Australia’s Free Trade Agreements: The 2022 round-up, and the opportunities in 2023

Amel Saeed, Samy Mansour, Danielle Crowe, Mariam Azzo, David Landy, Zac Chami and Andrew Hay
12 Dec 2022
Time to read: 3 minutes

Businesses and investors looking to take advantage of the new opportunities provided by Australia's current and future free trade agreements should consider their own next steps now.

With the object of boosting the economy through increased trade and investment, Australia has continued to develop its network of free trade agreements through 2022, and has significant plans for 2023, bringing more opportunities for business.

The Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA)

Leaders of the Association of Southeast Asian Nations (ASEAN), Australia and New Zealand recently announced the substantial conclusion of negotiations to update the AANZFTA. While specific details of the upgrade have not yet been released, as negotiations are in-part ongoing, the Australian Minister for Trade and Tourism has announced that the upgrade aims to:

  • accelerate supply chain integration and resilience;
  • ensure the smooth flow of essential goods during periods of crises;
  • deepen services and investment liberalisation; and
  • support electronic commerce and digital transformation.

Provisions on electronic commerce, competition, customs procedures and trade facilitation, trade in goods, rules of origin, trade in services and investment will also be updated. It is expected that the Second Protocol to Amend AANZFTA will be signed in 2023. Watch this space.

Regional Comprehensive Economic Partnership Agreement (RCEP)

The RCEP is a regional free trade agreement which builds upon Australia’s existing agreements with 14 other Indo-Pacific countries. It entered into force on 1 January 2022 and will be the world’s largest free trade agreement by members’ GDP when successfully ratified by all parties.

The RCEP delivers greater integration of value chains, more common rules of origin for businesses trading with multiple RCEP parties, locks in market access, addresses non-tariff barriers and improves on positions in existing free trade agreements.

Australia-India Economic Cooperation and Trade Agreement (AI-ECTA)

After more than a decade of negotiations, the AI-ECTA was signed in April this year. The Australian Government has been working through the processes necessary to implement the agreement, and legislation to this effect successfully passed Parliament in late November. India has also completed its domestic process to ratify the AI-ECTA. The AI-ECTA will enter into force on 29 December 2022.

India presents a number of opportunities, particularly for Australian exporters, as the world’s fastest growing large economy. Australia’s aim is for India to become one of its top three export markets by 2035 and to similarly increase India-bound Australian investment. AI-ECTA will eliminate tariffs on 85% of Australian exports and progressively reduce tariffs on a further 5%. This will save Australian exporters around $2 billion per year. Consumers and business are set to save around $500 million per year in tariffs on imports. Improved mobility for professionals and access to the Indian market for Australian companies are among the other upshots.

AI-ECTA is an interim agreement and negotiations are in progress for a full free trade agreement between these parties.

Australia-United Kingdom Free Trade Agreement (A-UK FTA)

The A-UK FTA was signed on 17 December 2021 and will enter into force 30 days (or any other mutually agreed period) after both Australia and the UK confirm in writing that they have completed their respective domestic requirements. In a step towards this, the Australian Parliament passed the required legislation to implement the agreement in late November this year. The UK Government is still in the process of enacting enabling legislation required as part of its own ratification process. The Australian Minister for Trade and Tourism has recently announced he will encourage the UK to finalise their domestic requirements so that the A-UK FTA can enter into force in early 2023.

The A-UK FTA will eliminate tariffs on over 99% of Australian goods exported to the UK and reduce other trade barriers. It will regulate digital trade, make it easier for Australian companies and individuals to operate in the UK market and raise the investment screening threshold to match that given to other key Australian investment partners with whom Australia has a free trade agreement.

Key takeaway

2023 will see the continued negotiation of the Australia-European Union Free Trade Agreement (A-EU FTA) and a more comprehensive version of the AI-ECTA, the Australia-India Comprehensive Economic Cooperation and Trade Agreement. There are indications that the A-EU FTA, in particular, may be finalised in the first half of 2023.

The Department of Foreign Affairs and Trade (DFAT) is also seeking submissions in relation to potential outcomes of negotiating a free trade agreement with the Gulf Cooperation Council (GCC) and a comprehensive economic partnership with the United Arab Emirates. Information on both agreements (including how to make submissions) can be found on the DFAT website here and here respectively. The economic relationship between Australia and members of the GCC including the United Arab Emirates is significant. Two-way trade between Australia and the GCC in 2021 equated to 11.1 billion dollars. The United Arab Emirates, in particular, is our 19th largest export market and largest trade and investment partner in the Middle East. These potential agreements reflect Australia’s interest in furthering these relationships.

Businesses and investors looking to take advantage of the new opportunities provided by Australia's free trade agreements (including the potential free trade agreements referenced above) should consider their own next steps, whether that be investigating channels to market, seeking to understand the specific market conditions for their products or services and/or taking steps to establish a presence in free trade agreement countries.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.