Australian tourism industry. It is estimated WHM spend on average $13,000 while in Australia7; meaning UK WHM contribute close to $565 million annually to local communities across Australia.
Ensuring visa fees and charges, tax arrangements, length of stay requirements and the application process remains simple and cost effective is of vital importance to this cohort of our workforce.
5.128
The Association stressed the delayed decision on tax arrangements for Working Holiday Makers (‘backpacker tax’) caused “considerable angst and confusion among the industry and prospective working holiday makers”.
5.129
The Association hoped the $10 million global youth campaign currently being undertaken by Tourism Australia will go some way in addressing “misconceptions of Australia as a destination to travel and work, a sustained effort is required to ensure Australia remains top of mind with UK travellers when deciding to holiday and work”.
The Government must ensure the cost of visas remains competitive to other long-haul destinations, and funding for the global youth campaign is continued well after its planned three-year allocation to maintain Australia’s share of this important labour market.
5.130
The British High Commissioner, HE Menna Rawlings CMG reiterated the UK Government’s still wants migrants but wants to exercise more control over its borders.
Therefore, when it comes to regulation, when it comes to areas such as recognition of qualifications for people coming in from other countries and when it comes to control of our own borders and how we choose to manage immigration flows, we will have more control.
I think the concern about immigration was actually one about control—control of borders and control of numbers. The biggest challenge in recent years has been the free movement of workers from the EU into the UK in an unregulated and unmanaged way. That will stop. That's an absolutely critical red line from this for the government. We'll still need migrants, of course—it will be a really important part of our workforce—but who they are, where they come from and what sectors we want them in will be something that we'll be much better able to control.
Education and research services
5.131
Swinburne University of Technology recommends the consideration of an exchange of both educational and research services being part of any free trade agreement between Australia and the UK that allows free movement of academic staff, researchers and students between both countries.
5.132
Swinburne University of Technology believed the similar regulatory environments and quality assurance in both Australia and the UK’s education systems should open the way for the “reciprocal recognition of qualifications between our two nations”.
For example, a degree or certificate obtained in either country ought to be recognised as valid in both countries without the need to re-train or otherwise complete onerous further compliance testing before being able to commence work. It would be suggested that this treatment also be extended to fellow Commonwealth nations New Zealand and Canada, who also share this close alignment in standards.
5.133
Australia and the UK should also consider granting Most Favoured Nation status to each other in any proposed FTA too, according to the Swinburne University of Technology.
To this end, it would be desirable that a Most-Favoured Nation (MFN) clause be included in any future agreement, to ensure that Australia's competitive position is secured should Britain extend beneficial treatment to other trade partners in the education sector.
5.134
Melbourne academic with expertise on single market effects and the impact of free trade agreements on corporations, Professor Gabriele Suder, recommended the simplifying or abolition of visa constraints would be very important for students, academics and professional staff as it “enhances recruitment and mobility opportunity, reduces cost and allows talent to travel and get established”.
For researchers, ease of mobility consequently helps accelerate research output and increases productivity and employability potential, as well as university’s research ranking and income, often jointly with partner institutions.
5.135
Professor Suder believed the removal of regulatory barriers for the delivery of education and training services by education providers abroad deserves attention.
This includes, inter alia, regulatory conditions for staff to work on offshore campus for long- or short-term assignments, encompassing favourable provisions for salary provisions, revenue repatriation, and staff’s social security and retirement conditions, as partly in the European Union.
Banking and financial services
5.136
If digitisation is becoming the great enabler of global trade, especially in financial services, then the HSBC Bank Australia expects “common standards will be the great enabler of digitisation”. Countries such as the UK and Australia, with a “notably open and liberal attitude towards business and regulation, should promote appropriate conditions for doing business” in the evolving trade environment.
The UK and Australia both place highly in the World Bank Doing Business rankings, but in both cases there are areas for improvement (e.g., concerning trade-related compliance costs)…this also means turning attention toward greater mutual regulatory coherence and transparency, along with enabling support for businesses.
5.137
While both countries have a highly rated “ease of doing business” score, including the set up process for companies, the Australian British Chamber of Commerce highlighted some challenges in the UK with opening bank accounts.
Australian companies often refer to the difficulties of setting up bank accounts in the UK, with some reporting challenges to the source of funds despite being from clearly well-established parent businesses in Australia. This is often linked to anti-money laundering requirements in the UK which hopefully could be alleviated through better connectivity between our financial systems, particularly through recognised banks.
Investment
5.138
To support Australia’s and the UK’s openness to inward and outward investment, the Minerals Council wants the Australian Government to ensure that its Foreign Investment Review Board (FIRB) screening requirements do not impose unnecessary costs or deter inward investment from the UK.
Given the UK’s importance as a source of investment capital for Australia, the monetary threshold which triggers FIRB screening for proposed business investments in non-sensitive sectors should be increased from its present level of $252 million for UK investors to the $1,094 million screening threshold for investors from FTA partner countries such as the United States, Japan, Korea, China and New Zealand.
5.139
The Minerals Council believes lifting the FIRB screening threshold for UK investors would be good public policy in any circumstances. It is all the more desirable given the possibility that Brexit-related uncertainties may weigh on UK capital outflows.
5.140
The Australian British Chamber of Commerce supported raising the FIRB threshold for UK investment in Australia since both countries are advocates in global forums for open and free investment with only limited refusals based on national interest tests.
5.141
Australia’s FIRB arrangements are considered by the Australian British Chamber of Commerce more formal than the UK at present, although the Chamber raised there is discussion of a similar body being established in the UK.
The UK does not have the same freedom for investment as other countries have been afforded to other countries into Australia. It is envisaged that investment without triggering the need for FIRB review could easily be increased to the $1bn level afforded in other FTAs.
Chapter summary
5.142
A range of barriers have been identified with Australian exporters concerned by agricultural market barriers such as in-quota tariffs and the high tariffs on imported volumes above the Tariff Rate Quota levels, sanitary and phytosanitary measures and geographical indications for red meat, wine, dairy, cane sugar and rice.
5.143
Australian meat exporter Thomas Foods highlighted the challenges of Australia’s high quality beef quota of 7,150 tonnes and also contrasted Australia’s sheepmeat quota 19,186 tonnes with New Zealand’s quota of 226,000 tonnes. The larger red meat exporters also queried the Australian Government’s management of the EU’s quota and also the quota for new entrants in meat exports.
5.144
Treasury Wine Estates estimated that the total direct cost of the EU import duty on Australian wine exports to the UK totalled more than $42 million in 2015. This estimate does not take into account the cost to industry of the reduced competitiveness of Australian wine in the UK against other international suppliers from Chile and South Africa.
5.145
The Australian dairy industry highlighted how the tariff and non-tariff barriers to trade had contributed the exports of Australian dairy product to the EU dropping from 15,090 tonne in 2006 to 137 tonnes in 2015.
5.146
The sugar industry outlined the challenges of Australia having a small annual WTO tariff rate quota access to the EU including the UK of just 9,925 tonnes of raw cane sugar. The EU imports up to 3.5 million tonnes of sugar.
5.147
Importers of motor vehicles from the UK raised concerns about Australia’s 5 per cent tariff on all new motor vehicles imported into Australia from the UK, EU and other countries without FTAs with Australia as well as the impact of the luxury car tax upon British vehicle imports too.
5.148
The Tourism & Transport Forum lamented that while international air fares are currently the lowest they have been for many years, the UK’s Air Passenger Duty (APO) is the world's most expensive tax for departing travellers, and Australia's equivalent, the Passenger Movement Charge (PMC), is second most expensive.
5.149
The Australian British Chamber of Commerce submitted Australia, despite its large UK population, is seen as quite a difficult country to enter for work purposes and voiced concerns by the processes involved in obtaining 457 visas for skilled workers from the UK.
5.150
Given the UK’s importance as a source of investment capital for Australia, the Minerals Council of Australia suggested the monetary threshold which triggers FIRB screening for proposed business investments in non-sensitive sectors should be increased from its present level of $252 million for UK investors to the $1,094 million screening threshold of other free trade partner countries.