2. Background and treaty overview

Trading relationship, assessment of outcomes, general and final provisions, dispute settlement, and matters of interest
2.1
This chapter focusses on the broader context in which the Free Trade Agreement between Australia and the United Kingdom of Great Britain and Northern Ireland (AUKFTA)1 has been agreed and examines firstly the trading relationship between Australia and the United Kingdom (UK). It then discusses each Party’s assessment of the significant outcomes in the AUKFTA before turning to some provisions in the AUKFTA—specifically the general and final provisions and the dispute settlement provisions. The chapter closes with a discussion of matters raised during the inquiry that do not directly relate to the specifics of the AUKFTA, namely the agreement-making considerations with respect to independent economic modelling and mid-stream stakeholder consultation.

Australia-UK trade relationship

2.2
The trade relationship between Australia and the UK is dominated by investment. The value of both goods and services traded between the countries represent a fraction of the value of investment between Australia and the UK.2
2.3
In 2021, the UK was Australia’s second largest source of foreign direct investment ($718.6 billion or 17.4 per cent), after the United States (US) ($1,053 billion or 25.5 per cent).3 The UK was the second largest recipient of Australian foreign investment ($537.5 billion or 16.2 per cent), after the US ($1,113.8 billion or 33.5 per cent).4
2.4
While the UK attracts a significant amount of Australian foreign investment, Australia is not a significant recipient for foreign investment from the UK in comparison to the UK’s major investment trading partners, such as the Netherlands or the US. Australia’s position is probably best described as being one of the significant recipients of UK foreign investment outside Europe and North America.5
2.5
Though Australia has an overall goods and services trade surplus with the UK, in 2020, it had a $2.144 billion services deficit, around half the 2019 deficit of $4.320 billion. The reduction in the services deficit, however, was almost entirely the consequence of reductions in travel services imports (specifically, Australians travelling to the UK).6
Table 2.1:  Australia’s goods and services trade with the UK (major items and total), 2020
Exports
Imports
Item
Value ($m)
Item
Value ($m)
Gold
$12,059.4
Other business services
$1,481.0
Other business services
$1,515.0
Intellectual property charges
$963.0
Financial services
$639.0
Financial services
$786.0
Telecommunications and ICT7 services
$602.0
Medicaments (including veterinary)
$772.6
Lead
$512.0
Insurance and pension services
$758.0
Alcoholic beverages
$506.6
Passenger motor vehicles
$626.3
Recreational travel
$420.0
Recreational travel
$545.0
Measuring and analysing instruments
$345.6
Telecommunications and ICT services
$474.0
Education-related travel
$241.0
Transport services
$365.0
Total
$18,771.1
Total
$12,996.7
Source: National Interest Analysis.8

Assessment of outcomes

2.6
The Australian Government explained the benefits of the AUKFTA in terms of meeting policy objectives, including:
contributing to diversifying Australia’s trade and guarding against the risk of discriminatory trade blocs
putting pressure on the multilateral system to further liberalise and broaden the range of issues the multilateral system engages with
removing barriers impeding trade in goods.9
2.7
The Australian Government has not publicly released economic modelling of trade agreements since 2016, making it difficult to determine the economic impact of the commitments made by Parties to the AUKFTA. This is discussed further below.
2.8
In December 2021, however, the UK Department for International Trade released its impact assessment of the AUKFTA.10 Overall, the UK impact assessment suggested the agreement could increase bilateral trade ‘in the long run’ by £10.4 billion, assuming a 53 per cent increase in trade resulting from reductions in regulatory restrictions to goods and services trade, tariff reductions, income and supply chain effects, and UK economic growth.11
2.9
Subject to a high degree of uncertainty, by 2035 the AUKFTA could increase UK gross domestic product (GDP) by 0.08 per cent.12 The UK Department for International Trade estimated the AUKFTA could increase Australia’s GDP by £2.3 billion when compared to projections of Australian GDP in 2035.13
2.10
The Department of Foreign Affairs and Trade (DFAT) advised the Committee that:
Our Office of the Chief Economist certainly reviewed that analysis and, on the basis of that analysis, found that the UK's methodology for constructing its model was robust and its findings on the potential impacts for the Australian economy should be considered reliable.14
2.11
The AUKFTA is identified by the UK as a ‘key stepping stone’ to its accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)—one of the world’s largest trade agreements—and is part of the UK’s reorientation of its trading relationships towards emerging markets in the Indo-Pacific region.15
2.12
According to the House of Commons International Trade Committee, the AUKFTA drew ‘widely on the CPTPP, while also going beyond it in some respects and potentially conflicting with it in others’.16
2.13
In February 2021, the UK made a ‘Formal Accession Request to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership’. On 2 June 2021, the CPTPP Commission agreed to formally commence accession negotiations with the UK.17

Significant aspects of the AUKFTA

2.14
According to the Australian Government, significant outcomes from the AUKFTA are:
reduction in tariffs—currently 89 per cent of Australian goods are exported to the UK duty free, whereas on entry into force (EIF), over 99 per cent of Australian goods exports by value would enter without tariffs
simplification of customs procedures including making it easier for traders to prove the originating status of goods
enhanced opportunities for Australians to live and work in the UK (and vice versa)
liberalisation of the rules for services and investment
provisions to support mutual recognition of qualifications
promotion of digital trade
greater access to government procurement opportunities
support for small and medium-sized enterprises
commitments to support women’s access to the benefits that flow from trade and investment
commitments to advance Indigenous interests and deliver new opportunities and revenue streams for Indigenous exporters
the establishment of a Strategic Innovation Dialogue.18
2.15
Highlights identified by the UK Department for International Trade include:
greater legally-guaranteed access to Australian government procurement opportunities than provided in any other trade agreement, expected to constitute around £10 billion of new opportunities each year
removal of all tariffs on UK exports to Australia while retaining protections for sensitive UK sectors for a number of years (beef and sheep meat, dairy, sugar) and providing a general bilateral safeguard mechanism to provide a temporary safety net for industry (tariffs on long-grain milled rice, pork, poultry and eggs remain in the long run)
minimisation of red tape by modernising rules of origin, ensuring transparent and efficient customs procedures, reducing technical barriers to trade and sanitary and phytosanitary measures
business mobility arrangements for UK professionals to travel for work
on food standards – no new permissions for imports from Australia, and hormone-treated beef would remain banned
non-regression and non-derogation clauses on animal welfare standards, and a strong statement recognising animals as sentient beings
tackling barriers to digital and online trade, including commitments on electronic contracts, e-authentication and trust services
ambitious intellectual property provisions
exceptions and exclusions for the National Health Service.19
2.16
The UK Department for International Trade stated Australia and the UK already trade along the lines of their comparative advantage and expected this to continue. The UK identified Australia’s comparative advantages in areas including agriculture, semi-processed foods, and energy, while its own were in areas such as chemical, rubber and plastic products, motor vehicles, transport equipment, businesses services, communications, financial services, and insurance.20

General provisions

Establishing a free trade area

2.17
Chapter 1 of the AUKFTA, amongst other things, creates a free trade area. Article XXIV of the General Agreement on Tariffs and Trade 1947, as incorporated in the General Agreement on Tariffs and Trade 1994, and article V of the General Agreement on Trade in Services, permit parties to make bilateral agreements on trade by establishing a ‘free trade area’.
2.18
Article 1.1 of the AUKFTA establishes a free trade area for the purposes of implementing the provisions of the AUKFTA.21

Application of World Trade Organization agreements

2.19
Article 1.2 affirms the existing rights and obligations of each Party under agreements to which both Parties are a party, including the Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement).22

Definitions

2.20
The definitions applicable throughout the AUKFTA are similar to those found in other trade agreements. The following are relevant for later chapters in this report:
a ‘national’ is a citizen or permanent resident of Australia or UK, but the term ‘person of a Party’ means a national or enterprise of one of the Parties
a person means a natural person or an enterprise
the territories of the UK include the Bailiwicks of Guernsey and Jersey, and the Isle of Man for the purposes of Chapters 2 (trade in goods), 4 (rules of origin and origin procedures), 5 (customs procedures and trade facilitation), 6 (sanitary and phytosanitary measures), and 25 (animal welfare and antimicrobial resistance).23

Legislation

2.21
According to the National Interest Analysis (NIA), Australia would need to make the following legislative changes in order to implement the obligations in the AUKFTA:
Customs Tariff Act 1995 to incorporate the preferential tariff rates that would apply to goods imported from the UK under the AUKFTA, and the Customs (International Obligations) Regulation 2015 and Customs Tariff Regulations 2004 to allow for refunds of excess customs duty paid.
Customs Act 1901 and a customs (AUKFTA rules of origin) regulation would need to be created establishing rules for determining the originating status of goods imported from the UK for the purpose of determining eligibility for preferential tariff treatment.
Foreign Acquisitions and Takeover Regulation 2015 to incorporate the new thresholds for screening investment proposals by investors from the UK.
Legislative instrument under section 140GBA of the Migration Act 1958 would need to be created to give effect to Australia’s labour market testing waiver commitment in the AUKFTA. Amendments would also be required to the Migration Regulations 1994 and associated legislative instruments to implement the shared understandings on mobility.24

Final provisions

2.22
The final provisions address how the AUKFTA, might be amended, come into force, be reviewed, and be terminated. They also deal with how it might be extended.
2.23
The Parties can agree, in writing, to amend the AUKFTA. Amendments would enter into force 30 days after the exchange of written notification that domestic requirements have been completed, or on such other date as the Parties may agree.25
2.24
The AUKFTA would enter into force 30 days after the date on which the Parties exchange written notifications confirming they have completed their respective domestic requirements, or on a date the Parties agree.26
2.25
The Parties undertake to conduct a general review of the AUKFTA in the seventh year following EIF, or as agreed by the Parties. The purpose of a review would be to update and enhance the AUKFTA to ensure it remained relevant to the trade and investment issues and challenges confronting the Parties.27
2.26
A Party may terminate the AUKFTA by giving the other Party notice in writing. Termination would take effect six months after the date of the notification, or as the Parties agree.28

Extension of the AUKFTA

2.27
The AUKFTA foreshadows the potential extension of coverage of the agreement to territories for whose international relations the UK is responsible. Should the UK wish to do this, it is to deliver a written request and the Parties are to hold consultations to consider and agree the extension.29
2.28
As noted above, the Bailiwicks of Guernsey and Jersey, and the Isle of Man would be able to trade in goods under the provisions of the AUKFTA on EIF.30
2.29
The AUKFTA states an extension may include an extension of further provisions to the Bailiwicks of Guernsey and Jersey, and the Isle of Man, as well as any extension to any other territories for whose international relations the UK is responsible, including but not limited to, Gibraltar.31
2.30
Other territories for whose international relations the UK is responsible include the British Virgin Islands, Cayman Islands, and Bermuda, by some accounts, the top three international tax havens.32
2.31
In side letters to the AUKFTA, the UK has delivered a written request, and Australia has undertaken to enter into discussions as soon as practicable. The side letters request an extension of the provisions of the AUKFTA relating to trade in services and investment to Gibraltar, the Bailiwicks of Guernsey and Jersey, and the Isle of Man.33 No assessment is provided in the NIA of the implications of opening the services and investment provisions of the AUKFTA to these territories.

Dispute settlement

2.32
Chapter 30 contains the AUKFTA’s formal dispute settlement mechanism and the main provisions are discussed below.34 Notwithstanding the comprehensive dispute settlement provisions, the chapter requires the Parties to endeavour to agree on the interpretation and application of the AUKFTA and make every attempt, through cooperation and consultations, to arrive at a mutually agreed solution where matters arise.35
2.33
The dispute settlement provisions generally come into effect when a Party considers that:
an actual or proposed measure of the other Party is or would be inconsistent with its obligations under the AUKFTA
the other Party has failed to carry out its obligations under the AUKFTA.36
2.34
Parties retain the right to have recourse to the dispute settlement procedures available under any other international agreement to which they are party, including the WTO Agreement.37 Various provisions deal with when a forum is deemed to have been selected.38
2.35
Parties may voluntarily undertake alternative methods of dispute resolution including good offices, conciliation, and mediation.39
2.36
The Parties may reach a mutually agreed solution at any time with respect to any dispute within the scope of the chapter. If this occurs during panel proceedings, the Parties are to notify the agreed solution to the panel.40

Consultations

2.37
The AUKFTA allows a Party to request consultations on any matter within the scope of the dispute settlement provisions. Provisions detail how the consultation process would work.41
2.38
The Parties are required to make every attempt to reach a mutually agreed solution through consultations and shall provide sufficient factual information to enable a full examination of the matter.42

Panels

2.39
A complaining Party may request the establishment of a panel if an issue relates to an actual measure (not a proposed measure) and either:
the other Party does not reply to a request for, or enter into, consultation within the time period specified
the Parties agree not to enter into consultations
the Parties fail to resolve the matter through consultations within 60 days.43
2.40
A panel consists of three panellists unless otherwise agreed.44 Parties are to enter into consultations on the composition of the panel. If agreement cannot be reached within 10 days a Party may advise the following procedure applies (with specified timeframes for each step):
each Party is to appoint one panellist (who may be a national of the Party)45
Parties are to agree on the appointment of the third panellist who would serve as chair (the chair is not to be a national, resident, or employed by either Party unless otherwise agreed)
if any of the panellists have not been appointed within 35 days, a Party may request the Director-General of the World Trade Organization (WTO) to appoint the remaining panellists46
if the Director-General of the WTO is unavailable or does not appoint the remaining panellists, a Party may request the Secretary-General of the Permanent Court of Arbitration to appoint the remaining panellists.47
2.41
The same provisions above generally apply in situations where a panellist resigns or becomes unable to act, and with composition where a panel is reconvened.48
2.42
Panellists are required to:
have demonstrated expertise or experience in law, international trade, other matters covered by the AUKFTA, or resolutions of disputes arising from international trade agreements
be chosen on the basis of objectivity, reliability, and sound judgment
be independent of, and not affiliated with or take instructions from, a Party
serve in their individual capacities and not take instructions on matters related to the dispute
comply with the Code of Conduct.49

Functions of the panel

2.43
The AUKFTA establishes the functions of the panel which, broadly, are:
making an objective assessment of the matter before it (provisions establish how this is to occur)
to operate under the specified terms of reference that require issuing a written report containing findings and reasons for the findings.50
2.44
Provisions specify the content and the manner in which the reports and findings are to be set out.51 A panel’s findings are to be made by consensus or majority vote, and cannot add to or diminish the rights and obligations provided in the AUKFTA.52 Any interpretation of the AUKFTA made by the panel is to be in accordance with customary rules of interpretation of public international law and the panel must also consider relevant interpretations in reports of WTO panels and the WTO Appellate Body.53
2.45
The panel may rule on its own jurisdiction.54

Rules of Procedure and Code of Conduct

2.46
The proceedings for dispute settlement are to be conducted in accordance with Chapter 30, the Rules of Procedure, and the Code of Conduct, unless Parties agree otherwise.55
2.47
The Rules of Procedure specify matters, including the number and location of hearings; opportunities to provide submissions; the publication of submissions, oral statements, written responses to requests, and the final report; ability to seek information or technical advice from experts; and confidentiality.56
2.48
At the request of the Parties, a panel is to suspend its work. The panel is to terminate its proceedings at the Parties’ request.57

Reports

2.49
The panel is to assume full responsibility for the drafting of the reports and they are to be drafted without the presence of the Parties. Provisions require the panel to issue an interim report within certain timeframes. Parties can submit comments on the interim report. The final report is to include a discussion of any comments made by Parties to the interim report.58 The final report is binding on the Parties.59

Compliance

2.50
Where a panel finds a measure of the responding Party is inconsistent with its obligations under the AUKFTA, or the responding Party has failed to carry out its obligations under the AUKFTA, the responding Party must comply promptly with the final panel report.60
2.51
Various provisions specify requirements for the responding Party to notify the complaining Party of its intentions with regard to complying with the panel report and notifying of actual compliance, including timeframes for implementation.61
2.52
If there is a disagreement with regard to compliance with a panel report, a Party may request the panel reconvenes to decide the matter. Chapter 30 specifies the procedure for this to occur, including timeframes.62

Temporary remedies for non-compliance

2.53
In the event the responding Party does not comply with the final panel report, the following temporary measures may be considered (subject to various procedures):
compensation (which is voluntary and is to be consistent with the AUKFTA)
suspension of concessions
suspension of other obligations.63
2.54
Any suspension is not to exceed the level of nullification or impairment.64 The responding Party is able to object to the suspension on certain grounds and can request the panel to reconvene to make findings on the matter.65
2.55
Any compensation or the suspension of concessions or other obligations is to be temporary until such time as the responding Party has complied with the final panel report or the Parties have reached a mutually agreed solution.66

Disapplication or modification of dispute settlement procedures

2.56
A number of chapters of the AUKFTA either contain their own dispute settlement mechanisms, or modify or are excluded from coverage by the Chapter 30 dispute settlement provisions. There is no recourse to dispute settlement under Chapter 30 for the following chapters: sanitary and phytosanitary measures, technical barriers to trade, competition policy and consumer protection, small and medium-sized enterprises, innovation, development, trade and gender equality, animal welfare and antimicrobial resistance, good regulatory practice, and cooperation.67
2.57
Other partial exclusions or modifications are contained in the following chapters: trade remedies, cross-border trade in services, financial services, temporary entry for business persons, investment, labour, the environment, and transparency and anti-corruption.68

Matters of interest

Economic modelling

2.58
Modelling the potential economic impact of trade agreements has been a perennial issue in trade agreement inquiries. Examining Australian Government economic modelling of trade agreements was formerly a common feature of Committee inquiries. However, since 2016 the Australian Government has not publicly released any trade agreement modelling, and has generally justified that approach with the explanation that modelling is challenging and difficult to do accurately.69
2.59
On that point it is salient to note the advice provided by DFAT (see paragraph 2.10) in relation to the UK’s modelling that:
Our Office of the Chief Economist certainly reviewed that analysis and, on the basis of that analysis, found that the UK's methodology for constructing its model was robust and its findings on the potential impacts for the Australian economy should be considered reliable.70
2.60
In any case, it is apparent that some earlier modelling in relation to previously settled trade agreements was overly optimistic. Modelling of the Australia–US Free Trade Agreement in 2004 suggested the agreement would result in an increase in GDP of 0.4 per cent after 10 years. Subsequent analysis of the actual benefits of the agreement showed that no net increase in trade had occurred. More recent modelling of the Australia–China Free Trade Agreement showed that the agreement would grow the Australian dairy industry at 1.5 per cent a year, resulting in an increase of 600 on farm jobs a year.71 This has not turned out to be the case.72
2.61
However, the Committee learnt during this inquiry that DFAT does assess the outcomes of trade agreements over time:
We do it really for our internal use and to be drawn upon in committee hearings such as this, on particular agreements. That said, we are working closely with our Office of the Chief Economist to look at ways in which we can enhance the modelling of trade outcomes under our free trade agreements. That's an ongoing project; we haven't completed that, but it is an ongoing discussion within the department.73
2.62
Departmental officials also told the Committee that while DFAT does commission economic modelling on a case-by-case basis, ‘economic modelling of trade agreements is just one tool that we use or can use to assess the benefits of an agreement, including whether it's in the national interest’.74
2.63
Rather than examining the macro impact of trade agreements, ‘which might appear small’, DFAT stated ‘what is important is the sectoral impact’.75 However, DFAT acknowledged that while it was reasonably ‘straightforward’ to track trade in goods, modelling of services outcomes was ‘inherently more difficult’ and the focus should be on the certainty the AUKFTA provides to services exporters.76
2.64
As discussed above, the UK Department for International Trade undertook an impact assessment of the AUKFTA and found, assuming a 53 per cent increase in trade and subject to a high degree of uncertainty, by 2035 it could increase UK GDP by 0.08 per cent, and could increase Australia’s GDP by £2.3 billion when compared to projections of Australian GDP in 2035. As noted above, DFAT considered this modelling robust and reliable.77
2.65
The AUKFTA, in contrast to other recent trade agreements Australia has signed, contains provisions that might enable the Australian Government to assess how effective the agreement might be.
2.66
Collecting data on trade in goods between the UK and Australia is the subject of AUKFTA side letters. The side letters would improve data sharing on trade between the two countries with the following purposes:
recognising the value of trade data in accurately analysing the implementation of the AUKFTA
committing the Parties to exchange trade information on an annual basis to monitor trade between the two countries and enable calculation of the utilisation of the AUKFTA’s preferential trade arrangements.78

Consultation

2.67
While the Executive arm of government has the power to make treaties in Australia, part of this process usually involves public consultation.79 The extent of consultation during the negotiation process on trade agreements by the Australian Government has been a matter of contention for many years.80 In previous Committee inquiries, the Australian Government has contended that it has consulted in an open, timely, and extensive fashion, including with the business community, the farming sector, academics, the unions, and civil society groups.81
2.68
In relation to the AUKFTA consultation measures, DFAT stated:
… in the lead-up to commencement of negotiations and throughout negotiations, negotiators regularly engaged with representatives of the business sector, academia and civil society organisations to provide them with an opportunity to share their views and expectations of the A-UKFTA negotiations.82
2.69
Consultations, according to DFAT, began in September 2016, prior to the launch of negotiations in June 2020.83 In the NIA, DFAT identified 142 stakeholders engaged during the negotiation process including civil society groups, in addition to state and territory governments.84
2.70
It is not possible to form a judgement on the substance, depth, or influence of these consultations on the final outcome as no further information is provided. It is the case that some participants to the inquiry raised concerns about the quality of DFAT’s consultation. However, other participants, such as the Australian British Chamber of Commerce (ABCC) and the Australian-UK Chamber of Commerce hosted online stakeholder consultations with DFAT after negotiating rounds.85

Views of participants—Consultation process

2.71
Some participants were satisfied with the consultation process. Australian Grape and Wine told the Committee:
I can unequivocally say we had fantastic consultation from the department. They were very, very good. They talked to us. Obviously, there were regular formal consultation processes, but they were very open to informal discussions. They spent a lot of time talking to me during the process. I don't think they could have done a better job.86
2.72
Similarly, the ABCC stated:
I think the broad view of the membership would be that there was an appropriate amount of consultation, and that the views of a broad range of people in the community were taken into account … I think the overall sentiment is that the process was well conducted and that they were happy with the outcome.87
2.73
However, others expressed significant dissatisfaction with the consultation process. The Australian Fair Trade and Investment Network (AFTINET) stated that while there were consultations with business and community organisations (including itself) during negotiations, these negotiations occurred without access to draft texts, and the final text was not published until the AUKFTA was signed.88
2.74
The Construction, Forestry, Maritime, Mining and Energy Union (Construction and General Division) (CFMMEU) stated DFAT had failed to genuinely consult with any trade union organisation over the content of the AUKFTA. Where the Australian Council of Trade Unions (ACTU) was involved, the CFMMEU stated the consultations were briefings rather than genuine consultations.89
2.75
The ACTU continued to hold deep concerns about the consultation process:
… negotiated behind closed doors, with no opportunity for trade unions and broader civil society to have genuine input into the negotiations, and ultimately ratified with very little public scrutiny. This stands in contrast to the much more open approach taken by the UK Government, which seeks the views of unions and other key stakeholders to inform the negotiation process before it begins, and as negotiations progress.90
2.76
The ACTU, which was listed as being consulted in the NIA stated they were ‘not genuinely consulted’ but instead:
… occasionally invited to ‘stakeholder consultations’ held at the end of each negotiating round, however these were short, high-level briefings with a range of other stakeholder groups, rather than a genuine consultation about the potential impact of the UK FTA [free trade agreement] on workers.91
2.77
During the public hearings, DFAT maintained that consultation had been thorough and involved a public platform for public submissions; extensive one-on-one engagement with various stakeholders; briefings following each negotiation round; more formal biannual briefings; engagement with peak bodies as a group; and the Ministerial Advisory Council on FTA negotiations (which met on five occasions).92 DFAT stated:
The membership for all of these bodies is varied. It includes specific sectoral stakeholders, peak bodies, civil society and unions. For example, I had a number of discussions with AFTINET throughout the course of the negotiations. We have quite a consultative and responsive approach with AFTINET. When issues are raised, we respond to AFTINET. Similarly, we had several engagements with union representatives, which were usually brought under the umbrella of the ACTU, but I also spoke directly to representatives from the AWU [Australian Workers’ Union]. Unions and AFTINET are also part of these formal mechanisms for peak body bilateral engagement.93
2.78
During the hearing on 26 September 2022, the issue of consultation with the Maritime Union of Australia (MUA) in relation to a concern the union had with the treatment of cabotage was discussed. In relation to consultation, the Committee heard discussions with the MUA did not commence until after the AUKFTA had been signed:
The first meeting was on 22 December 2021, when we went through the concerns that they'd raised and sought to answer and resolve those. Then there was a follow-up meeting on 10 March 2022 to also work through their concerns. So there were those two specific meetings, where the sole purpose of the meeting was to work through the commentary and concerns of the MUA.94
2.79
In evidence to the inquiry, however, DFAT advised the Committee that ‘[c]onsultations with the MUA occurred under the auspices of the ACTU and individually with the MUA’ in May 2020 (phone call), March 2021 (phone call), November 2021 (videoconference), December 2021 (phone call, emails and videoconference), and March 2022 (videoconference).95 The AUKFTA was signed on 17 December 2021.
2.80
The Committee also heard evidence about consultation with Indigenous organisations. DFAT stated:
… we consulted with a number of Indigenous business stakeholders, including Supply Nation— in fact, Supply Nation was a member of the ministerial advisory council—as well as IgNITE, which does have a very close relationship with DFAT. We did discuss specific interests from a business and trade perspective.96
2.81
During the hearing on 26 September 2022, Senator Dorinda Cox advised DFAT representatives that:
… three other stakeholders who were watching live last week … now want to engage in this process, because they didn't know it was being undertaken.97

  • 1
    Free Trade Agreement between Australia and the United Kingdom of Great Britain and Northern Ireland (Adelaide, 17 December 2021 and London, 16 December 2021) [2022] ATNIF 3, hereafter AUKFTA.
  • 2
    Australian Bureau of Statistics, ‘International Investment Position, Australia: Supplementary Statistics - Supplementary statistics on Australia's international investment position by counterpart countries’, May 2022, www.abs.gov.au/statistics/economy/international-trade/international-investment-position-australia-supplementary-statistics/latest-release, viewed 28 October 2022.
  • 3
    Department of Foreign Affairs and Trade (DFAT), ‘Statistics on who invests in Australia’, www.dfat.gov.au/trade/trade-and-investment-data-information-and-publications/foreign-investment-statistics/statistics-on-who-invests-in-australia#:~:text=The%20United%20States%20 and%20United,per%20cent%20of%20the%20total.,viewed 28 August 2022.
  • 4
    DFAT, ‘Statistics on who invests in Australia’, www.dfat.gov.au/trade/trade-and-investment-data-information-and-publications/foreign-investment-statistics/statistics-on-who-invests-in-australia#:~:text=The%20United%20States%20and%20 United,per%20cent%20of%20the%20total.,
    viewed 28 August 2022.
  • 5
    United Kingdom (UK) Office for National Statistics, ‘Foreign direct investment involving UK companies (directional): outward – Dataset’, Table 3.1, 3 February 2022, www.ons.gov.uk/
    businessindustryandtrade/business/businessinnovation/datasets/foreigndirectinvestmentinvolvingukcompaniesoutwardtables, viewed 30 June 2022.
  • 6
    National Interest Analysis [2022] ATNIA 3 with attachments on consultation, Regulation Impact Statement and benefits for Australia, Free Trade Agreement between Australia and the United Kingdom of Great Britain and Northern Ireland (Adelaide, 17 December 2021 and London, 16 December 2021) [2022] ATNIF 3, hereafter NIA, attachment II – Regulation Impact Statement, pages 11-13.
  • 7
    Information and communications technology.
  • 8
    NIA, attachment II – Regulation Impact Statement, page 10.
  • 9
    NIA, attachment II – Regulation Impact Statement, page 17.
  • 10
    Department for International Trade, Impact assessment of the Free Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and Australia, May 2022.
  • 11
    Department for International Trade, Impact assessment of the Free Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and Australia, May 2022, page 5.
  • 12
    Department for International Trade, Impact assessment of the Free Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and Australia, May 2022, page 5.
  • 13
    Department for International Trade, Impact assessment of the Free Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and Australia, May 2022, page 34.
  • 14
    Ms Elisabeth Bowes, First Assistant Secretary, Free Trade Agreements and Stakeholder Engagement Division and Chief Negotiator, DFAT, Committee Hansard, Canberra, 26 September 2022, page 2.
  • 15
    Department for International Trade, Impact assessment of the Free Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and Australia, May 2022, page 11.
  • 16
    House of Commons International Trade Committee, UK trade negotiations: Agreement with Australia, 6 July 2022, page 7.
  • 17
    DFAT, ‘Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)’, www.dfat.gov.au/trade/agreements/in-force/cptpp/comprehensive-and-progressive-agreement-for-trans-pacific-partnership, viewed 3 September 2022.
  • 18
    NIA, attachment III – Benefits for Australia, pages [1]-[6].
  • 19
    Department for International Trade, Impact assessment of the Free Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and Australia, May 2022, pages 4, 15, 17-18, 27.
  • 20
    Department for International Trade, Impact assessment of the Free Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and Australia, May 2022, page 12.
  • 21
    AUKFTA, article 1.1.
  • 22
    AUKFTA, article 1.2(1). Annexed to the WTO Agreement are a number of World Trade Organization (WTO) agreements (see footnote 37).
  • 23
    AUKFTA, article 1.4.
  • 24
    NIA, paragraph 62.
  • 25
    AUKFTA, article 32.2.
  • 26
    AUKFTA, article 32.7.
  • 27
    AUKFTA, articles 32.6(1)-(2).
  • 28
    AUKFTA, article 32.8(1).
  • 29
    AUKFTA, article 32.4(1).
  • 30
    AUKFTA, article 1.4.
  • 31
    AUKFTA, article 32.4(2).
  • 32
    N Shaxson, ‘Tackling Tax Havens’ Finance and Development, Volume 56, Number 3, 2019, page 7.
  • 33
    The Rt Hon Anne-Marie Trevelyan MP, Secretary of State for International Trade, Letter of understanding on extending the provisions of the AUKFTA relating to trade in services and investment to Gibraltar to the Hon Dan Tehan MP, Minister for Trade, Tourism and Investment, 16 December 2021; The Hon Dan Tehan MP, Minister for Trade, Tourism and Investment, Letter of understanding on extending the provisions of the AUKFTA relating to trade in services and investment to Gibraltar to the Rt Hon Anne-Marie Trevelyan MP, Secretary of State for International Trade, 17 December 2021.
    The Rt Hon Anne-Marie Trevelyan MP, Secretary of State for International Trade, Letter of understanding on extending the provisions of the AUKFTA relating to trade in services and investment to the Bailiwicks of Guernsey and Jersey and the Isle of Man to the Hon Dan Tehan MP, Minister for Trade, Tourism and Investment, 16 December 2021; The Hon Dan Tehan MP, Minister for Trade, Tourism and Investment, Letter of understanding on extending the provisions of the AUKFTA relating to trade in services and investment to the Bailiwicks of Guernsey and Jersey and the Isle of Man to the Rt Hon Anne-Marie Trevelyan MP, Secretary of State for International Trade, 17 December 2021.
  • 34
    AUKFTA, article 30.2.
  • 35
    AUKFTA, article 30.3.
  • 36
    AUKFTA, article 30.4(1).
  • 37
    AUKFTA, article 30.4(3). Other agreements are annexed to the WTO Agreement including the General Agreement on Tariffs and Trade 1994, General Agreement on Trade in Services, Agreement on Safeguards, Agreement on Subsidies and Countervailing Measures, Agreement on the Application of Sanitary and Phytosanitary Measures, Agreement on Technical Barriers to Trade, and Agreement on Trade Facilitation.
  • 38
    AUKFTA, article 30.5(2).
  • 39
    Good offices consists of a third party providing logistical support to help parties negotiate in a productive atmosphere. Conciliation involves the direct participation of an outside person in the discussion and negotiations between the parties. Mediation involves the mediator participating in and contributing to the discussions and negotiations, and possibly proposing a solution to the parties. See: WTO, ‘Dispute Settlement without recourse to Panels and the Appellate Body’, www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c8s1p2_e.htm, viewed 22 June 2022.
  • 40
    AUKFTA, articles 30.20(1)-(2).
  • 41
    AUKFTA, articles 30.7(1)-(3), (7).
  • 42
    AUKFTA, articles 30.7(5)-(6).
  • 43
    AUKFTA, articles 30.8(1), (3).
  • 44
    AUKFTA, articles 30.9(2), 30.10.
  • 45
    If the complaining Party fails to appoint its panellist, the dispute settlement procedure lapses. AUKFTA, article 30.9(5).
  • 46
    If the Director-General is a national of one of the Parties, arrangements are made for another WTO officer to make the decision. See: AUKFTA, article 30.9(7). This is a key area of difference with the dispute settlement provision in the CPTPP, which has a more extensive procedure for the selection of panellists and in cases of disagreement on panellists, though the principles are largely the same. See, CPTPP, articles 28.9, 28.11.
  • 47
    AUKFTA, articles 30.9(3)-(9), 30.10(3).
  • 48
    AUKFTA, articles 30.9(10)-(11).
  • 49
    AUKFTA, article 30.10.
  • 50
    AUKFTA, articles 30.11(1)-(4).
  • 51
    AUKFTA, article 30.11(6).
  • 52
    AUKFTA, articles 30.11(9)-(10).
  • 53
    AUKFTA, article 30.11(11).
  • 54
    AUKFTA, article 30.11(5).
  • 55
    AUKFTA, article 30.13(1).
  • 56
    AUKFTA, article 30.13(2).
  • 57
    AUKFTA, articles 30.18(1)-(5).
  • 58
    AUKFTA, articles 30.12(1)-(4).
  • 59
    AUKFTA, article 30.12(5).
  • 60
    AUKFTA, article 30.14(1).
  • 61
    AUKFTA, articles 30.14(2)-(5).
  • 62
    AUKFTA, articles 30.15(1)-(7).
  • 63
    AUKFTA, article 30.16(1).
  • 64
    AUKFTA, article 30.16(6).
  • 65
    AUKFTA, articles 30.16(9)-(11).
  • 66
    AUKFTA, articles 30.17(1)-(7).
  • 67
    AUKFTA, articles 6.18, 7.14, 17.8, 19.6, 20.7, 23.4, 24.4, 25.3, 26.13, 27.6.
  • 68
    AUKFTA, articles 3.13, 8.2(7), 9.23, 9C.9, 11.7, 13.2(7), 21.16, 22.26, 28.13, 28.15; Annex 13C.
  • 69
    Joint Standing Committee on Treaties (JSCOT), Report 165: Trans-Pacific Partnership Agreement, November 2016, paragraph 5.38.
  • 70
    Ms Elisabeth Bowes, DFAT, Committee Hansard, Canberra, 26 September 2022, page 2.
  • 71
    JSCOT, Inquiry into the Australia-China Free Trade Agreement, Mr David Losberg, Senior Policy Manager, Australian Dairy Farmers, Committee Hansard, Canberra, 17 August 2015, page 9.
  • 72
    JSCOT, Report 165: Trans-Pacific Partnership Agreement, November 2016, paragraphs 5.35-5.37.
  • 73
    Ms Elisabeth Bowes, DFAT, Committee Hansard, Canberra, 26 September 2022, page 2.
  • 74
    Ms Elisabeth Bowes, DFAT, Committee Hansard, Canberra, 20 September 2022, page 3.
  • 75
    Ms Elisabeth Bowes, DFAT, Committee Hansard, Canberra, 20 September 2022, page 3.
  • 76
    Ms Elisabeth Bowes, DFAT, Committee Hansard, Canberra, 26 September 2022, page 2; Ms Elisabeth Bowes, DFAT, Committee Hansard, Canberra, 20 September 2022, page 3.
  • 77
    Ms Elisabeth Bowes, DFAT, Committee Hansard, Canberra, 20 September 2022, page 3.
  • 78
    The Rt Hon Anne-Marie Trevelyan MP, Secretary of State for International Trade, Letter of understanding on data sharing to the Hon Dan Tehan MP, Minister for Trade, Tourism and Investment, 16 December 2021; The Hon Dan Tehan MP, Minister for Trade, Tourism and Investment, Letter of understanding on data sharing to the Rt Hon Anne-Marie Trevelyan MP, Secretary of State for International Trade, 17 December 2021.
  • 79
    JSCOT, Report 165: Trans-Pacific Partnership, November 2016, paragraphs 5.5-5.6.
  • 80
    JSCOT, Report 165: Trans-Pacific Partnership, November 2016, paragraphs 5.8-5.9.
  • 81
    For the Committee’s previous consideration of consultation, see: JSCOT, Report 165: Trans-Pacific Partnership, November 2016, paragraphs 5.7-5.9; JSCOT, Inquiry into the Trans-Pacific Partnership (TPP), Ms Elizabeth Ward, TPP Chief Negotiator, Office of Trade Negotiations, DFAT, Committee Hansard, Canberra, 7 November 2016, page 20.
  • 82
    NIA, paragraph 68.
  • 83
    NIA, paragraph 67.
  • 84
    NIA, paragraph 76.
  • 85
    NIA, paragraph 68.
  • 86
    Mr Anthony Battaglene, Chief Executive Officer, Australian Grape and Wine, Committee Hansard, Canberra, 20 September 2022, page 38.
  • 87
    Mr Andrew Low, Chairman, Australian British Chamber of Commerce, Committee Hansard, Canberra, 20 September 2022, page 62.
  • 88
    Australian Fair Trade and Investment Network, Submission 6, page 8.
  • 89
    Construction, Forestry, Maritime, Mining and Energy Union (Construction and General Division), Submission 17, pages 2-3.
  • 90
    Australian Council of Trade Unions (ACTU), Submission 27, page 5.
  • 91
    ACTU, Submission 27, page 5.
  • 92
    Ms Elisabeth Bowes, DFAT, Committee Hansard, Canberra, 20 September 2022, page 4.
  • 93
    Ms Elisabeth Bowes, DFAT, Committee Hansard, Canberra, 20 September 2022, page 4.
  • 94
    Mr Andrew Johnson, Assistant Secretary, Maritime and Shipping Branch, Department of Infrastructure, Transport, Regional Development, Communications and the Arts, Committee Hansard, Canberra, 26 September 2022, page 4.
  • 95
    Ms Elisabeth Bowes, DFAT, Committee Hansard, Canberra, 26 September 2022, page 13; DFAT, Submission 35, page [12].
  • 96
    Ms Elisabeth Bowes, DFAT, Committee Hansard, Canberra, 20 September 2022, page 5.
  • 97
    Senator Dorinda Cox, Committee Hansard, Canberra, 26 September 2022, page 11.

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