Analysis of the UK-Australia trade Agreement in Principle

Posted on June 17, 2021
Scott Morrison Source Facebook

While we are pleased to see a bit more detail on the UK-Australia trade deal in the Agreement in Principle (agreed on 15 June 2021), there is still a lot to be worked out which will influence the impact of the deal.

Here is an initial analysis of what we’ve learned so far:

Investment

We've been raising Investor-State Dispute Settlement (ISDS) as a major concern and are pleased to see it doesn't feature in the Agreement in Princple. The clause has been used by corporations to challenge important environmental, social and public health regulations.

However, we need to see what the UK does under the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). It is possible that both countries are covered by ISDS in the CPTPP, and that they are therefore thinking it will just be simpler to leave ISDS out of UK-Australia.

Here some key points on investment:

  • Devolved administrations will need to pay attention. A negative list is being used, which means that the only areas excluded are those that are explicitly listed. There is a commitment to consultation with regions, which is likely to be important.
  • Many of the same provisions as in other investment chapters appear in UK-Australia. E.g. Most favoured nation, means that Australia can ‘import’ provisions from other UK deals if it thinks they are more generous. This makes it very hard to predict the impact of the chapter.

Environment and climate

We expect any new UK trade deal to be aligned with its climate targets. Unfortunately this new UK-Australia deal seem to fail that test and is fundamentally at odds with the UK’s commitment to achieve net-zero emissions by 2050.

Here some key points on the environment and climate:

  • As with most other trade deals, we mostly see ‘best endeavour’ language, commitments to ‘recognise/ strive to/ corporate on/ emphasise’ various environmental agreements. We feel this is a missed opportunity for the UK to show leadership on climate change.
  • The environment chapter is based on CPTPP.
  • The main sense in which anything is binding is if it is trade-distorting, which is notoriously difficult to prove.
  • Language on fisheries and conservation is more ambitious but without proper enforcement its potential impact is undermined.

Digital and E-commerce

We are concerned that moving ahead with e-commerce negotiations in trade deals risks closing down wider debate about the way we govern the internet. Debates about internet regulation are still in their infancy and there are huge implications for personal privacy, equity, development etc.

Here some key points on digital and e-commerce:

  • These are relatively new in FTAs - an agreement is yet to be finalised at the WTO.
  • The UK sees these as a priority area and is pushing for more comprehensive coverage, e.g. in the Japan deal.
  • The inclusion of commitments on preventing forced tech transfer could be problematic because it means governments can’t see how tech works and address issues such as racial bias. A good example of this was Volkswagen gaming the emissions testing system.


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Image: Scott Morrison, Australian Prime Minister. Source: Facebook