- AUS-UAE Promotion and Protection of Investments
Agreement between the United Arab Emirates and Australia on the Promotion and Protection of Investments
3.1The Agreement between the United Arab Emirates and Australia on the Promotion and Protection of Investments was referred to the Committee on 18 November 2024.
3.2The Committee received four submissions and held two public hearings, in conjunction with the Comprehensive Economic Partnership Agreement between Australia and the United Arab Emirates (CEPA), on 30 January 2025 and 5 February 2025. A list of submissions can be found at Appendix A. Transcripts of evidence from public hearings can be accessed through the Committee’s website.
Overview and background
3.3The Agreement between the United Arab Emirates and Australia on the Promotion and Protection of Investments (UAE Investments Agreement) was signed alongside CEPA and accompanying documents. The purpose of the UAE Investments Agreement is to provide a stand-alone treaty for the inclusion of investment provisions, which was requested by the United Arab Emirates (UAE) and is in accordance with their usual practice.
3.4The UAE Investments Agreement includes investment protections and non-discrimination provisions which provide certainty to Australian and UAE investors. It includes reservations for non-conforming measures, provides policy space for the Treasurer, and establishes a Council on Investment to promote and enhance investment relationships between Australia and the UAE.
Justifications
3.5As noted in the previous chapter, the UAE is Australia’s largest trade and investment partner in the Middle East. In 2023 it was Australia’s 30th largest investor of direct, portfolio, financially derivative, and other investments.
3.6The UAE Investments Agreement is an important part of the CEPA package. It is expected to create valuable opportunities for trade and investment outcomes, expand and diversify Australia’s trade and investment opportunities, and strengthen engagement in the Middle East.
3.7The UAE currently has significant investments in Australia’s priority sectors such as renewable energy, agribusiness, tourism, health, and aged care through its US$1.4 trillion Sovereign Wealth Fund. This agreement provides significant scope to expand this bilateral investment partnership.
3.8The UAE Investments Agreement will do this through:
- establishing the Council on Investment to facilitate political and technical exchanges;
- supporting the Government’s right to regulate in the public interest; and
- encouraging meaningful dialogue with First Nations people and investors.
- In the interests of preserving significant policy space, the UAE Investments Agreement will not:
- prevent Australia from being able to enact measures to maintain or restore international peace and security, or protect its own security interests;
- include investor-state dispute settlement (ISDS) provisions; or
- alter any part of the Foreign Investor Framework or subject either party to dispute resolutions pursuant to the Framework.
Obligations
3.10The UAE Investments Agreement contains non-discrimination provisions that apply to an investment once it is established in Australia or in the UAE. A Party must treat another Parties’ investor no less favourably, nor should it discriminate between its own investors, or conduct unlawful expropriation. Further, each Party retains the right to deny the benefits of the UAE Investments Agreement to an investor and may request information from investors in relation to their investments.
3.11Through the UAE Investments Agreement, investors are encouraged to incorporate internationally recognised standards of practice, guidelines and principles of corporate social responsibility. Investors are also encouraged to consult with First Nations people and First Nations investors.
3.12The Council on Investment is to be co-chaired for Australia by the Minister for Trade and Tourism and Treasurer, and for the UAE by the Finance Minister and Investment Minister. The Council will further the investment relationship and implement any outcomes from the Ministerial level meetings.
3.13A dispute resolution mechanism is included in the UAE Investments Agreement which outlines exceptions familiar to Australia’s free trade agreements.
Consultation
3.14Consultation for the UAE Investments Agreement was conducted in the context of the broader CEPA package and detailed in the previous chapter.
Implementation and costs
3.15No new funding is required for this UAE Investments Agreement, and no regulatory burden will be applied to businesses, communities, or individuals.
Withdrawal
3.16The UAE Investments Agreement shall remain in force for 10 years. It shall continue to be in force unless replaced by the mutual consent of the Parties, or terminated through a process whereby after 10 years a Party gives one year’s advance written notice of termination to the other Party through diplomatic channels.
Future treaty action
3.17The UAE Investments Agreement can be amended with the written agreement of both Parties. Amendments shall enter force 60 days after the date on which both Parties exchange notifications, which must be made in writing and must confirm that all domestic requirements have been completed.
Issues
3.18Some evidence provided to the Committee raised concerns about labour rights and breaches of human rights in the UAE. These same concerns were raised regarding the CEPA. As the UAE Investments Agreement is an integral part of the CEPA package, these concerns are addressed in the previous chapter. Other issues raised through evidence that apply to both agreements are also covered in the previous chapter.
3.19Notwithstanding, evidence received expressly about the UAE Investments Agreement in submissions supported several of its key features, such as the exclusion of ISDS provisions. According to the Department of Foreign Affairs and Trade, ISDS ‘provides foreign investors, including Australian investors overseas, with the right to access an international tribunal to resolve investment disputes.’
3.20In their submission to the inquiry, the Australian Fair Trade and Investment Network (AFTINET) argued that ISDS ‘enables a single international investor to claim billions in compensation from governments’, if it can be proven that a change in law or policy, or a lack of consultation about a change, will reduce future profits.
3.21AFTINET’s submission provided examples of where Australia has previously experienced ISDS claims, demonstrating the negative impact such claims can have on investment. The submission also provided support for Australia’s move toward excluding ISDS in new agreements and reviewing it in existing agreements.
3.22The Australia UAE Business Council (the Council) stated that the exclusion of the ISDS ‘reflects stakeholder feedback and reinforces Australia’s commitment to maintaining policy autonomy.’
3.23The Council also supported establishment of the Council on Investment, and the UAE Investments Agreement’s assurances of fair treatment, protections against unlawful expropriation, and non-discrimination. It stated these assurances ‘provide a stable and transparent investment environment, encouraging the growth of sectors critical to both economies.’
Conclusion
3.24The Committee recognises that having strong trade and investment relations with the Middle East is in the national interest. The UAE is the Middle East’s third largest economy, one of the wealthiest countries in the region, and Australia’s largest trade and investment partner in the Middle East.
3.25By ratifying this UAE Investments Agreement as part of the CEPA package, the bilateral investment relations between both Australia and the UAE will continue to grow rapidly. It is expected that this package will provide ongoing benefits to Australian businesses and investors. Evidence received throughout this inquiry testified to the importance of fostering this relationship and of the benefits to both Parties.
3.26While the Committee notes concerns raised in evidence to the UAE Investments Agreement, and particularly in relation to the CEPA, the Committee also notes ongoing work by the UAE to improve human rights and strengthen labour rights, and the importance of Australia maintaining an ongoing dialogue with the UAE regarding these matters.
3.27The Committee supports the Agreement between the United Arab Emirates and Australia on the Promotion and Protection of Investments and recommends that binding treaty action be taken.