This chapter explores the opportunities to grow Australia’s trade with the United Kingdom. It will also canvass the prospects for a free trade agreement between Australia and the UK, noting both the scope for opportunities and the risk of impediments or barriers to this end. Whilst barriers and impediments to trade and investment are addressed in greater detail in Chapter 5, it is important to note in any evaluation of increased two-way trade that actual and/or potential obstructions are implicit in any future strategy aimed at expanding bilateral trade between Australia and the UK. The chapter looks at the growth areas sector by sector. It also examines Australia’s investment relationship with the United Kingdom and the role of London as a global financial hub and the opportunities to grow links in tourism, healthcare and education with the UK.
The Australia-UK Trade Working Group
The Australian Government expects the UK’s exit from the EU will present new opportunities to expand Australia’s trade and investment links. The Australia-UK Trade Working Group, according to the Department of Foreign Affairs and Trade, will be an important vehicle for identifying opportunities to expand bilateral trade and investment, including scoping work for a future Australia-UK FTA, when the time is right. The Working Group will also seek to smooth the transition for Australia and the UK, as the UK’s new arrangements with the EU are implemented.
As part of this engagement, Australia will continue to consult the UK on foreign investment policymaking, to maintain support for a positive environment for foreign investment with certainty and clarity for investors. Our objective is to ensure Australia is more frequently considered as a preferred investment destination, as UK business starts to look more closely at markets for growth outside Europe, particularly in the Asia-Pacific region.
The UK Secretary of State for International Trade, the Rt Hon Liam Fox MP, highlighted that the close economic and trade links between the UK and Australia as important for both countries.
As a sign of the strength of this relationship, Australia was the first country since the EU Referendum with which the UK established a bilateral trade working group. This was a clear commitment by both governments to deepen our economic links and address existing barriers to trade. The working group will include discussions towards a future ambitious and comprehensive Australia-UK free trade agreement (FTA). Whilst the UK is not able to conclude FTAs whilst still a member of the EU, we can do preparatory work with other countries on our future trading relationships.
Australia-UK Free Trade Agreement
The UK Secretary of State for International Trade submitted that upon leaving the EU, the UK will “no longer be part of the EU's Common Commercial Policy or be bound by the Common External Tariff” and able to establish its own tariff schedules at the World Trade Organization (WTO).
This means that once the UK has left the EU we will be free to strike our own trade agreements with countries around the world. Our trade relationship with the EU is and will remain important, but it is also clear that the UK needs to significantly increase its trade with a greater number of export markets around the world.
With Australia, we aim to ensure the expeditious transition to formal FTA negotiations once the UK has completed its negotiations to exit the EU. Working jointly towards a new trade agreement between Australia and the UK will help us take the strong bilateral trade and investment relationship to a new level of ambition.
The National Farmers’ Federation recognised the clear opportunity for Australia to forge deeper trade relations with the high value and mature UK market.
Given the success the Australian government has achieved in recent times with free trade agreements, it is vital that the momentum is maintained. To take advantage of the potential opportunities from a trade agreement with the UK, the NFF seeks a comprehensive partnership between industry and government. As part of this partnership, a realistic resource allocation that enables the range of existing trade agreements and non-tariff barriers is required.
The General Manager of Production at Thomas Foods International, Mr David Larkin AM, said it is important that an outcome of the negotiations will be for Australia's access for red meat exports to the EU to “remain the same as it is today, excluding the UK, and negotiations with the UK to be on a World Trade Organization basis”.
We need to approach the negotiations with a blank sheet of paper and a view to a new opportunity. Australia need to be mindful of the significant disadvantage we face in terms of competition. New Zealand is 75 per cent of the sheepmeat imported into the UK and has an access to the UK 10 times greater than Australia. Whilst a number of opportunities will exist in a crowded space, demand and consumption is however sound and a market need exists.
At the moment, as the negotiations, deals and outcomes are likely to be fluid and organic, the Australian government needs to frame the strategy of engagement in those terms. It must involve industry and individual, large players, and there needs to be an on-the-ground operation now. The three largest trade deals—China, Japan and Korea—were all done with considerable industry involvement.
The Head of Corporate and Regulatory Affairs, JBS Australia, Mr John Berry, wants the Australian Government use the opportunity of a free trade agreement with the UK to open the British market for Australian beef and sheepmeat.
In our view, the guiding principles for the Australian negotiators in the red meat space for both the UK FTA and the EU must be expanding access for Australian red meat through reducing technical and tariff barriers and cost in servicing the UK market, which is a high-value market. Secondly, when dealing with these trade barriers with the UK, this must be science based and consistent with WTO obligations. Addressing EUCAS as the major barrier to growing trade in Australian beef is critical to maintaining access to the EU under current arrangements and establishing separate arrangements for the UK.
The Chief Executive Officer of HSBC Bank Australia, Mr Martin Tricaud, said the HSBC’s biggest concern with any free trade agreement is maintaining stability and predictability.
Having the ecosystem, from a legislative, regulatory and tax perspective, being predictable is very important to us. Financial services may be impacted by an FTA, but they will not be impacted by an FTA only. There are many other considerations. Australia is a member of the G20. Australia is a member, like the UK, of a few governing bodies, regulatory bodies, for the financial industry globally. One of them is the Basel committee. Another one is the Financial Stability Board, which was created in the context of the G20…It will be important; …but I believe that the part of EU regulation which is recognised by the Australian regulator, in one way or another, in a post-Brexit environment, will have to be adjusted. For banks like HSBC, with headquarters in the UK, this regulation will have to be recognised in a different manner.
The Chief Executive Officer of the Australian Food and Grocery Council, Ms Tanya Barden, believed Australia had enough resources and expertise to negotiate trade agreements with both the EU and the UK.
Australia has managed to negotiate multiple free trade agreements in the past—with China, Korea and Japan—so I would see it as a priority to negotiate with both the UK and the EU simultaneously.
According to the Australian Dairy Industry Council a “gold standard agreement for dairy (and agricultural) produce is epitomised by access that results in free trade (zero tariffs on all products and no quotas), no Technical Barriers to Trade and a mutually compatible regulatory environment”.
A trade agreement with the UK offers the opportunity of substantially expanding dairy exports from Australia to the UK provided that:
Commercially meaningful liberalisation of dairy products occurs from date of implementation with a substantive compound annual growth rate
Dairy product coverage is comprehensive
Quotas are a transitory measure to free trade within a short time frame (5 years maximum)
In‐quota tariff rates are zero and
Non‐tariff measures are based on international standards and sound science with a mandatory requirement for regulatory cooperation that can lay the basis for harmonisation of standards:
This will mitigate the potential for non‐tariff measures to evolve into behind the border (on non‐tariff barriers) to trade.
The Federal Chamber of Automotive Industries (FCAI) has submitted that as it has previously “urged strong support for an Australia-EU Free Trade Agreement” it similarly “supports a stand-alone FTA with the UK”, following its withdrawal from the EU.
A properly conceived bilateral agreement with the UK will unlock opportunities for expanding economic activity, to the benefit of both countries. The FCAI encourages Australia to expedite negotiations with the UK in a timely manner.
Ford Australia, like its parent the Ford Motor Company, submitted that as a global exporter/importer of motor vehicles and automotive parts it supports Australia seeking a free trade agreement with the UK as a “strong advocate of the principles of genuine, unhindered and fair trade”.
Ford Australia is on record as supporting the establishment of an Australia-EU Free Trade Agreement and similarly now advocates the negotiation of such an agreement with the UK… Properly conceived and executed Free Trade Agreements deliver many real benefits to participants. These include the generation of economic activity with prospects for employment and income growth, the opportunity for expansion into new services and industries, and the potential for exchange of ideas, intellectual property and other cross-border benefits which flow from increased reciprocal trade.
The FCAI supports a potential comprehensive free trade agreement with the UK that encompasses an immediate reduction to zero of the tariff rate applied to motor vehicles imported from the UK and also abolishes the Luxury Car Tax.
The FCAI believes that as a matter of good policy, the Australian Government should abolish the Luxury Car Tax, and that this could also form part of the negotiations between the two parties.
With respect to Australia's trade relationship with the UK, Bunnings, which has 11,000 staff working at its 255 trading locations across the UK and Ireland is deeply supportive of a free trade agreement between Britain and Australia as it believe this would further' grow business opportunities and create significant advantages for consumers.
Australian airline Qantas submitted that a high-quality, comprehensive free trade agreement (FTA) will play an important role in facilitating the stronger trade and commercial ties it seeks to enhance between Australia and the UK, and increase economic integration between the two countries.
Qantas welcomed that FTAs currently in place between Australia and China, Australia and Japan, Australia and Korea, Australia and Singapore, and others Australia is currently negotiating “do not include aviation specific commitments”.
This reflects a recognition that bilateral air services agreements currently in place deliver outcomes that provide sufficient flexibility to progress air services liberalisation in line with policy and commercial objectives.
Qantas supports this approach and, more broadly, the negotiation of FTAs for the wider economic and investment benefits they produce, with associated positive impacts for travel and tourism.
The Chief Executive Officer of the London-based Australia-United Kingdom Chamber of Commerce, Ms Catherine Ann Woo, highlighted how the proposed free trade agreement with the UK can build upon the strong growth in trade between both countries through four primary mechanisms:
agreed terms to reduce or eliminate tariffs and quotas attached to export goods;
mutual recognition of regulatory requirements and standards to lower entry barriers and thereby increase exchange of goods and services;
freer movement of talent, coupled with transferability of professional qualifications; and
confirmation and enhancement of market access arrangements to increase two-way foreign direct investment
DFAT's recently released Composition of trade 2016 report found that two-way trade with the UK now comprises 4.3 per cent of Australia's total two-way trade and was the fastest growing in 2015-16, with a 25.4 per cent increase over that year, which was in stark comparison with other major two-way trading partners, including the US, Japan and Korea, all of which contracted between negative six per cent and negative 12 per cent.
Ms Woo said free trade will give Australian producers and manufacturers greater access to the UK's 66 million consumers and allow greater investment flow from the UK, which will create direct and indirect benefits.
It is projected that, in the period between 2012 and 2050, Australia's food industry will need up to AU$1 trillion in additional capital to increase its size, productivity and competitiveness as it increasingly becomes a food bowl to Asia. A free trade agreement with the UK which enables greater capital flow into Australia would help inject this capital, thereby not only increasing trade with the UK but also with surrounding economies that Australia exports to.
The Chairman of the Australia-United Kingdom Chamber of Commerce, Mr Richard Porter believes the UK Government will want this free trade agreement with Australia as soon as possible after ‘Brexit’.
Assuming we can get an FTA that allows for terms that are beneficial because of the early mover advantage, in particular around the movement of people and the four items we've talked about, together with some protections where in future agreements you get a grandfather clause that protects us—if future agreements are better termed and they flow back, we do think that's an opportunity. We think the British really want an early win. They see Australia as an opportunity for an early win, partly to practice—they haven't done a lot of trade agreements—but also, basically, to say to the world that Britain is open to business.
The Director of the UK Trade Policy Observatory, University of Sussex, Professor L Alan Winters was unsure of just how much difference a free trade agreement would make to two-way trade.
…that the amount of difference that a free trade agreement would make to trade is probably relatively small. Certainly for Britain but even for Australia, this trade flow is not among the most important that the countries have. Most of the goods Australia sells to Britain are not subject to trade restrictions already. When it comes to services, half the trade flow is personal travel, and it just isn't affected by trade restrictions. The third biggest component is transportation, which is just carting goods which we choose to trade around the world. It's only in the area of professional services that I think Australia will have a large interest in a free trade agreement, and there you've already made it clear that you think visas are an important part of that. We know that's a little bit of a difficulty in our local political system.
Professor Winters described the UK’s dealings with Australia as a mature trading relationship.
…but it is also a very distant trading relationship in terms of putting stuff on ships—and even planes take 24 hours. It is different in nature to the trading relationship that you have with New Zealand or we have with Europe, where the distances are so much shorter and the time zone is the same and so business is easy. It's not to say that a few million here and a few million there aren't worth worrying about, but they don't compare with the billions that Britain is looking at post-Brexit.
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 include a number of strategic priorities within its trade policy with the UK and the EU:
A well-prepared negotiating position by March 2019 or the date when the UK’s exit negotiations cease and the trade terms are made available.
Professor Murray, Dr Matera and Dr Allison-Reumann support the Australian Government commencing preparation for FTA negotiations with the UK during the period that the EU and the UK negotiate the UK’s exit from the Union.
There are already steps taken in this respect with the formation of the UK-Australia Joint Trade Working Group in 2016. It is recommended that the Australian Government should also set up high level preparation groups across trade and related issues to be covered by such an FTA.
Pay special attention to existing EU-Australia agreements and ensure that the characteristics and benefits of these agreements feature in a future UK-Australia FTA and related agreements with the UK.
Professor Murray, Dr Matera and Dr Allison-Reumann recommend the Australian Government draw on Australia’s strategic advantage when negotiating with the UK.
This advantage relates to:
Australia’s diversified trade relations, particularly with Asia.
Australia’s extensive trade negotiation experience in comparison to the UK, as trade negotiations have been an EU (not UK) competence since1973.
The likelihood that the UK will accord priority to finalising trade deals swiftly once it leaves the EU.
The familiarity of the Australian system that presents Australia as an attractive trade negotiator to the UK.
The International Airlines Group (IAG), which operates British Airways, agreed with the need to ensure “liberal bilateral or multilateral air services agreements allow a competitive airline market that can deliver the economic benefits in the UK and in Australia”.
Although air transport is outside World Trade Organisation arrangements, and therefore separate from free trade agreement negotiations, the parallel requirement for liberal air transport should be recognised in the consideration of UK-Australia trade when the UK leaves the EU.
HSBC Bank Australia believed achieving a higher degree of “regulatory convergence” between Australia and the UK along with the inclusion of a chapter or provisions specifically on financial services in a bilateral free trade agreement will help increase trade and investment.
…greater standardisation or mutual recognition of equivalence in regulation and consultation on future regulatory developments also have a role to play. For both the UK and Australia, any free trade agreement that did not contain specific provisions for financial services would seem to be missing a major opportunity.
HSBC Bank Australia, which began operations in Australia in 1965 and was awarded an Australia commercial banking license in 1986, would support a bilateral free trade agreement between Australia and the UK as one option to encourage greater trade and investment, especially when complemented by “supportive action in other areas such as regulation”.
HSBC Bank Australia outlined the key features or characteristics that it would welcome in any free trade agreement between the two countries:
Non-tariff barriers: Provisions for improved transparency in requirements, alignment with international standards, and consultation or coordination in establishing new regulations. The Australia-New Zealand FTA, which covers business law coordination, mutual recognition of goods and occupations classification, and food standards, could provide a good basis, according to the HSBC Bank Australia.
Trade facilitation: Reducing the complexity and cost of trade processes at the border, aided by the WTO’s Trade Facilitation Agreement which came into force this year.
Trade in services: Trade liberalisation for services exports has lagged that of goods. There is potential, according to the HSBC Bank Australia, to open up sectors to ensure there is no discrimination against foreign partner firms, and also address temporary movement of service providers, for example by examining controls over movement of people between the two countries. This also includes provisions to ensure appropriate protection for intellectual property rights.
Government procurement: Liberalisation of government procurement in the UK and Australia could represent a significant opportunity. Accords could offer ‘national treatment’ for foreign firms in specified areas, complementing efforts by the WTO under the Agreement on Government Procurement.
Trade-related investment: An investment chapter could go beyond WTO provisions to improve access to markets or investors protection in the event a party does not meet its commitment (investor state dispute settlement).
Special provisions for Small to Medium-sized Enterprises: Assisting small to medium-sized enterprises to negotiate trade between the two markets, for example by providing easy online access to relevant information and contact points.
Labour rights and social concerns: Aiming to ensure respect for internationally-recognised international labour standards, gender challenges and other concerns.
Environmental protection: Levelling the playing field so that businesses in both the UK and Australia do not gain unfair advantage through abuse of the environment. An example from the now-suspended Trans-Pacific Partnership agreement, according to the HSBC Bank Australia, included commitments for each country to enforce its environmental laws and abide by international commitments.
Specific sectors: Addressing the challenges faced in specific sectors, where liberalisation is complex or difficult. Sectors requiring attention could include electronics, financial services, telecommunications and others. This could also include digital trade or e-commerce, where issues such as data localisation and privacy requirements could be addressed.
Medicines Australia, representing a pharmaceutical sector that employs more than 15,000 people, wants a free trade agreement with the UK to help with the growth of Australia’s largest advanced manufacturing export industry.
With the UK set to leave the European Union (EU), there is an opportunity to address existing barriers to increasing the level of trade for the pharmaceutical sector in a future trade agreement between Australia and the UK. Similar to other Free Trade Agreements (FTAs) the development of an agreement with the UK would expand opportunities for Australian based pharmaceutical companies to grow their export prospects and increase domestic contributions to the Australian economy.
Medicines Australia believed by reducing trade barriers and forming mutually beneficial FTAs with countries such as the UK will “increase Australia’s competitiveness as a global trading partner, strengthen Australia’s economy and ensure Australians have access to innovative health care solutions”.
Medicines Australia saw merit in a specific chapter on pharmaceuticals in a proposed Australia-UK FTA similar to what was in the Australia-US Free Trade Agreement (AUSFTA). The keys to successful trade agreements for the pharmaceutical sector, according to Medicines Australia, are:
A foundation of strong and mutually agreed principles acknowledging the unique role of innovative pharmaceutical technologies to Australians’ health and economic prosperity;
Recognition of Australia’s niche strengths in research capability and advanced and specialist manufacturing;
Harmonisation of regulatory standards across key trading partners, including strengthening review mechanisms;
Commitment to a strong and competitive Intellectual Property system to foster and reward innovation, including strengthening the current patent notification system;
Embedded policy incentives to attract direct and indirect investment in research & development;
Streamlined and efficient processes to create a destination of choice for research and development;
Avoidance of policies that harm the ability to attract and retain innovation and invention; and
Cooperative mechanisms to continuously monitor, strengthen and improve bilateral and multilateral trade relations.
The Law Council of Australia highlight that the major benefit for legal services under any trade agreement with the UK will be the opportunity to conclude a trade agreement that properly recognises the importance of legal services and include a chapter dedicated to legal services.
This would require forward looking commitments that create a framework for ongoing improvements to local regulatory regimes, meaningful mechanisms for dealing with behind the border barriers and commitments to free movement of legal services providers across all four modes of service supply. The importance of the trade-enabling role of multijurisdictional legal services in facilitating two-way trade and investment cannot be overstated.
In addition to 'standstill' market access commitments from both parties, the Law Council wants a trade agreement between Australia and the UK to ideally incorporate text on best practice regulation of multi-jurisdictional legal services into the main body of the agreement.
The direct benefit of these provisions would be the clear demonstration of how far-reaching legal services commitments can be meaningfully incorporated into trade agreements.
The Department of Agriculture and Water Resources expects UK’s exit from the EU will require the UK to negotiate new WTO schedule (including for tariffs) as up until now it has been covered by the EU schedules; this could provide an opportunity for the UK to reduce its general agricultural tariff barriers.
Once the UK has exited the EU, Australia may also have the opportunity to build on general tariff reductions through a possible Australia-UK bilateral FTA. These reductions to tariff barriers would support expanded agricultural trade and investment links between Australia and the UK.
The NSW Government admitted while trade and investment with the UK is subject to relatively low barriers compared to other jurisdictions, there was however, still room to “reduce tariffs and regulatory hurdles to promote a stronger two-way investment and trade flow”.
An Australia-UK FTA provides the opportunity to lower trade barriers in sectors such as agriculture where the UK has traditionally been more liberal than other EU members. Through its membership of the EU, the UK continues to impose substantial tariffs on agricultural products. Tariffs on all animal products average 15 per cent, on dairy 33 per cent and on fruit and vegetables 10 per cent.
The NSW Government stated that NSW beef and other agricultural producers strongly support an FTA with the UK that lowers barriers to NSW’s exports.
To ensure that competitor countries such as NZ and the US do not secure a competitive advantage in this market, producers emphasise the need to be among the first negotiating partners with the UK. Behind the border, regulatory hurdles continue to impact export opportunities. Currently, import licences are required for a number of items into the UK including agricultural products, plants and animals, foods, medicines, textiles, and chemicals.
FTA negotiations present an opportunity to strengthen access for NSW services exports too according to the NSW Government.
Harmonisation of standards and regulations along with stronger arrangements for mutual recognition of qualifications could support stronger performance in financial and business services. Less intensive visa restrictions would support the freer flow of tourists, students and business professionals. Lowering these restrictions would also promote linkages between the growing technology ecosystems in NSW and the UK.
The NSW Government also highlighted the significant “head-turning” effect of an FTA that should “not be under-estimated”.
An FTA draws attention to business opportunities in the market, so attracts businesses to considering expanding business links there.
The Scotch Whisky Association from Edinburgh, Scotland, submitted that its industry strongly supports efforts to maintain and improve trading relations with Australia by negotiating a free trade agreement as soon as possible upon the UK exiting the EU.
Although the British Government cannot enter into new free trade agreements until after Brexit, we have already informed them that Australia is one of the countries with which we believe an early FTA would be beneficial. From our perspective, there are various issues whose resolution we would welcome and no doubt there are issues that Australian industry would like to see the UK address. We have a good relationship with the Distilled Spirits Industry Council of Australia who we would aim to work with closely on any agreement.
The Emeritus Professor of Agricultural Economics at the University of Reading, Alan Swinbank, submitted the EU has a number of FTAs around the world, many of which include agriculture. Many EU’s recent FTAs are so-called ‘mixed agreements’ because they not only cover trade, which is an exclusive EU competence, but also other matters over which EU Member States retain control.
To what extent the UK would remain bound by these mixed agreements post-Brexit is an open question. Many experts suggest that — as with traditional FTAs for which the EU had exercised its exclusive competence — the UK would no longer be party to such agreements following Brexit…
Professor Swinbank believes FTAs with high cost agricultural producers such as South Korea and Japan offer export opportunities for the UK’s food and drink products and agricultural commodities.
FTAs with more competitive suppliers of the temperate farm products produced in the UK, such as Australia and New Zealand, and South America, are more problematic. They could offer the UK’s quality food and drink manufacturers improved access into overseas markets: Pitney Bowles reports for example that Australia’s import duty on chocolate, and on cream biscuits, is 5 per cent, plus an import processing charge of AU$50.
However UK farmers would be alarmed at the prospect of cheaper beef, lamb, dairy products and sugar penetrating the British market. And…liberal access for these products from the Antipodes and South America is hardly compatible with maintaining an open border between the UK and the Republic of Ireland.
The National Farmers’ Federation (NFF) submitted that the Australian agricultural industry is well placed to take advantage of the trading opportunities provided by the UK exiting the EU.
Currently the import demand in the UK for many of Australia’s agricultural goods exceeds import quotas.
The Australian British Chamber of Commerce stated Australian agricultural exporters should be keen to look to the UK as a destination for agricultural product at all levels, but particularly at the premium levels, given the comparative wealth of the UK in global terms.
The Restaurant & Catering Association submitted that Australia’s trade relationship with the UK provides a significant opportunity to increase the export capacity of Australian businesses, particularly agricultural exports from small food and wine producers.
The Association pointed to Tourism Australia research from 2014 in its Consumer Demand Project: Food & Wine showing that “great food, wine and local cuisine” is now a major factor in holiday decision making, ahead of “world class beauty and natural environments”.
Australia ranks number one for food and wine experiences among travellers from our major source markets, with one in five dollars spent by international visitors on food and wine while in Australia. Providing access to these products well after visitors return home offers a further avenue to expand and grow the capacity of food service businesses. However, tax arrangements and assistance programs must support small hospitality businesses to leverage trade arrangements. While reform of the Wine Equalisation Tax (WET) in some instances will provide greater transparency and support to legitimate producers, the impact the tax has on the price competitiveness of Australian product in international markets still remains a concern for industry.
The National Farmers’ Federation submitted that ‘Brexit’ provides a unique opportunity for the Australian red meat industry to enhance its trading relationship with the British consumers once again after the UK was previously Australia’s largest red meat export destination before it joined the EU.
The NFF believe the Australian red meat sector can benefit from timely import reforms that will help position meat exporters for better access to the British market and set up a “valuable trading regime into the future”.
A more liberalised UK import administration would deliver substantial advantages to the Australian red meat industry as well as to UK shippers, wholesalers, merchants, foodservice and retail administrators – every one of whom esteem Australia's products for their consistent and highly regarded quality. With the UK being an importer of high quality food products, the Australian red meat industry is ideally positioned to help meet future demand, providing the construct of the import regime is similarly supportive. NFF supports the aim of the red meat industry in continuing to provide the UK with the choice of a range of superior red meat products.
The General Manager of Production at Thomas Foods International, Mr David Larkin AM, described how a UK red meat market that was once 80 per cent before joining the EU was now 1½ per cent of exports by volume and 4½ per cent of exports by dollar, but was important.
…the market remains a significant cornerstone of farmgate returns and, whilst it is low in volume, is very important in terms of value. Australia is the largest non-EU beef supplier and the second largest sheepmeat supplier. The market has continued to establish itself as a high-value market and is one that is protected by a number of barriers to trade. Those barriers to trade are subsidies, tariffs and quota, and technical trade barriers in the form of HGP bans, hormonal growth promotant bans, and processing directives in terms of equivalence in processing sites.
While the UK has traditionally been an export market based on high volume, lower value wine, Treasury Wine Estates, one of the world’s largest wine companies with brands such as Penfolds, Pepperjack, Wynns, Wolf Blass and Lindeman’s, agreed with a Australian Grape and Wine Authority’s export market report highlighting the opportunity in the UK market, particularly for more premium wines.
The Australian wine industry, according to Treasury Wine Estates, 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.
This would directly benefit the Australian wine industry by removing the burden of the Common Customs Tariff; making Australian wine more competitive with European produced wines and wines from Chile and South Africa; and removing the tariff incentive to ship Australian wine in bulk, which the current differentiated CCT ensures.
Treasury Wine Estates speculated that there could be additional benefit to the industry if a zero tariff treatment FTA was negotiated with the UK before some of Australia’s ‘new world’ competitors such as New Zealand, Chile and Argentina negotiated similar outcomes.
The Winemakers’ Federation of Australia agreed the UK leaving the EU presented a number of opportunities for wine producers and exporters.
It is likely that the UK will largely adopt the current EU regulatory framework for food law and roll the main elements and principles into UK legislation in order to apply as soon as the UK leaves the EU.
However, as there is a growing UK wine sector and the UK has traditionally had a more-opened minded view of trade, ‘Brexit’ may also provide Australian wine exporters with a “great opportunity to simplify some of the technical regulations in place”.
The Winemakers’ Federation hoped this may also result in a greater partnership working between industry and enforcement bodies. The Wine and Spirits Trade Association (WSTA) has already started exploring entering into a Primary Authority role for products falling within its remit. This has the potential to enhance trade.
The WSTA has agreed to work with WFA at the industry level to develop model agreements to ensure that the UK leaving the EU does not disrupt the trade flow of wine and spirits into and out of the UK. The WWTG has proved itself to be a successful trade facilitation group which the UK will play a role in.
Intellectual property protection, including Geographic Indications, according to the Winemakers’ Federation is an important issue for the wine sector to continually monitor. The UK Government will seek to establish a system for existing protected designations of origin for wines and spirits and the Winemakers’ Federation believed the authorities could also take the opportunity to revise current protection for English wine and sparkling wine. Australia needs to ensure that they continue to respect the protection of grape varieties such as ‘prosecco’ and ‘Montepulciano’ and respect homonymous use of grape varieties and geographic indications.
Professor Kym Anderson from the Wine Economics Research Centre at the University of Adelaide but appearing in a private capacity believes Australia should pursue a similar wine agreement with the UK to one it has with the EU that reduced many non-tariff barriers.
The opportunity for Australia now is to try and get into an agreement of that sort with the UK. We could do that immediately. We do not have to wait for starting up an FTA for that; it could be a separate agreement. It could be of benefit to the UK wine industry itself, tiny though it is, because they would be able to get reciprocal benefits from that agreement in selling into Australia. We, of course, would be the major beneficiary in getting more easily into the UK market. And there is the possibility that we could have a better agreement than we already have with the EU, in that one agreement.
It is also more likely the WFA believed that the UK will seek to create a more integrated import-export control system which would also counter illicit trade and therefore reduce the requirement for controls further down the supply chain.
The Australian dairy industry submitted in the absence of a “trading relationship there has been minimal incentive for bilateral investment in the dairy supply chain”. Possible implications for Australia’s dairy trade and investment relationship post‐Brexit are complex.
Whilst the UK will negotiate a trade agreement with the EU‐27 it is also required to establish a schedule for multilateral (WTO) access as their membership of the then EEC predated by over two decades the conclusion of the Uruguay Round Agreement. The two negotiations will run in parallel, once Article 50 is triggered.
The Australian dairy industry stated Australia along with other major dairy exporting nations; New Zealand (number 1) and the United States (number 3) have expressed an interest in negotiating a bilateral agreement with the UK.
The sequencing of bilateral negotiations may have an important bearing on the quality of dairy market access, noting that:
The UK is milk deficit nation, with the self‐sufficiency ratio, depending on seasonal conditions, as low as 88 per cent meaning it will remain an important importer of dairy products, though:
The evolution of regional and global value chains means that the UK is also a modest sized exporter of milk, cream, cheeses.
Australia, New Zealand and the United States will likely all seek major liberalisation of dairy product trade; preferably a similar outcome to that agreed with the EU
The EU will seek to retain preferential access for dairy products to the UK market, post‐Brexit and specifically at the current zero tariff rates, and
The UK dairy sector is enmeshed with that of the continental EU member states and with Ireland.
The Australian dairy industry noted that the Irish dairy producers’ major export destination is the UK, especially for cheddar cheese and butter.
A change in the current free trade scenario could have major implications for the Irish (both Erie and Northern Ireland) industry in terms of cross border movement of milk, export flows and product mix.
According to leading Australian rice producer, SunRice, the UK’s exit from the EU, and the possible negotiation of a Free Trade Agreement (FTA) between Australia and the UK, represents a significant opportunity for Australian rice exports into a market where there is “demonstrable and increasing demand for high quality Australian rice”.
SunRice as one of Australia’s largest branded, processed-food exporters noted that the Australian rice industry has not benefitted from the recent FTAs that the Australian Government negotiated with the major trading partners of Japan, China or South Korea. Rice had been excluded due to cultural and political sensitivities regarding the domestic rice industries in those countries in North Asia. SunRice believed these cultural and political sensitivities were unlikely to influence any future FTA negotiations with the UK. In addition, the Australian rice industry does not receive any subsidies or protection measures from the government – unlike rice industries and growers in competitor countries, including those beyond Asia.
The UK has increasing demand for Japonica rice varieties, the dominant varieties grown in Australia, which cannot be fully satisfied by EU production, and this has driven an expansion in import volumes.
A major factor underpinning the material increase in UK Japonica rice imports has been the ‘sushi revolution’ – the phenomenal increase in the popularity of Japanese cuisine, which requires specialty and niche short and medium grain rice varieties.
The Japanese Government estimates that Japanese cuisine restaurants outside of Japan increased from 24,000 in 2006 to 89,000 in 2015 (+270 per cent). Sushi has been one of the fastest growing foodservice sectors across Europe: the combined sushi market in the UK and France would now be approaching US$0.5 billion per annum.
According to SunRice, Australia is seen as an efficient producer of the specialty Japonica rice varieties used in Japanese cuisine. SunRice sales of branded rice for global Japanese cuisine and sushi foodservice markets was approximately 25,000 milled tonnes in 2016, which represents overall volume growth of 85 per cent since 2013.
SunRice is presently fielding inquiries from UK customers that could potentially increase the volume of sales into this market by between 2,500-3,000 tonnes per annum. Should these inquiries translate into sales, SunRice forecast annual import volumes of Australian Japonica rice to the UK would well exceed the EU’s present TRQ every year.
Trade and Investment Queensland is aware of a major British sugar purchaser Tate & Lyle expressing strong interest in sourcing Queensland sugar cane should EU quota restrictions, which protect EU sugar beet sales to the UK, are removed following ‘Brexit’.
With 80 per cent of Australian raw sugar exported, the Australian Sugar Industry Alliance (ASA) is seeking unrestricted access for Australian sugar in all its export markets including the restoration of Australian sugar exports to the UK to the levels of the 1970s.
The value of Australian sugar exports will be enhanced by the market opportunities that will flow from restoring access to the UK sugar market.
ASA submitted it has the full support of and is working closely with Tate & Lyle Sugar, the UK’s sole buyer of raw sugar, in restoring access to the UK for Australian raw sugar.
Tate & Lyle want access to a reliable supply of high quality Australian raw sugar to run its refinery competitively and at full capacity.
In 1971, prior to the UK’s decision to join the then European Economic Community (EEC), approximately one third of Australian raw sugar exports were destined for Europe, principally the UK, one‐third was sold to markets in East Asia and the remaining one‐third was sold to North America markets in Canada and the USA.
There is a real opportunity for the Australia sugar industry to re‐establish commercial sector links and significant commercial trade in sugar following the UK’s exit from the EU.
Despite Tate & Lyle Sugar’s import demand for Australian raw sugar, the Australian Sugar Industry Alliance stated the trade is severely limited by quota and tariff restrictions.
Our ability to supply sugar will be heavily dependent on the terms of trade agreements Australia enters with the UK.
The National Farmers’ Federation submitted it supports the aim of the Australian Sugar Industry Alliance to re-establish this historical market and to develop the UK market unhindered by EU tariffs and quotas.
British agricultural economist Professor Alan Swinbank was less optimistic about the UK importing significant amounts of Australian sugar on leaving the EU.
You've been shut out since we joined the European Economic Community back in 1973. Very high tariffs mean you can't get into the European market unless you go to a tariff-rate quota…We have a raw sugar-refining capacity in Britain. Suppose we moved to free trade and suppose we reduced our tariffs on sugar. Would it be Australian sugar that got access to our market? I think not. I think it would be either Brazilian sugar, because that would be cheaper with the shorter distances, or European manufactured sugar, because if we had zero tariffs on sugar then the European sugar beet producers would be able to export packaged sugar into the UK market. So the form this hard Brexit takes is very, very crucial.
Department of Industry, Innovation and Science highlighted the high importance of the Australian minerals and energy resource sector to the Australian economy.
Australia is home to an innovative mining equipment, technology and services sector and hosts some of the world’s leading mining, oil and gas conglomerates. During the recent ‘mining boom’, domestic and foreign sourced investment has facilitated the rapid growth of Australia’s diverse resources and energy sectors.
The Foreign Investment Review Board has reported that the UK has provided the highest level of foreign investment in Australia’s major projects, with UK incorporated companies being responsible for 27 per cent of major project investment costs.
Of particular importance to the Australian economy are the 26 major projects worth $2 billion or above that are either currently underway or in the design and engineering stages. Many of these major mining projects are joint ventures involving both Australian and foreign investors.
Logistics and global supply chains
The HSBC Bank Australia noted that trade and investment flows around the world have become increasingly complex and interconnected. It submitted that running international production lines was cheaper, faster and generally safer than ever before, leading to sprawling supply chains.
Such developments provide multiple opportunities for Australian and UK firms to benefit, whether they are central to a supply chain or provide more peripheral or niche products or services. Complex supply chains increasingly include a combination of goods and services, with intermediate inputs that often cross borders multiple times.
Reductions in trade barriers can result in greater clearance speed, increased efficiency and reduced cost allowing high-productivity firms to enter new export markets and thrive, according to HSBC Bank Australia. The Bank expects Australia’s logistics industry could benefit from increased exposure to the UK.
The Australian Logistic Council estimates that the logistics industry accounts for 8.6 per cent of Australian GDP, when supply chains supporting other sectors are taken into account. New trends including 3D printing, automation and wireless sensor tags are disrupting transport and logistics industries around the world, and Australian innovators in this field stand to benefit from exporting their expertise and innovation to other markets.
Medicines Australia identified pharmaceuticals and vaccines as a significant advanced manufacturing global export for Australia. Currently it stated medicines and pharmaceutical products are Australia’s largest manufactured export, worth as much as $3 billion annually. As Australia has seen a diminishing manufacturing footprint over recent years, Medicines Australia, believed opening up new, and strengthening current trading relationships with countries such as the UK will provide an incentive for greater investment and securing jobs for Australians.
With global demand for medicines expected to double in a decade, there are opportunities for Australia to grow its share of the international pharmaceutical trade through increasing advanced manufacturing and enhancing research and development activity. Making the most of this opportunity will help drive economic growth, secure more high-skills jobs, and provide Australians with improved access to new medicines. A trade agreement with the UK would be a prime opportunity to further support investment and potential expansions of our advanced manufacturing base in Australia.
Medicines Australia expects much of the potential growth will come from partnerships and investment in Australia’s medical technology, pharmaceutical and biotechnology research industry.
This industry has the skills and capacity to construct specialist, innovative manufacturing plants which will deliver jobs for STEM graduates. In addition to the potential for export and advanced manufacturing growth, innovative pharmaceutical companies also support other Australian businesses through investing in research and development, engineering and other associated functions.
Australia as a gateway to Asia for the services sector
As well as bilateral investment within the service sector, the HSBC Bank Australia sees there is the potential for British and Australian firms to work together to maximise opportunities directly in Asia.
To take one major example, China’s Belt and Road Initiative is an ambitious, multi-faceted, multi-decade strategy aimed at boosting the flow of trade, capital and services between China and more than 60 other countries to its West and South. Attracting the right international expertise and investment will be critical for the success of the Belt and Road Initiative, as delivering projects that offer long-term value for partners will require that they meet global standards for governance, planning and execution.
HSBC Bank Australia believes UK and Australian firms can make a real difference when teaming up to jointly bid for roles on large infrastructure projects.
Engineering firms, designers, construction companies, law firms, financial services companies and others offer a broad range of world-class expertise. Many British and Australian firms in these areas benefit from decades of experience in international and cross-border infrastructure projects. These firms, often working together, can advise on what is required to make a specific project – whether it is a road in Malaysia, an airport in India or a railway in Central Asia – investable, deliverable, legal and sustainable.
The Chief Executive Officer of the Australian British Chamber of Commerce, Mr David McCredie sees a bright future for new investment from the UK in Australia
From a UK perspective, particularly given where they will be on day one after Brexit, assuming that trading arrangements with other parts of the world have not been put in place or are not allowed to be put in place, depending on what transition periods and other things may occur, Australia would be a very useful market to open up opportunities for investment here to enable investment in other parts of the world, given our relationships with China, Japan, Korea, Singapore and other ASEAN counties and even the US.
Mr McCredie identified Australia’s free trade agreement with China as an important part of any British companies looking to establish themselves in the Asia region.
That gives us a competitive edge. If British businesses are able to utilise that by having investments in Australia from which they then look at opportunities in China, I think that's one of the key opportunities post-Brexit. If we can have an open door with the UK and an open door with China, then we can facilitate that. Absolutely, people do do that. There is a sense from the UK: 'Why would we go all the way to Australia to come back?' I think there are a number of things that fit with the narrative that Australia is useful in that space. One is that, in my experience, people like to live in nice environments. Australia has a wonderful standard of living. There's no doubt that it's expensive,
HSBC Bank Australia submitted that the services export relationship between the two countries is stronger than that for goods, and “could have the most potential for future growth”.
The UK is Australia’s third largest export market for services, while Australia ranks tenth for UK services exports, with much of the bilateral trade in services focused on travel and tourism, business services and financial services… Services exports between Australia and the UK could benefit considerably from trade liberalisation, as implied barriers to trade are two to three times higher for services than for goods.
Financial and business services
The Australian British Chamber of Commerce submitted that Australia should use trade negotiations to pursue the passporting of financial services from and to the UK.
As Australia progresses with financial passporting in our own region, there could be considerable benefits for arranging passporting of financial services from and to the UK through a bilateral arrangement. This will obviously be highly contingent on the relationships between the EU and UK as well as Australia’s relationships with other markets. The ability for fund managers to work effectively across the border to a traditionally strong partner country will enhance the opportunity for further two-way investment.
The Australian British Chamber of Commerce also supported the building of closer ties between the Australian and British corporate regulators to improve the ease of doing business in both countries.
An example of an area where this is being done, is through the relationship between the Australian Securities and Investment Commission and the Financial Conduct Authority with reciprocal rights around their sandboxing arrangements for fintech start-ups.
According to HSBC Bank Australia, the UK’s economic strength is driven in large part by financial services and business services.
Opportunities and challenges to be addressed by financial services are increasingly international in nature, from investment in infrastructure to responses to climate change. Collaboration, both between the public and private sectors and across borders, will be vital to mobilising the enormous amounts of finance required. The power of financial, legal and business services expertise is multiplied by the clustering of firms that can be found in the UK – as in Australia. To make the most of this combined financial and human capital requires the greatest possible degree of regulatory convergence.
The HSBC Bank Australia believes the services sector is one of those sectors where the geographic distance between the UK and Australia is more easily bridged through technology and innovation.
The internet of things and free movement of data will underpin trade in the twenty-first century, and technology will be particularly relevant to the growth of trade in services and the reconfiguration of global supply chains. The move towards ‘paperless trade’ will make trade easier, cheaper and safer. Technology is changing business models. And the emergence of agile micro-multinationals is testament to how technology has given smaller and medium-sized firms the ability to enter new markets and connect to new customers without needing the scale of larger multinationals.
The Regional Chief Executive Officer of Macquarie Group’s Business in Europe, the Middle East and Africa, Mr David Fass, said as one of Australia's largest exporters of financial services, Macquarie Group is supportive of frameworks that facilitate trade and the movement of capital around the world.
German Australian Business Council recommends banking, insurance, aviation and other such as professional services and the mutual recognition and equivalence of authorizations and other licenses become part of the FTA negotiations.
This is because Australian service providers like banks which currently provide their services throughout the entire European Union (for example in Germany or France) from establishments in the UK on the basis of the so-called EU Passports will no longer be allowed to do so after Brexit having become effective, because the EU Passports for financial services institutions established in the UK for the territory of the other 27 EU Member States will be terminated upon Brexit becoming effective. There are a number of Australian banks and financial services institutions which will be negatively affected by Brexit in this respect.
The GABC stated another area that should be addressed by the EU free trade agreement is the difficulty of opening a Euro bank account for smaller Australian companies and Australian ones for smaller European companies.
We know of companies that have had difficulty in organising banking arrangements because of money-laundering regulations and the need to provide sufficient identification, although this is usual due to the internal regulations of the banks. Nevertheless, more clarity on the purpose of such regulations and mutual recognition could help here.
The Regional Chief Executive Officer of Macquarie Group’s Business in Europe, the Middle East and Africa, Mr David Fass, said the ‘Brexit’ decision had not stopped their investment in the UK.
Our investment in Britain following the European Union referendum also includes a 61 per cent stake in the national grid gas distribution network which delivers natural gas to more than 11 million British customers. In relation to Brexit in particular, we are optimistic as we explore new opportunities that may arise.
Over the last four decades, Australia’s national savings have fallen short of its investment spending each year by an average of around 4 per cent of GDP. That according to the Minerals Council of Australia represents a gap of around $68 billion a year in today’s dollars. This shortfall has been met by foreign investment, which has allowed Australia to proceed with investments that could not otherwise be funded – investments which, in turn, lead to higher economic growth and better living standards. Foreign direct investment (FDI) in Australian enterprises and operations such as mines and farming also brings additional benefits such as the transfer of technology, skills and capabilities and access to global supply chains and export markets.
The UK has been a major source of foreign investment for Australia. In the colonial era and the first half of the 20th century, the UK was the dominant source of capital inflows for the Australian economy. Over recent decades, new sources of foreign investment have emerged, but the UK still remains a significant source of inward investment. In terms of the stocks, or levels, of foreign investment in Australia, the UK is the second largest source country, accounting for investments valued at $499.9 billion in 2015.
The Minerals Council states that foreign investment is very important for the Australian minerals sector which is capital intensive due to the large scale and technologically advanced nature of mining and resources development projects.
Access to funds, technology, know-how and market links through foreign investment, in particular foreign direct investment (FDI), has enabled Australia to tap its vast minerals resources potential and establish arguably the world’s most efficient mining sector.
In 2015, 16.4 per cent of the total stock of foreign investment in Australia, and 40 per cent of the total stock of FDI, was in the mining industry.
The Minerals Council of Australia outlined that the Australia-UK investment relationship has been underpinned by the strong track records of both countries in openness to inward and outward capital flows and in providing stable investment climates.
Australia needs to maintain its attractiveness as an investment destination through domestic policies such as competitive business taxation arrangements and flexible and productive workplace relations regulation.
HSBC Bank Australia believed one significant opportunity that Australia can offer the UK is the potential for British investors to invest in Australia as a way of capturing growth in Asia.
Australia’s participation in the Regional Comprehensive Economic Partnership (RCEP) places it strategically in the emerging Asian regional trade architecture, just as agreements such as TTIP and TPP in certain other regions appear to be stalling.
The Chief Executive Officer of HSBC Bank Australia, Mr Martin Tricaud, sees opportunity for Australia to become a gateway for UK investment and trade into Asia.
..we also believe that there is space for several financial centres, and that Australia has a role to play in that space, knowing that Australia has been able to finalise and sign a free trade agreement with China which is quite successful and has supported trade between both countries in a very successful manner.
The level of expertise in the financial sector in Sydney would certainly facilitate the development of a regional financial centre of expertise. Also, the importance of the underlying trade and investment flows between Australia and China makes a very strong argument for Australia taking a more important and maybe more prominent role in terms of financial transactions in RMB or in terms of belt and road related initiatives.
UK businesses can take advantage of Australia’s familiar legal, business and social systems, according to the HSBC Bank Australia, to establish “offices from which they can tap into China and ASEAN consumer markets”.
Even in advance of the RCEP accord, there are opportunities available via the three North Asian FTAs that Australia has signed with China, Japan and South Korea. Second, British investors whose policies restrict them from investing in non-OECD countries across Asia can access Asian growth indirectly by investing in Australian assets with a high degree of exposure to Asian trade, for example ports and airports, agricultural producers, tourism providers and commodities firms.
The UK is already the second largest source of foreign direct investment (FDI) in Australia, according to the HSBC Bank Australia, and “further incentives such as corporate tax changes could make the country even more attractive as a destination for foreign investment”.
Investment opportunities in the UK’s devolved administrations
Leading Australian investment bank Macquarie Group sees opportunities to broaden its investment across the UK, including in the Devolved Administrations in Scotland, Wales and Northern Ireland. Macquarie has invested in ownership of the Aberdeen, Glasgow and Southampton airports.
To that end, the Group is supportive of measures that encourage and facilitate dialogue with the Devolved Administrations, to support its efforts in that regard. By way of example, we see notable opportunity in Scotland as a future destination for investment. As an investor in Scotland, Macquarie recognises the depth of expertise that exists in its renewable energy and financial services sectors.
Mr Fass said Macquarie Group’s interest in investing projects in Scotland was about opportunity.
I think the real interest in Scotland and some of the regional cities of the UK comes from the fact that there are many international investors who are very focused on London and the south-east of England. Therefore, the competition for those types of projects is severe. We feel that we can get the same type of opportunities outside of London and the south-east by still taking the risks of the UK but without having to be in a competitive situation where we are finding ourselves in what I will call a very crowded environment…That we are finding opportunities to move outside of that hub I think is what is behind it.
Macquarie Group is acting as financial adviser to support the Swansea Bay Tidal Lagoon, the world’s first tidal lagoon power plant that harnesses the natural flow of tides to generate consistent renewable power.
This is a world-first renewable energy project that, when completed, will harness tidal energy to generate electricity sufficient to power approximately 155,000 homes.
Infrastructure and renewable energy
The UK Secretary of State for International Trade, the Rt Hon Liam Fox MP, welcomed British construction engineering companies winning contracts on infrastructure projects in Australia.
British companies already have a significant presence in Australia, with for example, Laing O'Rourke delivering the early works package for Sydney Light Rail and acting as the lead contractor for the £2.1 billion Pacific Highway upgrade.
Macquarie Group stated there continues to be strong interest by global investors in UK infrastructure too.
Macquarie and its managed funds have been instrumental in bringing more than £10 billion of investment to into the UK over the past six months.
Macquarie’s managed funds currently have more than £10 billion of funds for available investment into infrastructure assets around the world, including the UK.
The Group anticipates maintaining its commitment to UK infrastructure investment through its access to substantial capital through managed funds, private capital and the Macquarie Group balance sheet.
Mr Fass said that level of investment makes Macquarie Group the largest investor.
Macquarie has led investments in excess of 10 billion pounds into the UK, making an Australian-headquartered company the largest investor in UK infrastructure in that very interesting period.
The UK Government has policies in place that support the transition to a low-carbon economy and this has underpinned the opportunities for investment in renewable energy and clean technology, according to the Macquarie Group.
Macquarie, and its managed funds, is one of the world’s largest investors in renewable energy having invested or arranged more than £8.5 billion of investment into renewable energy projects since 2010. Much of this capital has been invested in the UK. Some recent examples of Macquarie’s contribution to the sector are:
arranging and investing £1.6 billion in Race Bank, a 573MW wind farm being built off the north Norfolk coast;
arranging financing for the construction of and co-investing in the Teesside Renewable Energy Plant in the north-east of England, the world’s largest new build biomass plant;
providing equity capital for the 336MW Galloper offshore wind farm near the Suffolk coast;
leading investment in Offshore Wind Transmission Owner (OFTOs) licences, valued at over £1 billion, which help connect and transmit electricity from offshore wind farms to the UK power grid; and
acting as financial adviser on the Swansea Bay Tidal Lagoon, the world’s first tidal lagoon power plant that harnesses the natural flow of tides to generate consistent renewable power helping UK's decarbonisation goals by meeting 11 per cent of annual Welsh domestic electricity demand.
Mr Fass detailed that Macquarie was selected in 2017 by the UK government to acquire the Green Investment Bank, the UK government's renewable energy investment business.
This is an organisation with an outstanding record in investing in green infrastructure and energy with a target of investing a further three billion pounds over the next three years. When this transaction is completed—and I expect it to be later this month—the combined Green Investment Bank and Macquarie teams will be amongst the largest teams of renewable energy specialists based in Edinburgh and London.
Bringing the Green Investment Bank into Macquarie allows us to build on an already strong track record of investing in UK green infrastructure.
Bunnings, which currently employs more than 50,000 staff across Australia, New Zealand, the United Kingdom and Ireland, including more than 11,000 people at the Bunnings UK Ireland chain of 255 trading locations would welcome a more open employment market between the UK and Australia to assist with its expansion.
We are committed to growing our business operations and continuing to create more permanent positions and career development opportunities in all regions, which in turn provides flow on benefits for the communities where we operate. It is especially important that skills and knowledge can be shared across all markets to create international best practice in every facet of our business operations.
Bunnings would like to submit that these·opportunities and benefits would be significantly enhanced if Australian citizens were able to have the same right to work in Britain as European Union nationals, and if Australian professionals were more readily able to secure visas to work in Britain.
The Restaurant & Catering Association believes future growth in the economy will be led by export services sectors such as tourism.
Service exports have doubled over the past 20 years, with growth in tourism expenditure now occurring at a faster rate than the national economy.
The Association regarded the tourism and hospitality industry as significant benefactors of Australia’s trade relationship with the UK, particularly from a visitation and employment perspective.
Further strengthening Australia’s trade relationship with the UK will result in greater visitation and expenditure in local businesses, which is necessary to grow Australia’s $116 billion visitor economy.
Tourism Australia has estimated that by 2020, the UK market will be worth between $5.5 billion and $6.7 billion to Australia so the Tourism & Transport Forum highlighted that the UK remains a “market of great importance to Australia's visitor economy”.
With the UK Government having formally commenced proceedings to exit the European Union, significant opportunities are expected to arise for Australia and the UK to recalibrate their trade relationship. TTF believes this change offers great opportunities to review and improve regulations and procedures governing or impacting Australia’s visitor economy, with a view to encouraging more travel from the UK, and further increasing both expenditure and visitor nights.
To leverage the Ashes series to be hosted in Australia over the 2017-18 summer, Cricket Australia works closely with Tourism Australia and Qantas to promote the series and Ashes travel packages across the UK.
Tourism Australia announced that it had partnered with Qantas to deliver a campaign in the UK to promote the 2017-18 Ashes. The campaign promoted Australia as a destination for major sporting events and encourages people travelling to the Ashes to enjoy experiences beyond the cricket such as a visit to Kangaroo Island to coincide with the Adelaide Test or Margaret River alongside the Perth Test.
According to Cricket Australia, Tourism Australia regards hosting the Ashes as always a big win for Australian tourism, given the large volume of visitors attending the series and holidaying between matches.
The Cricket Australia Travel Office has also partnered with 13 Licenced Travel Operators (LTOs) in the UK to promote the 2017-18 Ashes.
These LTOs offer the UK market a range of travel products, but it should be noted that all products include a minimum six night stay in each host city with the current average stay being seven nights. This length of stay in the host cities, combined with the number of days between Ashes Tests, means that UK travellers not only spend time in major cities but also visit regional areas.
Netball Australia stated netball is played by more than 20 million people in more than 80 countries worldwide and is most popular in Commonwealth nations.
This reach allows netball to develop valuable partnerships with the Australian Government and local organisations to use netball as a vehicle for social impact, sport for development and sports diplomacy, particularly in engaging with women and girls.
With the Netball World Cup is being hosted in Liverpool, UK, in 2019, and the 2018 Commonwealth Games in Brisbane, Netball Australia believes its national team and those international tournaments can help promote Australia and also forge closer business links with the UK.
There are many opportunities for Australia to leverage this pipeline of events involving the UK to promote trade and investment links.
Attracting tourists and leveraging the fantastic relationships netball has through its events is crucial in the lead up to the Commonwealth Games and beyond.
The two key areas of interest that the TTF want the Australia and British governments to address are the cost of travel from the UK to Australia, especially in the high cost of travel taxes of more than $182 imposed by both governments on tourists, and also the ease of access for British nationals into Australia through its border control.
The so-called ‘kangaroo route’ between the UK and Australia is one of the most competitive into Australia, with multiple international airlines operating or codesharing on services between the two countries via a range of air transport hubs, predominantly in the Arabian Gulf and Asia. Australia's distance from the UK, and the large number of competing destinations available to UK travellers, means Australia must be competitive not just on price but on ease of access and range of visitor product if it is to continue to grow the number of visitors from the UK.
The International Airlines Group (IAG), which operates British Airways, submitted that the tourism industry continues to be a major driver of economic activity, for which aviation is vital, and tourism is forecast to have an increased impact. IAG noted that Tourism Research Australia’s State of the Industry Report shows that spending on tourism by visitors from the UK increased 13 per cent from 2013-14.
Analysts predict continued air travel growth even in mature markets with the overall number of trips by Australian residents to all markets expected to grow by 23 per cent between 2012 and 2020 and those by UK residents to increase by 27 per cent.
In addition, IAG stressed how important air transport between the UK and Australia can be for supporting cultural connections, providing opportunities for the arts and educational exchange and for sporting links, which is particularly important given the distance and the historic ties between both countries, plus providing societal benefits too by allowing friends and relatives to visit each other.
But it is air transport’s role as a facilitator of trade and industry that IAG believes makes the greatest contribution to economic growth.
Air connectivity has a unique impact by facilitating face-to-face contact between businesses and people across different countries and so allowing trade and investment links between businesses. Therefore, air connectivity is crucial for facilitating Australian businesses and exporters’ access to the UK and the trade and investment opportunities available there. Greater openness of the economy as a result of increased trade and investment leads to productivity growth: economic growth creates demand for connectivity and in turn connectivity enables growth – it is a cyclical relationship.
With air travel widely regarded as a major facilitator of commerce and investment, Emirates highlighted that its breadth of choice of UK gateways has “undoubtedly opened up trade opportunities for Australia with non-hub markets outside of London”.
Emirates’ network enables faster overall journeys and greater itinerary choice for passengers who wish to travel to and from points other than the UK’s traditional gateways. Glasgow and Newcastle are good examples, where Emirates is the only carrier serving one-stop flights from Australia.
In a context of increased economic activity between Australia and the UK resulting from a possible free trade agreement, Qatar Airways believes that it could play an important “catalyst role in enhancing the economic benefits of freer trade between both countries, and particularly in regards to inbound tourism and the carriage of high-value goods by air”.
Going forward, Qatar Airways submitted that a new liberalized trade regime should go hand-in-hand with a more open and flexible aviation framework for all foreign airlines.
…in order to provide them with the opportunity to compete ahead of increased demand and thus enable them to make investments in the Australian market while committing to serve Australian businesses and consumers. In our view, market access restrictions are major impediments to freer trade and investment.
Qatar Airways claimed its growth potential in Australia was forecast at zero per cent by the Australian Government’s Department of Infrastructure and Regional Development, which oversees international aviation.
This means that our ability to contribute to any enhanced trade relations between Australia and the United Kingdom is already compromised due to capacity constraints. In our view, a more balanced convergence of Australia’s trade and aviation policies could bring great benefits to Australian businesses, shippers, and the tourism industry in the long-term.
IAG noted that the EU and the UK government and its airlines have led the way in Europe in liberalising access to aviation markets.
Australia has had liberal agreements with the UK and was also one of the first to sign a “horizontal agreement” with the EU, recognising carriers from all Member States collectively. These attitudes and the common rules adopted for the EU market have enabled a thriving and competitive market in Europe that has provided significant benefits to consumers by allowing more choice and lower prices.
HSBC Bank Australia expects tourism can be bolstered by closer business links and also expansion of long-haul air travel between Australia and the UK with Qantas Airlines, for example, offering a first ever direct commercial service between Perth and London to commence in March 2018 using the Boeing 787-9 Dreamliner to fly the 14,498 kilometres non-stop in 17 hours.
Stronger trade and investment ties could be expected to have positive follow-on benefits in increasing tourism between the two countries.
Qantas Group CEO Alan Joyce stated the history-making route would be a watershed for travel, tourism and trade.
When Qantas created the Kangaroo Route to London in 1947, it took four days and nine stops. Now it will take just 17 hours from Perth non-stop. This is a game-changing route flown by a game-changing aircraft. Australians have never had a direct link to Europe before, so the opportunities this opens up are huge.
Mr Joyce believed the direct route is expected to appeal to travellers on the East Coast as well as West Australians, helping to deliver a tourism boost.
A direct flight makes travelling to Australia a much more attractive proposition to millions of people. We expect many travellers from Europe will start their time in Australia with a visit to Perth before going on to see other parts of the country. Our modelling shows that people from the East Coast as well as South Australia would fly domestically to Perth to connect to our non-stop London service.
Qantas reiterated the benefits to be derived from this landmark service, however, will not be restricted to Western Australia - but will deliver “growth to the wider-Australian economy via dispersal to East Coast capitals and other leading domestic and regional tourism destinations”.
Qantas anticipates this major investment will deliver a swathe of economic benefits to both Australia and the UK including a “significant expansion of tourism, trade and people-to-people links”.
In Western Australia, which will constitute the Group's ‘hub’ for direct Australia-UK services, extensive marketing and partnership arrangements between Qantas and Tourism Western Australia will leverage this unique opportunity and seek to expand the local tourism market accordingly.
With the UK representing Western Australia's largest source market of inbound tourists in 2016 (16 per cent), it can be expected that Qantas' direct services between Perth and London will build upon this already significant figure - delivering downstream benefits to the wider-economy through increased visitor expenditure.
Qantas was optimistic the direct flights from the UK will help exceed Tourism Australia’s growth projections building on 2015-16 data that the UK was Australia's third largest inbound market for visitor arrivals, and second largest market for total visitor spend and visitor nights.
Facilitating ease of travel through direct UK-Australia services will contribute significantly to increased growth, with projections by Tourism Australia that the UK-Australia tourism market has the potential to be worth between $5.5-6.7 billion potentially understated.
Qantas also submitted it plays an active role in promoting the UK as a tourist destination and has longstanding partnerships with tourism authorities based in the UK and Australia.
Most recently, Qantas has collaborated with VisitBritain in a joint-marketing campaign designed to inspire Australians to explore the UK. This is part of our efforts to use creative content to promote destinations and will feature the food, cultural and outdoor experiences available to tourists in London, Brighton, Bristol, Liverpool and Manchester.
Aspen Medical’s future growth strategy is based on exporting Australian developed knowledge and products by expanding its overseas operations. Aspen Medical seeks to build on the opportunities that accrue in countries where Australia has free trade agreements. A future free trade agreement with the UK can give Aspen Medical an important competitive advantage that helps us realise our export led growth strategy.
Education and research services
Universities Australia has highlighted the potential opportunities for Australian researchers from the UK Government’s decision to allocate £4.7 billion to enhance the UK’s position as a world leader in science and innovation.
…so that by 2020, government spending on research and development will grow to an additional £2 billion over and above existing spending. This funding falls under a new National Productivity Investment Fund of £23 billion in high value investment from 2017-18 to 2021-22. In the spring budget recently presented to Parliament, £300 million of the fund was allocated to support the brightest and the best research talent, including support for 1000 new PhD places and fellowships, focused on STEM subjects. £90 million will fund the 1000 new PhD places, while £210 million will be used to create new fellowships, including programs to attract top global talent to conduct research in areas such as bioscience and biotechnology, quantum technologies, and satellite and space technology. These are exciting opportunities for Australia’s talented researchers in these fields of study.
Swinburne University of Technology, Victoria
The Swinburne University of Technology in Melbourne supports consideration of an “unfettered exchange of both educational and research services being enshrined in any revised trade partnership” with the UK as one way to strengthen the relationship between universities and industry in both countries.
This exchange would include enabling free movement of academic staff and students between Britain and Australia and the opportunity to participate in research activities in each other's countries with no more regulation or scrutiny than would be ordinarily applied to a domestic provider. This approach is supported by our highly similar systems and standards, and the innate high level of quality assurance that is therefore present in both of our regulatory environments.
The Deputy Vice-Chancellor (Academic) at the Swinburne University of Technology, Professor Duncan Bentley, sees merit in a dedicated chapter on education services as part of any free trade agreement between Australia and the UK.
A free trade in educational services with particular commitments under a dedicated chapter would also allow us to focus on the growing scale and quality of our educational support services and educational technologies. The EdTech sector is significantly growing in Australia. We have one, Quitch, which supports student retention and advancement. It has been adopted by the University of California and Columbia University in the US. It is just one of many EdTech applications, but there would be a proliferation of Australian EdTech if there were freedom of trade in educational services under a special chapter that also allowed opportunity.
If we were to go down the route of an education services chapter, one of the frameworks we could copy would be the success of the UK-EU framework, with setting up perhaps a research innovation and grant capability, which could put a bit of a boost under the research and it would then enhance the collaboration and start building on that.
Professor Bentley highlighted the how useful the UK-EU framework on education had been for research.
…the agreement means that you then have that free flow of people, technologies and the capability to jointly collaborate in ways which we are restricted from at the moment. So even if we had a free trade agreement with the UK, unless you have a common research funding framework where it is agreed that you can participate in grant applications or commercialisation activities and a shared governmental support of those activities to reduce all those hidden barriers and red tape issues, it isn't as easy as, say, in the EU where they put that in place.
In order to link as closely as possible to the developing trade agenda between Australia and the UK, Swinburne University of Technology also recommended encouraging a “greater focus on higher education partnerships in the growth areas of materials and manufacturing”.
Further, greater support should be given to enterprise and entrepreneurial endeavours across both nations, which will in turn deliver greater international trade opportunities.
Swinburne University of Technology supported preferential access to grant funding would help Australian and UK researchers overcome barriers to collaborative research.
Bilateral research agreements would not represent a separate stream of research funding, but would enable Australian and UK collaborations to be submitted to standard open grants opportunities in both nations.
Curtin University, Western Australia
In 2017, Curtin University formed a strategic alliance with the University of Aberdeen in Scotland, UK. Curtin University submitted as the large university in Western Australia with an international reputation for expertise in minerals and energy, health, and ICT and emerging technologies and being located in a city set to be the largest exporter of liquefied gas in the world, that the university was attracted to the broad range of expertise and experience available at the University of Aberdeen.
The University of Aberdeen, Scotland, strategic alliance
Founded in 1495, the University of Aberdeen is one of the oldest universities in the world and according to Curtin University is internationally recognised for its expertise in energy, medicine, business, nutrition and divinity. The University of Aberdeen pioneered discoveries that have changed thinking about medicine, science, arts and humanities over five centuries. The city of Aberdeen it is also situated in the heart of the UK's oil and gas industry.
The Aberdeen-Curtin Alliance draws on the complementary strengths of both universities to deliver high-impact research and innovative teaching programs across four themes of mutual interest: Engineering and Energy, Medicine and Health Sciences, Creative Arts, and Business.
To highlight the extent and broad scope of the Alliance between both universities in Perth and Aberdeen, it has 12 significant joint research projects underway in 2017:
Energy and Engineering - Understanding the decommissioning landscape.
Creative Arts - Negotiating cultural identity in contemporary Australian and Scottish short fiction.
Creative Arts - Haunted by use; theories and aesthetic uses of post-industrial space and place.
Energy and Engineering - Listening through rock salt; quantifying petrofabrics and seismic velocity anisotropy of evaporates to improve seismic imaging.
Energy and Engineering - Development of a theoretical strategy for designing titania nanoparticles for photocatalysis for water purification and wastewater treatment.
Health Sciences and Medicine - Campylobacter jejuni biofilm structure and cell dispersal.
Engineering - Thermal enhancement of nanofluids.
Engineering - Vibration-based structural health monitoring and damage detection in subsea risers.
Engineering - Efficient biomass upgrading technology.
Creative Writing - Literatures of travel and ideas and representations of Wilderness.
Business - Empirical modelling of crude oil prices under consideration of the relationship with other financial markets and the role of financialisation.
Health - The role of macromolecular crowding in protein translation.
Curtin University believed the “success of the collaborative PhD program is projected to support 36 PhD students on a full scholarship to undertake a jointly supervised research project by 2019”.
To highlight the global benefits of the joint research produced by the Curtin-Aberdeen Alliance, an example from the current research underway in Energy and Engineering is the Understanding the decommissioning landscape project that presents the opportunity to understand both mature and aging fields (North Sea) alongside a younger profile (Australia) in understanding the risks and uncertainties in the decommissioning process of exploited oil and gas sites. The Alliance will also create new teaching programs in strategic areas, more opportunities for student and staff mobility, closer connections with industry, and enhanced research capabilities to provide innovative solutions to global problems.
Curtin University welcomed the establishment of the Global Energy Institute (GEi) in 2017, and expects it to be a key pillar to the alliance between the universities.
The GEi will capitalise on the considerable strengths of both universities in the fields of oil, gas and renewables and provide an internationally recognised hub for delivering world-class research and education programs. Building on the University of Aberdeen's existing links with Africa and Europe, and Curtin's extensive presence in Asia, the GEi will deliver elite energy-related research, education and ongoing professional development. Through the GEi, Aberdeen and Curtin will collaborate in transnational education, energyrelated taught postgraduate programs, higher degree by research training, continuing professional development programs, research programs and, government and industry engagement.
Curtin University submitted the research priorities of the GEi are targeting; geophysics; smart grids; renewable and low emissions energy; CO2 utilisation; biofuels; carbon capture and storage; petroleum engineering; subsea research; sustainable cities; energy law; energy economics; and energy storage and fuel cells.
The key benefits for international student exports and research the Aberdeen-Curtin Alliance offers, according to Curtin University, include:
Attractive programs for prospective global students to drive coursework and research enrolments.
Joint academic appointments.
The GEi will attract high quality students from across the globe.
Enhanced global reputation and international market positioning of both universities and cities through the research outcomes and industry linkages.
Use of joint resources to access regions of the world that are of strategic importance.
Sharing of skills, facilities and equipment to enhance knowledge and drive excellence in research.
Curtin University expected international students and researchers to be attracted to what Curtin and Aberdeen jointly have to offer.
The universities plan to work together on joint transnational education projects, which will have a greater impact in global markets and be attractive to international students wanting a unique education with two globally recognised universities. With Curtin's existing transnational presence in Singapore, Malaysia and Mauritius, and Aberdeen's in South Korea, the alliance opens doors to work together on new joint transnational projects in geographic areas of strategic interest.
Curtin University submitted as the UK is home to a number of globally recognised universities with resources and industry connections, if aligned appropriately with Australian universities and industry, that will provide mutual benefits to both.
Enhanced investment and support into the global expansion of Australian universities through links with UK institutions provides the opportunity to develop world class research, strategic student mobility experiences and the scope to build a greater market presence and reputation in international education and related industries for Australia.
The University of Melbourne, Victoria
The University of Melbourne has approximately 180 exchange partners in 39 countries around the world. Most students of the University of Melbourne are eligible to apply for an exchange place. An exchange involves spending either one semester, a year (two semesters) or sometimes shorter periods at one of the university’s international partner institutions for full credit towards the student’s degree. In return, the University of Melbourne receives a student from the participating university.
Completing part of their degree overseas provides students with a unique experience, allowing cross cultural learning, an opportunity to internationalise their degree and make new connections from around the world.
The UK is the second most popular destination for outbound University of Melbourne students and the third most popular source for inbound exchange students from the UK.
In 2016, 150 students from the University of Melbourne participated in an exchange program to a United Kingdom university. In return, 130 students from United Kingdom institutions came to Melbourne.
Membership of the University of Melbourne’s alumni community in the UK is extended to all those who have successfully completed at least one year of full-time study at the university, or in the case of international students, have completed a semester-length Study Abroad program at the university. The London-based University alumni association has been in existence for nearly 30 years. On average, 250 University of Melbourne alumni attend and engage with alumni events in London per year.
Alumni are vital to the success of the University’s international engagement activities. Philanthropy from our alumni has enabled the University to extend into new fields of research, provided new buildings and facilities, and established scholarships and prizes to encourage access to education.
The University of Melbourne submitted that specific Government support for international engagement will greatly benefit the university’s capability to enhance this knowledge exchange.
In particular, financial support for PhD exchanges and post-doctoral exchanges can build a global network that further supports the growth of existing and new markets.
The University of Birmingham partnership
In 2016, the University of Melbourne and the University of Birmingham signed an expansive new agreement to formally collaborate on research, education, and cultural engagement. The partnership will help strengthen the existing collaboration between the universities, with the centrepiece being a joint PhD program co-funded by both institutions. The program will give up to 20 scholars in engineering the opportunity to study alongside world-leading academics in Birmingham and Melbourne across shared areas of priority research including energy storage, biomechanics, artificial intelligence and robotics. The $4 million ‘Priestley PhD Fellowships’ program reflects the unique, 20-year relationship between the universities, which have a shared history in Sir Raymond Priestley, the British geologist and Antarctic explorer who was Vice-Chancellor of both institutions. Beyond the fellowships, the partnership also provides for a $200,000 collaborative fund to encourage research staff mobility and collaboration between the UK and Australia.
The University of Manchester partnership
The University of Melbourne and the University of Manchester have established a research fund to deepen and extend collaborative research links between the universities. Grants up to $10,000 are awarded for collaborative research projects including symposia, workshops and researcher exchanges. The fund is targeted to areas of common interest between the two universities. In 2014, nine grants were made available to support University of Melbourne staff to undertake short-term visits to Manchester. The visits provided the Melbourne staff with a unique opportunity to develop and strengthen their professional ties in teaching, learning and research. Corresponding visits to the University of Melbourne were undertaken by University of Manchester staff.
The Melbourne Law School and Oxford University partnership
In 2009, the Melbourne Law School launched a dual degree program with Oxford University linking two of the world’s leading law schools. This program enables Melbourne students to undertake a 3.5 year combined Juris Doctor (JD) program with either the Oxford Bachelor of Civil Law (BCL) or the Oxford Masters in Law and Finance (MLF). Each combined program consists of 2.5 years study in Melbourne and 1 year at Oxford.
European Union Centre on Shared Complex Challenges
The University of Melbourne-based European Union Centre on Shared Complex Challenges was established in August 2014 with support from the European Commission. The Centre is part of the European External Action Service (EEAS), a global network of 39 centres hosted by universities worldwide, and one of five located in Australia. The Centre aims to promote awareness and understanding of the EU and its relationship with Australia. The Centre regularly facilitates visits to Australia for UK-based researchers.
Kings College London - Science Gallery
The University of Melbourne has secured the rights to Australia’s only node in the highly successful Science Gallery International network. Science Gallery Melbourne launched its inaugural pop-up exhibition, BLOOD, in 2017 ahead of its formal opening in Melbourne in 2020. Science Gallery will according to the University of Melbourne be a dynamic and engaging space to inspire young adults into the STEM workforce while delivering direct economic benefits via tourism, job creation and the export of Australian arts and science.
Founded in 2008 at Trinity College Dublin, Science Gallery uses greater interaction between scientists, engineers, designers, artists and the creative industries for engaging 15-25 year olds with science. Science Gallery is part of an international network with leading global universities. The Science Gallery partners include Kings College London.
International education market
Australia’s third largest export is education, supporting around 130,000 jobs and contributing $20 billion to the domestic economy, according to the University of Melbourne.
It is Victoria’s largest export. The continued growth of this sector requires stable policy settings, well-funded, world-leading research and robust regulation to ensure standards remain high and Australia is seen and known as a high quality provider of education services.
The University of Melbourne highlighted that Australia has much to gain by the significant links that each cohort of international students takes with them when they conclude their study in Australia.
Our international alumni network is one of Australia’s greatest assets. These ultimately help to drive political, economic and cultural activities globally.
The University of Melbourne submitted that Australian universities needed to operate in an increasingly internationalised higher education market where global talent is highly mobile.
While there is fierce competition to attract the best students and academic and professional staff internationally, Australia’s successful and well-regarded higher education sector can continue to expand the opportunity for Australia bringing benefits not only to students and staff but to the Australian economy and society more broadly. The UK will continue to be an important source of student and academic exchange that will enrich Australian universities.
DFAT highlighted how Australia’s ongoing promotion of cultural and economic openness, and growing links to dynamic Asia-Pacific growth engines, including through Australia’s triumvirate of North Asian FTAs, have positioned Australia well to capture a larger share of the lucrative international education market.
Education has become an important export sector for both Australia and the UK. While attracting international students from the UK to Australia and vice versa could be a source of growth, according to the HSBC Bank Australia, students from regions including Asia and the Middle-East will likely “boost growth in the sector more broadly”.
Beyond attracting international students, there is room for deeper collaboration between Australia and the UK in areas of expertise including genetics, biotechnology and alternative energy. Following departure from the European Union, research institutions and funders in the UK will have greater freedom to seek out partners worldwide, and it is clear that Australia has many natural advantages in this area.
HSBC Bank Australia believed Australia could look to attract more British investment to better commercialise its public sector research, especially in the health sector.
Australia is well regarded for leading-edge medical research, producing world leaders such as Ramsay, Sonic Healthcare and Cochlear. However Australia’s small domestic population and limited local funding for research and development hamper its ability to commercialise these ideas. According to a recent PwC study, greater commercialisation of public-sector medical research could add A$1 billion to the Australian economy.
A range of businesses and industry sectors offered support for a free trade agreement with the UK to build two-way trade and investment between Australia and the UK.
Agricultural exporters broadly called for meaningful liberalisation of trade into the UK wanting to expand access for Australian produce such as red meat, dairy and sugar to grow exports into the considered “high-value” UK market. This sector called for a short time frame in any trade agreement to transition to zero in quota tariffs that have impacted on the opportunities so far for Australian exports.
The financial services sector such as HSBC Bank Australia highlighted the importance of maintaining stability and predictability during any transition as the UK ‘Brexits’ from the EU. This sector also saw opportunities for Australia’s services sector to be a gateway for UK investors and companies into the Asian market, mostly due to Australia’s free trade agreement with China.
The tourism sector led by international airlines suggested tourism can be bolstered by expansion of long haul air travel between Australia and the UK.
The education sectors sees growth potential in international student and research exchanges between Australia and the UK from a free trade agreement that dedicates commitments to building closer education relationships.