House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Minister for Citizenship, Customs and Multicultural Affairs, the Honourable Julian Hill MP)

GENERAL OUTLINE

The purpose of the Customs Amendment (Australia-United Arab Emirates Comprehensive Economic Partnership Agreement Implementation) Bill 2025 (the Bill) is to amend the Customs Act 1901 (Customs Act) to introduce new rules of origin to determine if goods imported from the United Arab Emirates (UAE) into Australia are eligible for preferential tariff treatment under the Comprehensive Economic Partnership Agreement between Australia and the United Arab Emirates (the Agreement) and related matters.

The amendments also gives effect to the requirements for verifying claims for preferential tariff treatment (in accordance with the Agreement) of goods exported from Australia to the UAE.

Complementary amendments will also be made to the Customs Tariff Act 1995 (the Customs Tariff Act) by the Customs Tariff Amendment (Australia-United Arab Emirates Comprehensive Economic Partnership Agreement Implementation) Bill 2025 to set out the preferential tariff treatment applicable to goods that are determined to be eligible goods in accordance with the Agreement, known as originating goods.

Together the amendments contained in both Bills give effect to the customs commitment and agreed customs outcome set out in the Agreement.

The amendments contained in this Bill will be operative on the later of the day on which this Act receives the Royal Assent and the day on which the Agreement enters into force for Australia.

BACKGROUND

Australia and the UAE announced an intention to pursue the Agreement in a joint Ministerial statement issued on 17 March 2022. The start of negotiations was officially announced by the Minister for Trade and Tourism on 13 December 2023. Conclusion of the Agreement negotiations was announced by the Minister for Trade and Tourism on 17 September 2024. In addition to the Agreement and its five side letters, a standalone agreement between the UAE and Australia on the Promotion and Protection of Investments, and five memoranda of understanding relating to investment were also concluded as part of the negotiations.

The Agreement is Australia's first free trade agreement with a nation of the Middle East, and delivers on the Australian Government's commitment to opening new opportunities that will allow Australia to diversify our trade. Through the Agreement, Australian exporters will benefit from the elimination of tariffs on over 99 per cent of Australian goods exports to the UAE by value once fully implemented, estimated to increase Australian exports by around $678 million per year.

The Agreement is a modern and comprehensive free trade agreement delivering outcomes for Australian businesses in trade in goods, trade in services, investment, economic and technical cooperation, digital trade, intellectual property, government procurement, competition and consumer protection, small and medium sized enterprises, and includes outcomes for First Nations and Indigenous peoples and businesses in a standalone chapter for the first time in an Australian free trade agreement. The Agreement also affirms Australia's commitments under multilateral environmental agreements, contains provisions aimed at advancing women's economic empowerment in trade and investment, and supports a transparent and predictable regulatory environment for businesses.

FINANCIAL IMPACT STATEMENT

It is estimated that the implementation of the Agreement will reduce customs duty collections by $16 million Australian dollars in 2025-26, increasing to $23 million Australian dollars per year by 2029-30, when all tariff reductions under the Agreement are fully implemented.

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

A Statement of Compatibility with Human Rights in respect of the amendments contained in the Bill is at Attachment A . The Statement assesses the amendments to be compatible with Australia's human rights obligations.

IMPACT ANALYSIS

An Impact Assessment in respect of all amendments to give effect to the new rules of origin requirements in accordance with the Agreement and related preferential rates of custom duty is at Attachment B .

NOTES ON CLAUSES

Clause 1 Short title

1. This clause provides for the Customs Amendment (Australia - United Arab Emirates Comprehensive Economic Partnership Agreement Implementation) Bill 2025 (the Bill), when enacted, to be cited as the Customs Amendment (Australia-United Arab Emirates Comprehensive Economic Partnership Agreement Implementation) Act 2025.

Clause 2 Commencement

2. This clause sets out, in a table, the day on which the provisions of the Bill, when enacted, will commence.

3. Table item 1 provides for clauses 1 to 3 and anything in the Bill not elsewhere covered by the table to commence on the day the Bill receives the Royal Assent.

4. Table item 2 provides for Schedule 1 of the Bill to commence on the later of the day the Bill receives the Royal Assent, and the day the Comprehensive Economic Partnership Agreement between Australia and the United Arab Emirates (Agreement), done at Canberra on 6 November 2024, enters into force for Australia.

5. Table item 2 also provides that the Minister must announce the day on which the Agreement enters into force for Australia by notifiable instrument. The announcement made in the notifiable instrument does not lead to the commencement of Schedule 1. It merely announces the commencement of the Agreement for public awareness. This instrument is declared by the Bill to be a notifiable instrument for the purposes of the Legislation Act 2003 (Legislation Act), which ensures that it is made publicly available on the Federal Register of Legislation. Notifiable instruments are governed by the Legislation Act.

6. Schedule 1 does not commence at all if the Agreement does not enter into force for Australia. Under Article 26.4 of Chapter 26 of the Agreement, the Agreement shall enter into force 60 days after the date on which the Parties exchange written notifications through diplomatic channels, confirming that they have completed their respective domestic requirements necessary for the entry into force of this Agreement, or on such other date as the Parties may agree.

Clause 3 Schedules

7. This clause enables the Schedule to the Bill, when enacted, to amend or repeal provisions of legislation specified in that Schedule in accordance with the applicable items. The Customs Act 1901 (the Customs Act) is being amended by the Bill.

Schedule 1–Amendments

Part 1–UAE originating goods

Customs Act 1901

Introductory Comments

8. On 6 November 2024, the Minister for Trade and Tourism, Senator the Hon Don Farrell, and his counterpart from the United Arab Emirates (UAE), Minister for Foreign Trade, His Excellency Dr. Thani bin Ahmed Al Zeyoudi, signed the Agreement.

9. The Agreement, on entry into force for Australia, provides for new rules of origin to determine whether goods imported into Australia from the UAE are originating goods (referred to as 'UAE originating goods'), and the preferential rates of customs duty applicable to those goods. 'UAE originating goods', in accordance with the Agreement, are those goods that satisfy the new rules of origin requirements in new Division 1Q of Part VIII of the Customs Act inserted by the Bill.

Item 1 Subparagraph 105B(3)(b)(ii)

10. Subsection 105B(1) of the Customs Act sets out circumstances where the liability to pay import duty on excise-equivalent goods is wholly or partly extinguished. 'Excise-equivalent goods' is defined in section 9 of the Customs Regulation 2015 to mean the goods prescribed under clause 1 of Schedule 1 to that Regulation.

11. However, subsection 105B(3) of the Customs Act provides that the liability to pay import duty will not be wholly or partly extinguished if the excise-equivalent goods are classified to subheading 2207.20.10 (denatured ethanol) or 3826.00.10 (biodiesel) of Schedule 3 to the Customs Tariff Act, or an item in the table in Schedule 4A, 5, 6, 6A, 7, 8, 8A, 8B, 9, 9A, 10, 11, 12, 13,14 or 15 of that Act that relates to one of those subheadings.

12. As part of the implementation of the Agreement, a separate Customs Tariff Amendment (Australia-United Arab Emirates Comprehensive Economic Partnership Agreement Implementation) Bill 2025 (Customs Tariff Amendment Bill) will insert a new Schedule 16 into the Customs Tariff Act 1995 (Customs Tariff Act). New Schedule 16 will provide for excise-equivalent rates of duty on certain alcohol, tobacco, and petroleum fuel products in accordance with the Agreement. It will also set out the phased reductions of customs duty on various other goods that are specified under the Agreement.

13. This item amends subparagraph 105B(3)(b)(ii) to omit the expression "or 15" and substitutes it with the expression ", 15 or 16".

14. This amendment is a consequential amendment that accommodates the addition of new Schedule 16 to the Customs Tariff Act by inserting a reference to that Schedule. The purpose of this amendment is to ensure the collection of the correct customs duty for biofuels and biofuel blends imported under the Agreement.

Item 2 Subsection 105B(4) (paragraph (b) of the definition of biofuel blend)

15. Subsection 105B(4) of the Customs Act defines 'biofuel blend' as goods classified to certain subheadings under Schedule 3 to the Customs Tariff Act, or goods classified to a table item in a Schedule implementing a free trade agreement (FTA) that relates to one of the relevant subheadings in Schedule 3.

16. This item amends subsection 105B(4) to omit the expression "or 15" from the definition of biofuel blend at paragraph (b) and substitutes it with the expression ", 15 or 16".

17. This is a consequential amendment that inserts into the definition of 'biofuel blend' a reference to new Schedule 16 to the Customs Tariff Act. As with the amendment made by item 1, the purpose of this amendment is to ensure that the definition encompasses biofuel blend products imported into Australia from the UAE accords with the Agreement, allowing for the collection of the correct customs duty on those products.

Item 3 After Division 1P of Part VIII

18. This item amends Part VIII of the Customs Act to insert new Division 1Q after Division 1P.

19. New Division 1Q is entitled 'UAE originating goods' and sets out the new rules for determining whether goods are UAE originating goods and therefore eligible for a preferential rate of customs duty inserted into the Customs Tariff Act by the complementary Customs Tariff Amendment (Australia-United Arab Emirates Comprehensive Economic Partnership Agreement Implementation) Bill 2025. The new rules give effect to Chapter 3 of the Agreement.

20. New Division 1Q contains seven Subdivisions, being Subdivision A to Subdivision G, as set out below.

Subdivision A—Preliminary

21. Subdivision A contains a simplified outline of new Division 1Q and the interpretation provision for this Division.

New section 153ZSA Simplified outline of this Division

22. New section 153ZSA sets out a simplified outline of the operation of each Subdivision B to Subdivision G of new Division 1Q.

New section 153ZSB Interpretation

23. New subsection 153ZSB(1) sets out the definitions for the purposes of new Division 1Q as follows:

24. The term Agreement is defined to mean the Comprehensive Economic Partnership Agreement between Australia and the United Arab Emirates, done at Canberra on 6 November 2024, as amended from time to time. The note to this definition indicates that, as at 2025, the text of the Agreement is accessible through the Australian Treaties Library on the AustLII website. The access of this document on the AustLII website is free of charge.

25. The term aquaculture is defined to have the meaning given by Article 3.1 of Chapter 3 of the Agreement. Under Article 3.1, this term is defined to mean the farming of aquatic organisms including fish, molluscs, crustaceans, other aquatic invertebrates and aquatic plants, from seedstock including seed stock imported from non-parties, such as eggs, fry, fingerlings and larvae, parr, smolts, or other immature fish at post-larval stage, by intervention in the rearing or growth processes to enhance production, such as regular stocking, feeding, and protection from predators. This term is necessary and is captured by the definition of production.

26. The term Australian originating goods is defined to mean goods that are Australian originating goods under a law of the United Arab Emirates that implements the Agreement. This term is referred to in the definition of originating materials.

27. The term certificate of origin is defined to mean a certificate that is in force and that complies with the requirements of Article 3.22 of Chapter 3 of the Agreement. In accordance with Article 3.22, this document must also contain the information described in Annex 3B of the Agreement. This document is required to meet a requirement under new sections 153ZSC, 153ZSD and 153ZSE.

28. The term Convention is defined to mean the International Convention on the Harmonized Commodity Description and Coding System done at Brussels on 14 June 1983, as in force from time to time. The note to this definition indicates that as at 2025, the text of the Convention is accessible through the Australian Treaties Library on the AustLII website. The access of this document on the AustLII website is free of charge. This term is necessary and is referred to in the definition of 'Harmonized Commodity Description and Coding System'.

29. The term customs value, in relation to goods, is defined to have the meaning given by section 159 of the Customs Act. In most cases this will be the 'transaction value' as described in section 161 of the Customs Act, but there are other valuation methods if this value cannot be ascertained.

30. The term ex-works price, in relation to goods, is defined:

(a)

to have the same meaning as in Article 3.4 of the Agreement; or

(b)

if regulations are in force for the purposes of this paragraph, ex-works price has the meaning prescribed by the regulations.

31. Provision for the use of the ex-works price of goods is required in new Division 1Q as it is provided as an alternative methodology for calculating the Qualifying Value Content under the Agreement. The ex-works price differs from the customs value, which is ordinarily used in Australia's free trade agreements, as it only includes costs related to the production of a good, minus any internal taxes, which are, or may be, repaid when the product obtained is exported.

32. As such, the ex-works price will always be less than the customs value, which does include other costs such as the cost of movement of the relevant goods from the factory in the territory of the United Arab Emirates to the place of export to Australia, and related insurance costs.

33. For the purposes of subsections 153ZSE(5), 153ZSF(2), and 153ZSH(2), importers may choose to rely on the customs value or the ex-works price of goods when determining if goods are UAE originating goods.

34. It is appropriate to provide for the meaning of ex-works price to be prescribed in regulations, if considered necessary, due to the detail required and the technical nature of the calculations involved in working out the ex-works price of goods.

35. The term Harmonized Commodity Description and Coding System is defined to mean the Harmonized Commodity Description and Coding System (HCDC System) that is established by or under the Convention.

36. The HCDC System is the worldwide classification system that has been adopted by all countries that are members of the World Customs Organization (WCO). In Australia, the HCDC System has been adopted in the Customs Tariff Act.

37. The Agreement utilises the tariff classification codes of the HCDC System. In particular, section B of Annex 3A of the Agreement identifies goods that must satisfy various product specific qualifying rules, by reference to their tariff classification codes under the HCDC System. The tariff classification codes in the Agreement are the codes from the version of the HCDC System in place immediately from 1 January 2022, commonly referred to as HS 2022.

38. The HCDC System is a structure for classifying goods based on internationally agreed descriptors for goods, and related six-digit codes administered by the WCO. This six-digit classification uniquely identifies all traded goods and commodities and is uniform across all countries that have adopted the HCDC System. The WCO reviews the system every five years to reflect changes in industry practice, technological developments and evolving international trade patterns.

39. This term is referred to in the definition of 'Harmonized System', which sets out the HCDC System on which the Agreement, particularly the product-specific rules, is based.

40. The term Harmonized System is defined to mean:

•

Harmonized Commodity Description and Coding System as in force on 1 January 2022; or

•

if the table in Annex 3A to Chapter 3 of the Agreement is amended or replaced to refer to Chapters, headings and subheadings of a later version of the HCDC System—the later version of the HCDC System.

41. As explained by the notes for the definition of HCDC System, updates to that System are undertaken every 5 years. While each signatory to the Convention is required to implement and reflect related amendments to the HCDC System in their domestic legislation, simultaneously on the entry into force date, the pace at which the amendments are implemented varies from country to country.

42. In light of this, the definition of 'Harmonized System' (in paragraph (a)) will expressly recognise, in the Customs Act, the version of the HCDC System on which the Agreement was based, and allow subsequent versions of that System (in paragraph (b)) to also be recognised when the relevant Annex of the Agreement is formally amended. This term ensures the correct version of the Harmonized System is referred to in the Customs Act for determining UAE originating goods and incorporates by reference the current version of the Harmonized System to be recognised by the Customs Act. This is necessary for new Division 1Q inserted into Part VIII of the Customs Act, and relevantly for the purposes of new section 153ZSE for determining if goods imported from the UAE are UAE originating goods.

43. The current version of the Harmonized System is the version as in force on 1 January 2022, which is available for access free of charge on webpages administered by the WCO (
www.wcoomd.org). The version of Harmonized System for which the tariff classification codes are used to identify goods for the purpose of Annex 3A of Chapter 3 of the Agreement, and for section 153ZSE, is the version as in force on 1 January 2022 (being the current version).

44. The version of Annex 3A of Chapter 3 of the Agreement that is incorporated by reference under this Division for the purpose of section 153ZSE is the version that forms part of the Agreement signed on 6 November 2024. See also the notes in paragraph 82 to 86 of this document.

45. That version of Annex 3A to Chapter 3 of the Agreement is available free of charge on the Australian Treaties Library on the AustLII website (www.austlii.edu.au). Any agreed revisions to Annex 3A to Chapter 3 of the Agreement will also be made available free of charge on the Australian Treaties Library.

46. The term indirect materials is defined to mean:

•

goods used in the production, testing or inspection of goods, but not physically incorporated in the goods; or

•

goods or energy used in the maintenance or operation of equipment or buildings associated with the production of goods;

including:

•

fuel (within its ordinary meaning), catalysts and solvents; and

•

gloves, glasses, footwear, clothing, safety equipment and supplies; and

•

tools, dies and moulds; and

•

spare parts and materials; and

•

lubricants, greases, compounding materials and other similar goods.

47. This definition gives effect to the same term defined under Article 3.1 of Chapter 3 of the Agreement and is referred to in the definition of originating material.

48. The term Interpretation Rules is defined to mean the General Rules (as in force from time to time) for the Interpretation of the Harmonized System provided for by the Convention. The version of the General Rules for the Interpretation of the Harmonized System is the version for the Harmonized System in force from 1 January 2022. That version of the General Rules for the Interpretation of the Harmonized System, and subsequent versions of such Rules, are available free of charge on webpages administered by the WCO (
www.wcoomd.org).

49. The term non-originating materials is defined to mean goods that are not originating materials. Non-originating materials are goods that are not originating materials because they do not satisfy the requirements of new Division 1Q in their own right. An example of a non-originating good (and therefore material for use for production of another good) is a good that is grown and harvested from a country that is neither Australia nor the UAE. It is non-originating because that good in its harvested form is not from a country to which the Agreement applies.

50. The term non-party is defined to have the same meaning as it has in Chapter 3 of the Agreement, which is a Party that is not a Party to the Agreement. This term is referred to in new section 153ZSI, which deals with the consignment of UAE originating goods (see notes below for new section 153ZSI).

51. The term originating materials is defined to mean:

•

UAE originating goods that are used in the production of other goods and physically incorporated into those goods; or

•

Australian originating goods that are used in the production of other goods and physically incorporated into those goods; or

•

indirect materials.

52. In some circumstances, in order to determine whether goods that are imported into Australia are UAE originating goods and therefore eligible for a preferential rate of customs duty, it may be necessary to have regard to the origin of the materials from which the final goods are produced (see the notes for new Subdivision C).

53. The term person of the UAE is defined to mean a person of a Party within the meaning, so far as it relates to the United Arab Emirates, of Article 3.1 of Chapter 3 of the Agreement. This term is referred to in new section 153ZSC.

54. The term production is defined to have the meaning given by Article 3.1 of Chapter 3 of the Agreement. Under Article 3.1, 'production' is defined as operations including growing, cultivating, raising, mining, harvesting, fishing, aquaculture, trapping, hunting, capturing, collecting, breeding, extracting, gathering, manufacturing, working, processing, and other specific operations, including assembling a good. This list is non-exhaustive, and the term 'production' is capable of capturing any other process that falls within the meaning of 'operations', including any currently existing methods that have not been listed, and any new methods which may arise in the future.

55. The term territorial sea is defined to have the same meaning as in the Seas and Submerged Lands Act 1973. This definition is in turn taken from Articles 3 and 4 of the United Nations Convention on the Law of the Sea. This term is referred to in new section 153ZSC.

56. The term territory of Australia is defined to mean territory within the meaning, so far as it relates to Australia, of Article 1.2 of Chapter 1 of the Agreement. That is, the territory:

•

excluding all external territories other than the Territory of Norfolk Island, the Territory of Christmas Island, the Territory of Cocos (Keeling) Islands, the Territory of Ashmore and Cartier Islands, the Territory of Heard Island and McDonald Islands, and the Coral Sea Islands Territory; and

•

including Australia's territorial sea, contiguous zone, exclusive economic zone and continental shelf over which Australia exercises sovereignty, sovereign rights or jurisdiction in accordance with international law, particularly the United Nations Convention on the Law of the Sea, done at Montego Bay on 10 December 1982.

57. This term territory of Australia is referred to in new sections 153ZSD, 153ZSE and 153ZSI.

58. The term territory of the United Arab Emirates is defined to mean territory within the meaning, so far as it relates to the United Arab Emirates, of Article 1.2 of Chapter 1 of the Agreement. That is, the UAE's land territories and internal waters, including its Free Zones, territorial sea, including the seabed, and subsoil thereof, and airspace over such territories and waters, as well as the contiguous zone, the continental shelf and exclusive economic zone, over which the UAE has sovereignty, sovereign rights or jurisdiction as defined in its laws, and in accordance with international law.

59. The term UAE originating goods is defined to mean goods that, under this Division, are UAE originating goods.

Value of goods

60. New subsection 153ZSB(2) provides that the value of goods for the purposes of new Division 1Q is to be worked out in accordance with the regulations, and that the regulations may prescribe different valuation rules for different kinds of goods.

61. The value of goods is relevant, for example, in determining whether goods satisfy the de minimis requirement in Article 3.6 of Chapter 3 of the Agreement. The 'value' of goods in this context is to be distinguished from the 'customs value' of goods, which is to be worked out under section 159 of the Customs Act.

Tariff classifications

62. New subsection 153ZSB(3) provides that, in prescribing tariff classifications for the purposes of new Division 1Q, the regulations may refer to the Harmonized System. The product-specific rules of origin in Annex 3A to Chapter 3 of the Agreement refer to the tariff classifications of the Harmonized System.

63. New subsection 153ZSB(4) provides that subsection 4(3A) of the Customs Act does not apply for the purposes of new Division 1Q. Subsection 4(3A) provides that a reference in the Customs Act to the tariff classification of goods is a reference to Schedule 3 to the Customs Tariff Act.

64. The purpose of new subsection 153ZSB(4) is to enable references to the tariff classification of goods in new Division 1Q to be references to those in Annex 3A to Chapter 3 of the Agreement, in particular subdivision D, which may not necessarily be in the same version of the Harmonized System as applied in Schedule 3 of the Customs Tariff Act.

Incorporation of other instruments

65. New subsection 153ZSB(5) provides that, despite subsection 14(2) of the Legislation Act, regulations made for the purposes of new Division 1Q may make provision in relation to a matter by applying, adopting or incorporating, with or without modification, any matter contained in an instrument or other writing as in force or existing from time to time.

66. Subsection 153ZSB(5) will override subsection 14(2) of the Legislation Act should it be necessary, in order to implement the Agreement by applying, adopting or incorporating an instrument or other writing that is not an Act or disallowable legislative instrument, as it exists from time to time. This means the Customs Act will not need to be amended each time a document or other writing, which is incorporated by reference into the regulations made for the purpose of Division 1Q, and which informs or assists the operation of the Agreement, is altered or modified. Any instrument or other writing so incorporated will be limited to those that are required for the operation of the Agreement and will be made accessible through the Department's website, free of charge, to ensure they are readily available at no cost to persons concerned.

67. Where such references are made in regulations, the explanatory material prepared for those regulations will explain the rationale for, and basis upon which such references are made, and indicate where the material referred to can be located by the public.

Subdivision B—Goods wholly obtained or produced in the United Arab Emirates

68. Subdivision B contains new section 153ZSC, which sets out the rules in relation to goods that are wholly obtained or produced in the UAE.

Section 153ZSC Goods wholly obtained or produced in the United Arab Emirates

69. New subsection 153ZSC(1) provides that goods are UAE originating goods if they are wholly obtained or produced in the UAE, and either the importer of the goods has, at the time the goods are imported, a certificate of origin for the goods or a copy of one, or Australia has waived the requirement for a certificate of origin for the goods.

70. New subsection 153ZSC(2) provides that goods are wholly obtained or produced in the UAE if, and only if, the goods are:

(a)

plants, plant products or fungus grown, collected, harvested, cultivated, picked or gathered in the territory of the United Arab Emirates; or

(b)

live animals born and raised in the territory of the United Arab Emirates; or

(c)

goods obtained from live animals born and raised in the territory of the United Arab Emirates; or

(d)

goods obtained from hunting, trapping, fishing, aquaculture, collecting or capturing conducted in the territory of the United Arab Emirates, but not beyond the outer limits of the territorial sea of the UAE; or

(e)

minerals, or other natural resources, extracted or taken from the soil, waters, seabed or subsoil beneath the seabed in the territory of the United Arab Emirates; or

(f)

goods of sea-fishing, or other marine goods, taken in accordance with international law from outside the territorial waters of the UAE by any vessel that is registered, listed recorded, or licensed with the UAE and flying the flag of the UAE; or

(g)

goods produced, from goods referred to in paragraph (f), on board a factory ship that is registered, listed, recorded or licensed with the UAE and flying the flag of the UAE; or

(h)

goods, other than goods of sea-fishing or other marine goods, extracted or taken from the seabed, ocean floor or subsoil beneath the seabed of:

(i) the exclusive economic zone of the UAE; or

(ii) the continental shelf of the UAE;

by the UAE, or a person of the UAE, but only if the UAE, or the person of the UAE, has the right to exploit that seabed, ocean floor or subsoil in accordance with international law; or

(i)

waste or scrap that:

(i) has been derived from production in the territory of the United Arab Emirates; or

(ii) has been derived from used goods that are collected in the territory of the United Arab Emirates and that are fit only for the recovery of raw materials; or

(j)

goods produced or obtained in the territory of the United Arab Emirates, exclusively from goods referred to in paragraphs 153ZSC(2)(a) to (i) or from their derivatives.

71. New section 153ZSC gives effect to paragraph (1)(a) of Article 3.2, and Articles 3.3, 3.21 and 3.22 of Chapter 3 of the Agreement in respect of rules of origin for goods wholly obtained or produced in a Party to the Agreement. The purpose of this new section is to enable goods that satisfy the relevant requirements to be eligible for preferential treatment of customs duty, in accordance with the Agreement.

Subdivision C—Goods produced in the United Arab Emirates, or in the United Arab Emirates and Australia, from originating materials

72. New Subdivision C contains new section 153ZSD, which sets out the rule in relation to goods that are produced entirely in the territory of the United Arab Emirates, or entirely in the territory of the United Arab Emirates and the territory of Australia from originating materials only.

Section 153ZSD Goods produced in the United Arab Emirates, or in the United Arab Emirates and Australia, from originating materials

73. New section 153ZSD gives effect to paragraph (1)(b) of Article 3.2, paragraph 1 of Article 3.5, and Articles 3.21, and 3.22 of the Agreement.

74. New paragraph 153ZSD(a) provides that goods will be UAE originating goods if they are produced entirely in the territory of the United Arab Emirates, or entirely in the territory of the United Arab Emirates and the territory of Australia from originating materials only.

75. However, similarly to new paragraph 153ZSC(1)(b), new paragraph 153ZSD(b) provides that such goods are UAE originating goods only where either the importer of the goods also has, at the time the goods are imported, a certificate of origin or a copy of one, or Australia has waived the requirement for a certificate of origin for the goods.

76. For goods produced from originating materials only, it is important to note that goods themselves could be originating material used to produce other goods, such as where copra is produced from coconuts by drying the meat of the coconut. That copra may then be subsequently processed to produce coconut oil.

77. The purpose of this new section is to enable goods that satisfy the relevant requirements to be eligible for preferential tariff treatment in accordance with the Agreement.

Subdivision D—Goods produced in the United Arab Emirates, or in the United Arab Emirates and Australia, from non-originating materials

78. New Subdivision D sets out the rules of origin for goods produced in the UAE, or the UAE and Australia, from non-originating materials. Non-originating materials are those materials which are produced in the territory of a non-party to the Agreement, or which otherwise do not satisfy the requirements of Chapter 3 of the Agreement in respect of rules of origin as implemented by new Division 1Q.

Section 153ZSE Goods produced in the United Arab Emirates, or in the United Arab Emirates and Australia, from non-originating materials

79. New section 153ZSE gives effect to paragraph 1(c) of Article 3.2, and Articles 3.4, 3.6, 3.9, 3.10, 3.14, 3.15, 3.21 and 3.22 of Chapter 3 of the Agreement in respect of rules of origin for goods produced from non-originating materials. The purpose of this new section is to specify the requirements that must be satisfied in order for these goods to be eligible for preferential rates of customs duty in accordance with the Agreement.

80. New subsection 153ZSE(1) provides that goods are UAE originating goods if:

(a)

they are classified to a Chapter, heading or subheading of the Harmonized System that is covered by the table in Annex 3A to Chapter 3 of the Agreement; and

(b)

they are produced entirely in the territory of the United Arab Emirates, or entirely in the territory of the United Arab Emirates and the territory of Australia, from non-originating materials only, or from non-originating materials and originating materials; and

(c)

the goods satisfy the requirements applicable to the goods in that Annex; and

(d)

either of the following applies:

(i)

the importer of the goods has, at the time the goods are imported, a certificate of origin, or a copy of one, for the goods; or

(ii)

Australia has waived the requirement for a certificate of origin for the goods.

81. As with goods wholly obtained or produced in the territory of the United Arab Emirates, and goods produced entirely in the territory of the United Arab Emirates, or entirely in the territory of Australia and the United Arab Emirates from originating materials only, for goods to be originating under new section 153ZSE, the importer of the goods must have a certificate of origin or a copy of one, or Australia must have waived the requirement for a certificate of origin.

82. This provision applies both the product-specific rules and product specific process rules, set out in Annex 3A to Chapter 3 of the Agreement by direct reference to that Annex. Product specific rules are particular rules of origin applicable to the production of goods using a combination of originating and non-originating material. All non-originating materials used in producing the final good must satisfy the rule that is specific to the good (hence the expression "product specific rule"), as set out in Annex 3A of Chapter 3 of the Agreement, in order for those goods to be UAE originating goods under the Agreement.

83. An example of a product specific rule is the change in tariff classification rule. This means that all non-originating materials used in the production of a good, must have changed tariff classification during the production process, for the resulting good to be regarded as UAE originating goods under the Agreement. The tariff classification of a good is the heading or subheading under which the good is classified in Annex 3A of Chapter 3 of the Agreement.

84. A product specific process rule is one which clarifies whether a process, used in the production of goods, transforms an input material sufficiently for the resulting good to be an originating good under the Agreement. An example of a product specific process rule under the Agreement is the Chemical Reaction Rule, which clarifies that:

"A chemical reaction is a process (including a biochemical process) which results in a molecule with a new structure by breaking intramolecular bonds and fomenting new intramolecular bonds or by altering the spatial arrangement of atoms in a molecule".

85. The direct reference to Annex 3A mentioned in paragraph 82, does not compromise the operation, over time, of the product specific rules as set out in that Annex. As the Agreement is defined to be the Agreement "as amended from time to time", this ensures that the rules in Annex 3A, as current at the time of the importation of goods, will be applied.

86. It also ensures the application of any updated version of the Annex that would be contained in the Agreement as a result of the Parties implementing later versions of the HCDC System. This would take effect as soon as those provisions of the Agreement pertaining to the adoption of an updated Annex, and any of Australia's related domestic treaty-making procedures, are satisfied and completed.

87. New subsection 153ZSE(2) provides that, without limiting paragraph 153ZSE(1)(c), a requirement may be specified in the table in Annex 3A to Chapter 3 of the Agreement, by using an abbreviation that is given a meaning for the purposes of that Annex. For example, the abbreviation of QVC(35 Ex-works/40 FOB) in the Annex means the goods must have a qualifying value content (QVC) of at least 35 per cent if using the ex-works price as the basis and 40 per cent if using the customs value as the basis calculated in accordance with the Agreement (see paragraph 103 below for discussion of qualifying value content). Another example of an abbreviation in Annex 3A is 'CC', meaning the relevant goods must undergo a change in tariff classification at the two-digit level, which is equivalent to a change of chapter (hence the abbreviation 'CC') of the HCDC System. This provision therefore gives effect to those abbreviations for the purposes of the Customs Act.

Change in tariff classification

88. Like most product specific rule annexes to free trade agreements (FTAs), Annex 3A to Chapter 3 of the Agreement predominantly applies a change in tariff classification approach. A requirement for a material to undergo a change in tariff classification during production will only apply to non-originating materials. Goods that have been sourced outside a Party to the Agreement and that are used in the production of other goods are non-originating materials. Goods sourced from a Party to the Agreement that have not fulfilled the requirements of new Division 1Q and that are used in the production of other goods are also non-originating materials.

89. A change in tariff classification requires that any non-originating materials that are incorporated into the final good undergo a specified change in tariff classification in the territory of either of the Parties to the Agreement during the production process. New subsections 153ZSE(3) and (4) give effect to any change in classification requirements under paragraph 1(c) of Article 3.2, and Article 3.6 of the Agreement.

90. New subsection 153ZSE(3) refers to the first of several requirements that may be prescribed in regulations made for the determination of whether non-originating materials, used in the production of goods, may be taken to have satisfied a particular requirement for the purposes of new Subdivision D. The subsection provides that, if a requirement that applies in relation to the goods is that all non-originating materials used in the production of the goods must have undergone a particular change in tariff classification, the regulations may prescribe when a non-originating material used in the production of the goods is taken to satisfy the change in tariff classification.

91. Non-originating materials used to produce other goods will generally not have the same classification under the Harmonized System as the final good. This is because non-originating materials used to produce a good will likely be classified to one tariff classification before the production process, and the final good into which those materials are incorporated may be classified under a different tariff classification after the production process.

92. To satisfy a classification change requirement for the purposes of claiming preferential treatment of customs duty in accordance with the Agreement, the final goods concerned must be sufficiently transformed such that they will be classified to a different tariff classification to that of the non-originating materials from which they are produced, in accordance with the relevant product specific rule.

93. For example, assume jerk chicken bites (classified to tariff heading 1602 in Chapter 16 of the HCDC System) are manufactured from chicken meat wholly obtained and produced in the territory of the United Arab Emirates, which is combined with herbs and spices (classified to tariff headings 0907 to 0910 in Chapter 9 of the HCDC System) produced in Jamaica. As Jamaica is not a party to the Agreement, the herbs and spices are non-originating materials. Under the Agreement, the applicable product specific rule for goods incorporated into the production of chicken bites is 'CC' or 'QVC'.

94. As previously mentioned, the abbreviation 'CC' refers to the product specific rule requiring a change in tariff classification at the two digit level, which equates to a chapter change in the HCDC System, as defined in Annex 3A to Chapter 3 of the Agreement.

95. The abbreviation 'QVC' refers to the product specific rule requiring that a good must have a qualifying value content of not less than a particular percentage to be considered UAE originating goods (see paragraph 103 below for further discussion of this requirement). Under Annex 3A to the Agreement, where a good is subject to alternative requirements such as this, "the requirements of this Annex will be considered to be satisfied if a good satisfies one of the alternative rules."

96. Importantly, it is the product specific rule applicable to the final good which the non-originating materials used in its production must satisfy. Consequently, where a final good is subject to the 'CC' product specific rule, any non-originating materials used in the production of the jerk chicken bites from the example above must undergo a change to Chapter 16 from any other chapter. The herbs and spices are classified to Chapter 9 of the Harmonized System, hence these non-originating materials meet the tariff change requirement, having been incorporated during production into the chicken bites and thus now being classified to Chapter 16. The chicken meat itself is wholly obtained or produced in the UAE, making it an originating material in accordance with new section 153ZSC. It is therefore not required to undergo a change to its tariff classification.

97. It follows from the above example that it is necessary for the tariff classification of the final good, and that of each of the goods that are non-originating materials used in the production of the final goods, to be known in order to determine the relevant change in tariff classification applicable under the Agreement.

98. New subsection 153ZSE(4) provides that, if:

(a)

a requirement that applies in relation to the goods is that all non-originating materials used in the production of the goods must have undergone a particular change in tariff classification; and

(b)

one or more of the non-originating materials used in the production of the goods do not satisfy the change in tariff classification;

then the requirement is taken to be satisfied if:

(c)

in the case of goods classified to any of Chapters 50 to 63 of the Harmonized System:

(i)

the total value of the non-originating materials covered by paragraph (b) does not exceed 10% of the customs value of the goods; or

(ii)

the total value of the non-originating materials covered by paragraph (b) does not exceed 15% of the ex-works price of the goods; or

(iii)

the total weight of the non-originating materials covered by paragraph (b) does not exceed 10% of the total weight of the goods; or

(d)

in the case of goods classified to any of Chapters 1 to 49 or 64 to 97 of the Harmonized System:

(i)

the total value of the non-originating materials covered by paragraph (b) does not exceed 10% of the customs value of the goods; or

(ii)

the total value of the non-originating materials covered by paragraph (b) does not exceed 15% of the ex-works price of the goods.

99. This provision allows for the change in tariff classification requirement for goods of Chapters 50 to 63 (paragraph 153ZSE(4)(c)) to be satisfied if either the total customs value, or the total weight, of all of the non-originating materials used in the production of the goods, that do not satisfy the particular change in tariff classification required for the goods, does not exceed 10 per cent of the total customs value, or the total weight, of the goods. Where an importer relies on the ex-works price of the goods, the change in tariff classification requirement is taken to be satisfied where the total value of the non-originating material used in the production of the goods, does not exceed 15 per cent of the ex-works price of the goods.

100. The provision also allows for the change in tariff classification requirement for goods of Chapters 1 to 49 and 64 to 97 (paragraph 153ZSE(4)(d)) to be satisfied if the total value of all of the non-originating materials used in the production of the goods, that do not satisfy the particular change in tariff classification required for the goods, does not exceed 10 per cent of the customs value, or 15 per cent of the ex-works price of the goods.

101. The purpose of this provision is to give effect to the de minimis rule under paragraph 1 of Article 3.6 of the Agreement.

102. The value of non-originating materials for the purposes of subsection 153ZSE(4) is to be worked out in accordance with the method that will be included in the regulations made under new subsection 153ZSB(2).

Qualifying value content

103. New subsection 153ZSE(5) provides that, if a requirement that applies in relation to the goods is that the goods must have a qualifying value content of not less than a particular percentage worked out in a particular way:

(a)

the qualifying value content of the goods is to be worked out in accordance with the Agreement, unless paragraph (b) applies; or

(b)

if the regulations prescribe how to work out the qualifying value content of the goods—the qualifying value content of the goods is to be worked out in accordance with the regulations.

104. Under the product specific rules of origin in Annex 3A to the Agreement, it is a requirement that certain goods must contain a specified Qualifying Value Content (QVC). This means that a certain percentage of the value of the goods must be attributable to originating materials in order for the goods to "qualify" as UAE originating goods under the Agreement.

105. An example of a good that may satisfy a QVC requirement in order to so qualify is "Mixtures of vegetables", classified under subheading 0710.90 of the HCDC System. This good must contain a QVC of either 35% or 40%, depending on whether an importer elects to have the QVC of the goods calculated by reference to the ex-works price, or customs value of the goods respectively.

106. New paragraph 153ZSE(5)(a) stipulates that the QVC of a good is to be worked out in accordance with the Agreement. However, new paragraph 153ZSE(5)(b) establishes a head of power for the regulations to prescribe how to work out the QVC for goods, in which case the QVC is to be worked out in accordance with the regulations. This provision gives effect to Article 3.4 of Chapter 3 of the Agreement, enabling the formulae set out in that Article for the calculation of QVC to be prescribed in the regulations.

Goods put up in a set for retail sale

107. New subsection 153ZSE(6) gives effect to Article 3.14 of Chapter 3 of the Agreement which applies to sets of goods.

108. New subsection 153ZSE(6) provides that, if:

(a)

goods are put up in a set for retail sale; and

(b)

the goods are classified in accordance with Rule 3(c) of the Interpretation Rules;

the goods are UAE originating goods under this section only if:

(c)

all of the goods in the set, when considered separately, are UAE originating goods; or

(d)

the total customs value of the goods (if any) in the set that are not UAE originating goods does not exceed 20% of the customs value of the set of goods.

109. This provision clarifies how goods put up in a set for retail sale is to be treated. Under Rule 3(c) of the Interpretation Rules, when goods cannot be classified to a single heading or subheading, they shall be classified under the heading or subheading which occurs last in the numerical order of the HCDC system. "Interpretation Rules" is a defined term under new subsection 153ZSB(1).

110. New subsection 153ZSE(6) is accompanied by the example of a mirror, brush and comb put up as a 'grooming set' for retail sale. In accordance with Rule 3(c) of the Interpretation Rules, this set is classified under the tariff heading applicable to combs. This is because 'combs' is the heading which occurs last in numerical order of the HCDC system among the three items concerned.

111. The effect of new paragraph 153ZSE(6)(c) is that the set will not be considered to be UAE originating goods unless all three of the goods in the set, when considered separately, are UAE originating goods. However, if one or more of the goods in the grooming set is non-originating, then the grooming set may still be UAE originating goods under new paragraph 153ZSE(6)(d) if the customs value of the non-originating goods does not exceed 20% of the customs value of the entire grooming set.

Section 153ZSF Accessories, spare parts, tools or instructional or other information materials

112. New section 153ZSF gives effect to paragraph 1 of Article 3.9 of Chapter 3 of the Agreement, and provides at paragraph (1) that, if:

(a)

goods are imported into Australia with accessories, spare parts, tools or instructional or other information materials; and

(b)

the accessories, spare parts, tools or instructional or other information materials are classified and delivered with, and not invoiced separately from, the goods; and

(c)

the quantities and value of the accessories, spare parts, tools or instructional or other information materials are customary for the goods;

then the accessories, spare parts, tools or instructional or other information materials are to be disregarded for the purposes of this Subdivision.

113. However, new subsection 153ZSF(2) gives effect to paragraph 2 of Article 3.9 of Chapter 3 of the Agreement and provides that, if a requirement that applies in relation to the goods is that the goods must have a qualifying value content of not less than a particular percentage worked out in a particular way, the regulations must provide for the following:

(a)

the value of the accessories, spare parts, tools or instructional or other information materials to be taken into account for the purposes of working out the qualifying value content of the goods;

(b)

the accessories, spare parts, tools or instructional or other information materials to be taken into account as originating materials or non-originating materials, as the case may be.

114. The note to this subsection indicates that the value of accessories, spare parts, tools or instructional or other information materials is to be worked out in accordance with the regulations.

115. The purpose of this provision is to enable the origin of these goods to be effectively disregarded when imported in this way with the other UAE originating goods. Nonetheless, if the other UAE originating goods are subject to a QVC requirement, the accessories, spare parts, tools or instructional or other information materials are dealt with under new subsection 153ZSF(2).

116. Subsection 153ZSF(2) also establishes a head of power requiring that regulations be made to specify that the value of accessories, spare parts, tools or instructional or other information materials falling within the scope of the subsection are to be taken into account as originating, or non-originating as the case may be, in determining the QVC of the goods with which they are imported. Without this subsection, the value of accessories, spare parts, tools, and instructional or other information materials would not contribute to the QVC of materials used in the production of the goods.

Section 153ZSG Non-qualifying operations

117. New section 153ZSG gives effect to Article 3.7 of the Agreement, which is concerned with production operations that will not transform goods sufficiently for them to qualify as UAE originating goods under the Agreement.

118. New subsection 153ZSG(1) provides that goods are not UAE originating goods under new Subdivision D merely because of the following operations:

(a)

preserving operations to ensure that the goods remain in good condition for the purpose of transport or storage of the goods (such as drying, freezing, ventilating and chilling);

(b)

sifting, washing, cutting, slitting, bending, coiling, uncoiling, sharpening, simple grinding or slicing;

(c)

cleaning, including the removal of oxide, oil, paint or other coverings;

(d)

simple painting or polishing operations;

(e)

testing or calibration;

(f)

placing in bottles, cans, flasks, bags, cases or boxes, fixing on cards or boards or other packaging operations;

(g)

simple mixing (within the meaning of Article 3.7 of Chapter 3 of the Agreement) of goods, whether or not of different kinds;

(h)

simple assembly of parts of products to create a complete product or the disassembly of products into parts;

(i)

changes to packing, unpacking or repacking operations or the breaking up or assembly of consignments;

(j)

affixing or printing of marks, labels, logos or other like distinguishing signs on the goods or on their packaging;

(k)

husking, partial or total bleaching, polishing or glazing of cereals or rice;

(l)

mere dilution with water or another substance that does not materially alter the characteristics of the goods.

119. New subsection 153ZSG(2) defines the term 'simple' to have the same meaning as it has in Article 3.7 of Chapter 3 of the Agreement. That Article describes "simple" as an activity which does not need special skills, machines, apparatus, or equipment specially produced or installed for carrying out the activity.

120. The effect of new section 153ZSG is that if any of the above operations are the only operations that take place in a Party in relation to particular goods, either alone or as a combination, this will not be sufficient to confer originating status on the goods. For example, if non-originating goods, such as spices from Jamaica, are packaged into bottles in the UAE, this will not confer the status of UAE originating goods upon the spices.

Subdivision E—Packaging materials and containers

121. New Subdivision E contains new section 153ZSH, which deals with the treatment of packaging materials and containers into which imported goods are packaged for retail sale.

Section 153ZSH Packaging materials and containers

122. New section 153ZSH gives effect to Article 3.10 of Chapter 3 of the Agreement concerning packaging materials or containers for retail sale.

123. Subsection 153ZSH(1) gives effect to paragraph 1 of Article 3.10 of Chapter 3 of the Agreement and provides that, if:

(a)

goods are packaged for retail sale in packaging material or a container; and

(b)

the packaging material or container is classified with the goods in accordance with Rule 5 of the Interpretation Rules;

then the packaging material or container is to be disregarded for the purposes of this Division.

124. The reference to Interpretation Rules is a reference to the General Rules for the Interpretation of the Harmonized System. Rule 5 is concerned with packaging and containers that are typically used in respect of particular goods, such as instrument cases. That rule provides for the following:

(a)

camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long - term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This Rule does not, however, apply to containers which give the whole its essential character;

(b)

Subject to paragraph (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provision is not binding when such packing materials or packing containers are clearly suitable for repetitive use.

125. For paragraph 2 of Article 3.10 of Chapter 3 of the Agreement, new subsection 153ZSH(2) provides an exception to the application of subsection 153ZSH(1). This exception applies where the goods are required to have a QVC of not less than a particular percentage worked out in a particular way. Where this is the case, the regulations must provide for the following:

•

the value of the packaging material or container to be taken into account for the purposes of working out the qualifying value content of the goods;

•

the packaging material or container to be taken into account as an originating material or non-originating material, as the case may be.

126. Without new subsection 153ZSH(2), the value of packaging materials and containers for a good would not normally contribute to the value of materials that are used in the production of the goods in the determination of whether they are UAE originating goods based on a QVC requirement. If the value of these materials did so contribute, the goods may meet this requirement and therefore be eligible for the preferential rate of customs duty under the Agreement. Subsection 153ZSH(2) thus establishes a head of power for regulations to be made which must provide for the value to be taken into account for this purpose.

127. The note to subsection 153ZSH(2) explains that the value of packaging materials and containers for the purposes of this subsection is to be worked out in accordance with the regulations. New subsection 153ZSB(2) provides the head of power for regulations to do this.

Subdivision F—Consignment

128. New Subdivision F contains new section 153ZSI, which deals with the consignment requirements applicable to UAE originating goods and gives effect to Article 3.18 of Chapter 3 of the Agreement.

Section 153ZSI Consignment

129. New subsection 153ZSI(1) provides that goods are not UAE originating goods under new Division 1Q, if the goods are transported through a non-party and either or both of the following apply:

(a)

the goods undergo further production or any other operation in the territory of the non-party (other than unloading, reloading, separation from a bulk shipment or splitting of a consignment, storing, repacking, labelling or marking required by Australia or any other operation necessary to preserve the goods in good condition or to transport the goods to the territory of Australia);

(b)

the goods are released to free circulation (within the meaning of Article 3.18 of Chapter 3 of the Agreement) in the territory of a non-party.

130. New subsection 153ZSI(2) provides that section 153ZSI applies despite any other provision of new Division 1Q. As a result, even if goods are UAE originating goods in accordance with any other provisions of Division 1Q, if they come within the terms of subsection 153ZSI(1) they will not be UAE originating goods.

131. New section 153ZSI gives effect to Article 3.18 of Chapter 3 of the Agreement which deals with transport through Parties and non-Parties.

Subdivision G–Regulations

132. Subdivision G contains new section 153ZSJ, which provides a head of power for the regulations to make provision for and in relation to determining whether goods are UAE originating goods under new Division 1Q. This operates as a catch-all head of power for the making of regulations to provide for any matter which is not specifically covered by a head of power under other provisions of new Division 1Q.

Part 2—Verification powers

Customs Act 1901

Item 4 After Division 4M of Part VI

133. This item amends the Customs Act to insert new Division 4N into Part VI. New Division 4N is headed "Division 4N—Exportation of goods to the United Arab Emirates" and imposes obligations on Australian producers and exporters of goods to the UAE, who wish to obtain preferential tariff treatment in respect of those goods in the UAE. Division 4N is made up of new sections 126ASA, 126ASB, 126ASC, and 126ASD.

Section 126ASA Definitions

134. New section 126ASA contains definitions for the purposes of new Division 4N, as follows:

135. The term Agreement is defined to mean the Comprehensive Economic Partnership Agreement between Australia and the United Arab Emirates, done at Canberra on 6 November 2024, as amended from time to time.

136. The note to this definition indicates that, as at 2025, the text of the Agreement is accessible through the Australian Treaties Library on the AustLII website. The access of this document on the AustLII website is free of charge.

137. The term producer is defined to mean a person who engages in the production of goods.

138. The term production is defined to have the meaning given by Article 3.1 of Chapter 3 of the Agreement. See the notes for a similarly defined term under new subsection 153ZSB.

139. The term territory of the United Arab Emirates is defined to mean the territory within the meaning, so far as it relates to the United Arab Emirates, of Article 1.2 of Chapter 1 of the Agreement. See the notes for a similarly defined term under new subsection 153ZSB.

140. The term UAE customs administration is defined to mean customs administration within the meaning, so far as it relates to the UAE, of Article 4.1 of Chapter 4 of the Agreement. Paragraph (b) of Article 4.1 defines the customs administration of the UAE as the Federal Authority of Identity, Citizenship, Customs and Port Security, and its successors.

141. The term UAE customs official is defined to mean a person representing the customs administration of the UAE.

Section 126ASB Record keeping obligations

142. New section 126ASB inserts a head of power for regulations to prescribe record keeping obligations that will apply only in respect of goods that are exported from Australia to the territory of the UAE, and that are claimed to be Australian originating goods for the purpose of obtaining a preferential tariff in the UAE.

143. New subsection 126ASB(1) enables regulations to prescribe record keeping obligations that apply in respect of exported goods to which a claim for preferential tariff treatment is made in the UAE in accordance with a law of the UAE that implements their obligations under the Agreement. The method of keeping the records, such as the length of time for which they must be kept and the manner in which they must be kept, would be similar to current record keeping obligations under the Customs Act. However, the type of records that will be required to be kept will be much broader than current requirements. The requirements will extend to all records relating to the origin of the goods for which preferential tariff treatment is claimed in the UAE, and may include, amongst other things, records pertaining to the tariff classification of the goods, and the origin and value of the materials used to produce the goods.

144. For the avoidance of doubt, new subsection 126ASB(2) provides that the obligations under subsection 126ASB(1) may be imposed on an exporter or producer of goods.

Section 126ASC Power to require records

145. Under Articles 3.32 and 3.33 of Chapter 3 of the Agreement, Australia or the UAE may take action to verify the eligibility of imported goods for preferential treatment, including requesting the provision of records relating to the production and export of the goods. New section 126ASC gives effect to these Articles in respect of goods exported to the UAE, and that are claimed to be Australian originating goods for the purpose of obtaining a preferential tariff in the UAE.

146. New subsection 126ASC(1) provides that an authorised officer (as defined in Section 4 of the Customs Act) may require a person, who is subject to record keeping obligations under regulations made for the purposes of section 126ASB, to produce to the officer such of those records as the officer requires.

147. The note to new subsection 126ASC(1) directs the reader's attention to the existence of sections 243SB and 243SC of the Customs Act. Under section 243SB of the Customs Act, it is an offence of strict liability to fail to produce a record when required by an officer to do so in accordance with new section 126ASC. Section 243SC of the Customs Act preserves the common law privilege against self-incrimination in providing that a person need not produce a record if doing so would tend to incriminate them.

148. New subsection 126ASC(2) provides that an authorised officer may disclose any records so produced to a UAE customs official for the purpose of verifying a claim for preferential tariff treatment in the UAE.

149. Records obtained by an authorised officer under new section 126ASC may be 'Immigration and Border Protection information' within the meaning of the Australian Border Force Act 2015 (ABF Act). Section 42 of the ABF Act prohibits the disclosure of Immigration and Border Protection information except, amongst other things, where the disclosure is authorised by or under a law of the Commonwealth.

150. By including an express provision in the Customs Act allowing for this information to be disclosed to a UAE customs official, the disclosure is "required or authorised by or under a law of the Commonwealth" for the purposes of Part 6 of the ABF Act.

Section 126ASD Power to ask questions

151. New subsection 126ASD(1) provides that an authorised officer (which is defined in section 4 of the Customs Act) may require a person who is an exporter or producer of goods that:

(a)

are exported to the territory of the United Arab Emirates; and

(b)

are claimed to be Australian originating goods for the purpose of obtaining a preferential tariff in the territory of the United Arab Emirates;

to

answer questions in order to verify the origin of the goods.

152. The power to ask questions in the circumstances set out in this section supplements the power to require records in new section 126ASC.

153. The note to new subsection 126ASD(1) indicates that where an authorised officer has requested a person to answer questions, in order to verify the origin of goods in accordance with this subsection, a failure to answer questions by that person may be an offence of strict liability under section 243SA of the Customs Act. The note also indicates that, under section 243SC of the Customs Act, a person does not have to produce a record if doing so would tend to incriminate the person.

154. Subsection 126ASD(2) provides that an authorised officer may disclose any answers to such questions to a UAE customs official for the purpose of verifying a claim for a preferential tariff in the territory of the United Arab Emirates.

155. The answers to questions obtained by an authorised officer under new section 126ASD, may also be 'Immigration and Border Protection information' within the meaning of Part 6 of the ABF Act, and therefore cannot be disclosed to a UAE customs official unless the disclosure is for a purpose permitted by Part 6.

156. By including an express provision in the Customs Act allowing for this information to be disclosed to a UAE customs official, the disclosure is required or authorised by a law of the Commonwealth for the purposes of Part 6 of the ABF Act.

Part 3—Application provisions

Item 5 Application provisions

157. Item 5(1) provides that the amendments made by Part 1 of Schedule 1 to the Bill, when enacted, apply in relation to:

(a)

goods imported into Australia on or after the commencement of Part 1; and

(b)

goods imported into Australia before the commencement of Part 1, where the time for working out the rate of import duty on the goods had not occurred before the commencement of that Part.

158. Item 5(2) provides that the amendments made by Part 2 of Schedule 1 to the Bill applies, when enacted, in relation to goods exported to the territory of the UAE on or after the commencement of Part 2 (whether the goods were produced before, on or after that commencement).

Attachment A Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Customs Amendment (Australia-United Arab Emirates Comprehensive Economic Partnership Agreement Implementation) Bill 2025

The Customs Amendment (Australia United Arab Emirates Comprehensive Economic Partnership Agreement Implementation) Bill 2025 (the Bill) is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Bill

The purpose of the Bill is to amend the Customs Act 1901 (Customs Act) to give effect to the Comprehensive Economic Partnership Agreement between Australia and the United Arab Emirates (Agreement), signed on 6 November 2024 by introducing new rules of origin for goods that are imported into Australia from the United Arab Emirates (UAE).

The amendments to the Customs Act will enable goods that satisfy the rules of origin to enter Australia at preferential rates of customs duty. In particular, the Bill will:

•

implement rules of origin to determine goods eligible for preferential tariff treatment in accordance with the Agreement. Goods that satisfy the rules of origin under the Agreement are referred to as 'UAE originating goods';

•

enable regulations to prescribe record keeping obligations on producers and exporters for goods exported to the UAE that are claimed to be originating goods in accordance with the Agreement, and producers of such goods;

•

enable an authorised officer (as defined in subsection 4(1) of the Customs Act) to disclose information (including personal information within the meaning of the Privacy Act 1988 (Privacy Act) and Immigration and Border Protection information within the meaning of the Australian Border Force Act 2015 (Australian Border Force Act) to UAE customs officials for the purposes of verifying the claims for origin of goods exported to the territory of the UAE under the Agreement. UAE customs official means a person representing the UAE customs administration.

Complementary amendments will also be made to the Customs Tariff Act 1995 (Customs Tariff Act) by the Customs Tariff Amendment (Australia-United Arab Emirates Comprehensive Economic Partnership Agreement Implementation) Bill 2025.

Together the amendments contained in both Bills give effect to the customs commitment and agreed customs outcome set out in the Agreement.

The amendments contained in this Bill, when enacted, will commence on the later of the day on which the Bill receives the Royal Assent and the day on which the Agreement enters into force for Australia.

Human rights implications

This Bill engages the right to not be subjected to arbitrary or unlawful interference with privacy in Article 17 of the International Covenant on Civil and Political Rights to the extent that the Bill will allow for the collection and disclosure of personal information.

Article 17(1) sets out:

No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation.

Under Article 3.21 of Chapter 3 of the Agreement, a 'Certificate of Origin' document applied for by the exporter or producer or an authorised representative of the exporter or producer shall support a claim that goods are eligible for preferential tariff treatment in accordance with the Agreement. The key information that must be included in a 'Certificate of Origin' document is detailed in Article 3.22 and Annex 3B, of Chapter 3 of the Agreement and includes personal information, that is the exporter's and/or the producer's name and address.

The Bill in part inserts new sections into 126ASB, 126ASC and 126ASD to the Customs Act to enable:

•

regulations to prescribe record keeping obligations that apply in relation to goods that are exported to the UAE and are claimed to be Australian originating goods, in accordance with Chapter 3 of the Agreement, for the purpose of obtaining a preferential tariff in the UAE;

•

an authorised officer to require a person subject to record keeping obligations under the regulations to produce those records;

•

an authorised officer to disclose the records to a UAE customs official in order to verify a claim for a preferential tariff;

•

an authorised officer to require an exporter or producer of goods to answer questions in order to verify the origin of the goods; and

•

an authorised officer to disclose the answers to a UAE customs official in order to verify a claim for a preferential tariff.

Additionally, the record keeping obligations to be prescribed by the regulations will reflect the obligations set out in Articles 3.32 (Verification), 3.33 (Verification Visits) and 3.34 (Record Keeping Requirement) of Chapter 3 of the Agreement in respect of the retention of records and the verification of origin.

The new sections allow the UAE to verify the origin of goods exported from Australia that are claimed to be originating goods. For example, this may include the collection and disclosure of personal information set out in a 'Certificate of Origin' document, to a customs official from the UAE for the purpose of verifying a claim for a preferential tariff.

The verification of the eligibility for preferential treatment is required under the Agreement and the measures in the Bill are directed at the legitimate purpose of facilitating and supporting Australia's economic and international trade objectives and implementing the international legal obligations under the Agreement. The collection and disclosure of personal information is authorised under the Privacy Act and, where applicable, the Australian Border Force Act, with the Bill clarifying that authorised officers may require exporters or producers of goods to produce records or answer questions, which records or answers may be disclosed to officials of the UAE for the limited purpose of verifying a claim for a preferential tariff. The Bill will not alter the existing Australian domestic law protections.

This collection and disclosure is for the limited purpose of verifying a claim made by a person for preferential tariff treatment and the records captured by the new sections only to relate to goods that are exported to the UAE and are claimed to be Australian originating goods for those purposes. As such, the amendments are a reasonable and proportionate response to the legitimate purpose described above. The collection and disclosure of personal information in these circumstances will not constitute an unlawful or arbitrary interference with privacy.

Conclusion

The Bill is compatible with human rights because to the extent that it may engage the right to privacy, the amendments of the Customs Act in the Bill will not constitute an unlawful or arbitrary interference with privacy.

Australia - United Arab Emirates Comprehensive Economic Partnership Agreement OBPR22-01875 Certified Impact Analysis

Department of Foreign Affairs and Trade

Contents

Executive Summary

Introduction - Background and Current setting

1. What is the problem you are trying to solve and what data are available?

2. What are the objectives, why is government intervention needed to achieve them, and how will success be measured?

3. What policy options are you considering?

4. What is the likely net benefit of each option?

5. Who did you consult and how did you incorporate their feedback?

6. What is the best option from those you have considered and how will it be implemented?

7. How you will evaluate your chosen option against the success metrics?

Appendix A - List of stakeholders consulted through CEPA negotiations

Appendix B – Regulatory Burden Estimate

Executive Summary

The Australia-United Arab Emirates (UAE) Comprehensive Economic Partnership Agreement (CEPA) will be Australia's first free trade agreement with the Middle East and deliver on the Australian Government's commitment to opening new opportunities that will allow us to diversify our trade.

The UAE is a dynamic and globally focused partner and a gateway into the region for Australian exporters. It is currently Australia's largest trade and investment partner in the Middle East. In 2023 our two-way trade was worth over $9.94 billion and two-way investment worth $20.6 billion.

Through CEPA, Australian exporters will benefit from elimination of tariffs on over 99 per cent of Australian goods exports to the UAE by value, estimated to increase Australian exports at around $678 million per year.

Exporters will have preferential access to the UAE's growing market, with its connections to the broader region and beyond.

Australian service providers will benefit from CEPA through guaranteed access to sectors of commercial interest, including consulting, environmental, education, health and financial services.

As a modern trade agreement, CEPA includes commitments on inclusive and sustainable trade through promoting internationally recognised labour standards; supporting women's access to the full benefits and opportunities that flow from trade and investment; and ensuring high levels of environmental protection.

CEPA will also be Australia's first trade agreement with a stand-alone chapter which establishes a framework for cooperation to promote First Nations trade and investment interests. This delivers on the priority the government attaches to including First Nations people in our international trade agenda.

UAE entities are already major investors in Australia's renewables, waste-to-energy, health and aged care and resources sectors – innovative outcomes in CEPA will encourage further investment in priority sectors relevant to Australia's clean energy transition and net-zero ambitions, creating jobs and sustainable rural development.

Having now concluded the deal, Australia and the UAE are both working on formalising the legal treaty text and preparing CEPA for signature later this year. This impact analysis sets out why it is in Australia's interest to sign CEPA.

Introduction

This Impact Analysis assesses Australia's entry into an Australia-United Arab Emirates Comprehensive Economic Partnership Agreement (CEPA).

Background/Current setting

The United Arab Emirates (UAE) is a country comprising seven emirates - Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al-Quwain, Fujairah, and Ras Al Khaimah. Its capital city is Abu Dhabi, located in the largest and wealthiest of the seven emirates. Australia´s bilateral relationship with the UAE is friendly, multi-faceted and growing rapidly, across trade and investment, defence, aviation, security and law enforcement cooperation and people-to-people links.

Since its Federation in 1971, the UAE has developed rapidly and is now known for its modern infrastructure, international events and status as a trade and transport hub underpinned by a solid legal system and pro-business environment. The UAE is now the Middle East's third largest economy, and one of the wealthiest countries in the region on a per capita basis. Its gross domestic product (GDP) in 2024 is estimated at US$528 billion^[1].

While oil and gas still account for over two-thirds of its exports and the bulk of government revenue, the UAE has taken significant steps towards economic diversification, with approximately 70 per cent of GDP now generated by sectors other than oil and gas^[2]. It has made significant investments in establishing aerospace, nuclear power, defence, information technology (micro-processing), petrochemical and clean-tech industries. The last of these is most prominently represented by the multibillion-dollar initiative of Masdar City, a zero-carbon city outside Abu Dhabi. The UAE is also investing heavily in educational institutions, cultural and sporting attractions, exhibitions, events, information and communication technology (ICT), re-export and financial sectors.

The UAE is currently Australia´s largest trade and investment partner in the Middle East and a gateway into the region for Australian exporters.

Our two-way trade was worth over $9.94 billion^[3] in 2023, up 7.2 per cent on 2022 ($5.21 billion in exports and $4.73 billion in imports), with the UAE being Australia's 17th largest goods export partner^[4].

Minerals remain Australia's largest export to the UAE, with alumina the largest export commodity worth $1.05 billion in 2023^[5]. Australia is a leading supplier of alumina to the UAE market, with a market share of nearly 70 per cent. Other Australian exports include meat, vegetables, fruits and nuts, dairy products, barley and wheat. As a net food importer, the UAE has the potential to become a more significant export destination for Australian produce.

In the services sector, Australia exported $526 million to the UAE while the UAE exported almost $3.3 billion to Australia in 2023^[6]. Top Australian services exports to the UAE include transport and travel services, other business services, telecommunications, computer and information services, and financial, insurance and pension services^[7].

Investment linkages between the UAE and Australia are also substantial, with UAE investment in Australia worth $12.6 billion (2023) and Australian investment in the UAE totalling $8.02 billion^[8]. The UAE was the 30th largest investor in Australia in 2023 with an investment stock including direct, portfolio, financial derivative and other investments, according to Australian Bureau of Statistic data^[9].

There is significant scope to expand two-way investment with the UAE, given the complementarity of the Australian and UAE economies. The UAE is encouraging foreign investment related to areas where Australia has strengths, such as advanced manufacturing industries, supply chain logistics, agritech and education. The UAE has also established 40 free trade zones to attract foreign investment that grant foreign entities national treatment and provide tax benefits.

The UAE's leading Sovereign Wealth Funds (SWFs) contain an aggregate of USD$1.4 trillion in assets under management, with five funds ranked amongst the top 20 by the Sovereign Wealth Fund Institute. UAE SWF entities hold significant investments in Australia, including in the renewable energy, agribusiness, tourism, health and aged care and resources sectors. Australia continues to seek investment from UAE SWFs, principally in sectors such as infrastructure and renewable energy, where the UAE could be a significant partner in our clean energy transition.

Why a CEPA?

While our economic linkages are already strong, CEPA will be critical to opening new opportunities for Australian business with the UAE and to retain our competitive positions with this valuable growing economy.

Owing to these already strong economic links with UAE and the UAE's interest in pursuing an agreement with Australia, the Department of Foreign Affairs and Trade (DFAT) commissioned an independent Feasibility Analysis (2023) by the Centre for International Economics (CIE) (known throughout this document as the 'Feasibility Analysis')^[10]. This was a crucial first step in assessing whether a Free Trade Agreement (FTA) with UAE would provide economic benefits to Australia. The report concluded that under an FTA there were significant gains to be made for Australian exports and services, providing a welcome opportunity for diversification for exporters.^[11]

The report demonstrated these benefits through quantitative and qualitative analysis of the outcomes from the trade in goods in other FTAs the UAE (through the Gulf Cooperation Council (GCC)) had negotiated. This included Singapore, the European Free Trade Association Union and India. The analysis found that if Australia could negotiate a similar FTA with a commensurate reduction in tariffs, the goods Australia already exports to UAE could increase 14 percent by $490 million^[12]. Other benefits highlighted included increases in exports of Australian professional services and education^[13].

The UAE's FTAs (each of which is known as a CEPA)^[14], like many of Australia's 18 FTAs^[15] reduce tariffs, lowering the cost of exporting a range of items, including some of Australia's largest export commodities in the agriculture and mining sectors.

These CEPAs have also enabled improved access for service providers and suppliers creating opportunities in key sectors of commercial interest, such as education, financial and professional services.

In addition to these trade benefits, a range of other important outcomes could be achieved in a CEPA with the UAE.

A CEPA would provide a framework to facilitate two-way investment between Australia and the UAE, including in sectors that underpin the energy transition, whilst protecting the government's right to regulate in the public interest.

It would establish digital trade commitments which strike a balance between facilitating modern trade across all sectors of the economy and ensuring appropriate protections in the online environment. It would also promote balanced protection and enforcement of intellectual property rights, supporting innovation and creativity.

Additionally, through a UAE CEPA, Australia could promote inclusive and sustainable trade through internationally recognised labour standards; cooperation and collaboration on women's economic empowerment; and establish high levels of commitment to environmental protection, consistent with internationally agreed principles, standards and rules.

A CEPA would promote First Nations trade cooperation and reserve Australia's right to implement policy measures that provide more favourable treatment to Australian First Nations people.

It would also establish strong legal and institutional frameworks to ensure effective implementation and provide for open and effective consultation and information sharing, including a review mechanism to ensure it remains up-to-date and relevant.

Timeline of Negotiations

Australia and the UAE announced an intention to pursue a CEPA in a joint Ministerial statement on 17 March 2022. The start of negotiations was officially announced by the Minister for Trade and Tourism in December 2023^[16].

Prior to, and during the negotiation phase, DFAT conducted substantial consultation and engagement with multiple stakeholders, across a wide range of industries, organisations, businesses, unions, civil society and states and territories to ensure negotiations targeted a deal that benefited all Australians.

Status of the Impact Analysis

DFAT submitted an Impact Analysis through Early Assessment to the Office of Impact Analysis to support consideration of the negotiating mandate in March 2023.

This formal Impact Analysis is now submitted for approval prior to the proposed signing of the CEPA Treaty intended in October 2024.

1. What is the problem you are trying to solve and what data are available?

Australia needs to strengthen and diversify our exports to support our prosperity and build national economic resilience. We also need to attract investment in order to address key national priorities such as the clean energy transition.

Overall, the expansion of Australia's network of bilateral and regional free trade agreements is associated with a substantial and sustained increase in merchandise exports. Compared to 2014 – when the proportion of exports covered by FTAs stood at 18 per cent – total goods exports had more than doubled by 2023. This growth was supported by an increase in the number and scope of Australia's FTAs: by 2023, about 78 per cent of trade was covered by FTAs. Estimates from DFAT's structural gravity model show, on average, a 12.6 per cent increase in exports from an FTA annually, see Figure 1.^[17]

The liberalising effect of tariff reductions, removal of non-tariff barriers and the harmonisation of rules through bilateral and regional FTAs provides a range of benefits for supply chains, and Australia's ability to integrate into global cross-border supply chains. In addition to removing tariff barriers, and making Australian inputs more competitive, FTAs benefit supply chains by supporting resilience to shortages and shocks through diversification. Modern rules of origin in our regional FTAs also allow for cumulation – the ability for value-adding activities along a supply chain to take place across several countries while still qualifying for preferential tariff treatment. FTAs create an environment in which business can develop supply chains with a high degree of certainty, should they choose to use the opportunities created by FTAs.

Figure 1: Strong export growth supported by expansion in FTAs since 2003^[18]

Accessing and diversifying into new markets, developing and strengthening supply chains and encouraging new sources of foreign investment will be essential to Australia's economic resilience, supporting Australia's prosperity in an uncertain and contested world. Trade accounts for 27 per cent of Australia's GDP value-add, and one in four Australian jobs are trade-related. All businesses, their employees and families can benefit from the increased certainty and freer flow of goods and services provided by high quality trade agreements.

As we face an increasingly complex international outlook that includes growing protectionism, continuing to open new and diversified opportunities for trade and investment with a range of partners will support Australian jobs and prosperity and is a key economic priority for the government.

Using trade data provided by the Australian Bureau of Statistics (ABS)^[19], DFAT analysed the economic benefits FTAs provide. One of the latest FTAs, the Australia-UK FTA (A-UKFTA), entered into force in May 2023 with 99 per cent of UK tariffs on Australia's $14 billion two-way merchandise trade eliminated. Since coming into force, A-UKFTA has seen a large increase in a range of Australian goods exports to the UK. For example, from June 2023 to May 2024, beef exports increased by 417 per cent; chocolate confectionary exports increased by 76 per cent; fruit exports increased by 511 per cent and medical device exports increased by 1113 per cent. The A-UKFTA also enhanced opportunities for Australian services exporters to the UK by making it easier for services professionals to do business in the UK market and increasing opportunities for young Australians to work in the UK.

A lack of access to new opportunities for two-way goods and services trade and investment with the UAE could limit opportunities for Australian businesses to establish, expand, and diversify engagement with international markets. Although Australian businesses have access to markets in the UAE, Australia's higher cost of goods and distance from many markets mean Australian exports face less favourable conditions than similar goods and services from other countries. Also, the UAE is negotiating CEPAs with many of our competitors, so there is a high likelihood current Australian exports to the UAE will decline in competitiveness, as the UAE will preferentially trade with countries with which it has agreements.

Likewise, in the absence of a CEPA, Australia will be less attractive as a destination for quality inwards investment from the UAE, stifling our pursuit of national priorities such as our energy transition, where substantial UAE investment could make a major contribution to priority projects.

In the announcement of the establishment of the Net Zero Economy Authority, it was noted that "Australia's efforts to reduce emissions will generate significant economic change in regions across the country as some industries decline and others emerge. Significant public, private as well as foreign investment is needed to develop more sustainable sources of long-term prosperity and to support communities through this change"^[20]. FTAs are an important mechanism to promote and encourage this needed foreign investment.

Why would we lose our competitiveness without a CEPA?

Australia and the UAE currently have a positive economic relationship. However, our competitiveness and attractiveness as a trade and investment partner will not reach its full potential, and may even erode, particularly as the UAE implements FTAs with other countries. If other countries negotiate preferential trade agreements with the UAE, particularly those countries who provide similar goods and services to Australia, it is likely that the UAE will buy the goods and services from those countries with reduced tariff rates and other reductions in barriers.

Australia's competitors in the UAE merchandise export market are China, India, the US, Japan, Germany, the UK, Italy, Vietnam, France, Republic of Korea, Switzerland, Türkiye, Belgium, Hong Kong, China and Malaysia^[21]. Since 2022, the UAE has entered formal bilateral trade negotiations with a series of countries, including India (CEPA now in force), Israel (CEPA now in force), Indonesia (CEPA completed, but yet to enter into force), Republic of Korea, Chile (CEPA completed, but yet to enter into force), Türkiye, the Philippines, and Mercosur (South American trade bloc)^[22].

The UAE is also currently involved in negotiating a range of FTAs through its membership of the Gulf Cooperation Council (GCC)^[23]. The GCC is currently either negotiating, or in preparatory talks towards Free Trade Agreements (FTAs), with China, the European Union, India, Indonesia, New Zealand, Pakistan, Republic of Korea, and the United Kingdom.

These agreements are in addition to historical FTAs the UAE already has in force with Morocco and the Pan-Arab Free-Trade Area (PAFTA), and, through its membership of the GCC, with Singapore and the European Free Trade Association (Iceland, Liechtenstein, Norway, and Switzerland).

Goods and Services

As the UAE concludes more such agreements with our competitors, Australian exporters and services suppliers will find themselves at a potential competitive disadvantage with an increasing pool of other exporters and service suppliers. Our exporters will face comparatively higher tariffs for their products, which is likely to result in lower price competitiveness in the UAE market.

For example, Table 1, extracted from the Feasibility Analysis ^[24], is a comparison between calculated current World Trade Organization (WTO) Most Favoured Nation (MFN) tariff rates for Australia's main export commodities (weighted against Australia's exports to UAE^[25]) and tariff rates the UAE has through its regional FTAs as part of the GCC. The FTAs with the European Free Trade Association (EFTA) and Singapore are to illustrate the outcomes Australia could expect. This comparison found Australian products face an average tariff rate of 3.6 per cent on exported goods, compared with almost zero to Europe and Singapore with an FTA in place. Based on an expectation that the UAE would negotiate preferential tariff rates under CEPAs at zero or close to zero on most of these goods similar to the outcomes in its CEPA with Singapore and EFTA, Table 1 outlines the competitive disadvantage each Australian product would face, in percentage terms, against our competitors who have a CEPA with the UAE if we remain without one.

Table 1: Comparison between Australia's current export tariff rates with the rates UAE has through the European Free Trade Association (EFTA) and Singapore FTAs tariff rates^[26]

Current tariffs on imports from the UAE lead to higher costs for imported goods and services, purchases for inputs into Australian agricultural exports and for Australian consumers. A CEPA with the UAE would benefit exporters and consumers through improved access to the increased range of better-value goods and service imports that CEPA would bring.

For example, the UAE is an important source of fertilisers and petroleum for Australia^[27]. Fertilisers and petroleum are indispensable to Australia's agricultural production, and therefore underpin our food security.

The UAE is also a large supplier to Australia of jewellery items, auto parts and certain iron products, all of which attract a 5 per cent tariff. Without securing mutually beneficial trade liberalisation through CEPA, these tariffs would remain, preventing a lower cost of these goods for Australian businesses and consumers.

On the export side, we would lose out on opportunities to boost our engagement with a range of potential customers and suppliers based in the UAE. These customers and suppliers are becoming increasingly valuable to global supply chains as the UAE strengthens its role as a global supply and transport hub. This is particularly the case as other supply chains come under pressure due to geopolitical tensions, the impact of climate change and natural disasters and other unforeseen global events.

Without a CEPA, Australia will be unable to benefit as much from the UAE's status as a transport, logistics and services hub. The UAE's removal of tariff and other barriers on Australian exports will help safeguard Australia's role as an important supplier of agricultural commodities and industrial inputs into UAE industry.

In addition to tariffs, without a CEPA, Australian service suppliers and professionals would not be able to claim the same flexibilities of access or certainty of locked-in rules and protections as other countries that negotiate a CEPA with the UAE.

Over time this could negatively impact our current level of business engagement and would fail to open the new opportunities which enable Australian business to grow as described above.

Investment

Despite already strong UAE investment in Australia, there is substantial potential for this amount to expand given the value of the UAE´s outward-looking sovereign wealth funds and other investors.

The most notable UAE sovereign wealth funds - Abu Dhabi Investment Authority, Investment Corporation of Dubai, Mubadala and Emirates Investment Authority, were valued in 2022 at USD$993 billion (bn), USD$320bn, USD$287bn and USD$87bn respectively. UAE investors are motivated to invest primarily for commercial, rather than geostrategic reasons.

These investors are already active in Australia. However, feedback received (see list at Appendix A) from stakeholders is that outcomes to help promote and facilitate investment through a CEPA would make these investors more comfortable investing in Australia^[28], and they would be more likely to expand their investments, particularly in areas signaled by both governments as priorities, such as Green and Renewable Energy, Food and Agriculture, Infrastructure, Data and Artificial intelligence and Minerals.

Which stakeholders are most affected by this problem?

While the problem outlined above has an economy wide impact for Australia, the lack of access to new opportunities for two-way goods and services trade and investment with the UAE will particularly impact certain stakeholders.

In determining these stakeholders, DFAT conducted substantial stakeholder engagement (see under Question 5), receiving both informal feedback as well as 45 formal submissions.

In terms of goods trade, business sectors that already export significant volume to the UAE would be impacted if Australia lost competitiveness in those product lines.

The table below demonstrates Australia´s top 50 exports to the UAE, including those that currently face a 5 per cent applied tariff. If competitors gained tariff advantages into the UAE market for these products, then these sectors would likely become less price competitive and could see a reduction in demand from the UAE for their products. These points were reinforced by stakeholders representing these sectors during consultations.

Table 2: Australia´s Top 50 Exports to the UAE in 2023 and current applied tariffs.

In addition to exporters, stakeholders relying on foreign investment to support major projects in Australia would also be highly adversely impacted if Australia lost competitiveness as a preferred destination source for UAE investment. These stakeholders include a wide range of Australian businesses who could partner with UAE investors, as well as local and regional communities where projects occur.

As foreign investment occurs across multiple sectors in Australia, the list of these stakeholders or the sectors they represent is not exhaustive. However, Figure 2 provides a useful indication of the major industries which attracted foreign direct investment in Australia in 2023. Additionally, as noted by the Net Zero Economy Authority above, significant foreign investment is needed to develop projects related to Australia´s renewable energy and net-zero ambitions. Stakeholders in these sectors are thus particularly relevant in this context.

Figure 2: Foreign direct investment in Australia across selected industries^[29]

The wider community is also a stakeholder which benefits from projects relying on foreign investment, such as more renewable energy and lower emissions, and which would be impacted if Australia became less competitive in attracting investment from the UAE.

While investment projects may occur across Australia, impacting many communities and stakeholders, the Western Australian government specifically noted the impact investment from the UAE would have on Western Australia^[30]:

Western Australia and the UAE's energy sectors are in the midst of a transition towards cleaner energy sources, with the UAE's Energy Strategy 2050 aiming to increase the contribution of clean energy in the total energy mix to 50 per cent and reduce the carbon footprint of power generation by 70 per cent, both by 2050. Partnerships are already emerging in this space, with examples such as Masdar, a UAE company who in 2020 made its first investment in Australia after acquiring a stake in the country's second utility-scale waste-to-energy facility, East Rockingham Waste to Energy.

2. What are the objectives, why is government intervention needed to achieve them, and how will success be measured?

To address the problem outlined in Question 1, key objective of CEPA is to:

Strengthen trade and investment with the UAE through preferential market access for Australian goods and service exporters, and mechanisms which facilitate two-way investment.

This objective can be broken down using the SMART analysis as follows:

Specific – we need to ensure CEPA is a legally binding agreement with any associated Memorandum of Understandings (MOUs) and/or side-letters clearly defined as part of the CEPA package.

Measurable – we need to ensure CEPA is clear, setting out the rules, obligations and (where relevant) tariff reductions that Australia and the UAE agree to implement. The degree to which these are accurately implemented can be clearly measured after entry-into-force by comparing the terms of the agreement to the applied rules and tariffs.

Accountable – we need to ensure CEPA is publicly available so that all stakeholders can see its outcomes and raise any issues with the Australian government to pursue through the dispute settlement or cooperative provisions of the agreement.

Realistic – we need to ensure the outcomes of CEPA are achievable and can be implemented by both parties.

Timely – to reach the objective in a timely manner we need to ensure that CEPA can be implemented to deliver benefits as quickly as possible, in accordance with both parties' domestic treaty making procedures. Details on Australia's estimated timelines for entry into force are set out in Figure 3.

Figure 3: Outline of when the Australia-UAE CEPA will come into force^[31]

Signing an agreement that delivers on the above SMART objective requires government action. There are no other alternatives to government action that will legally ensure Australian exporters are not at a competitive disadvantage and legally ensure we achieve improved conditions to facilitate trade and investment with the UAE.

This action must be through a treaty as WTO rules do not permit members such as Australia and the UAE to unilaterally preference each other's trade without a legitimate treaty-level trade agreement.

Under Section 61 of the Australian Constitution, only the federal government can negotiate and implement an international treaty like the CEPA. DFAT has led whole-of-government efforts in the CEPA negotiations, based on guidance from Ministers. Consistent with Australia's treaty making procedures, when negotiating an FTA, DFAT has worked closely with other Australian Government agencies.

CEPA is well aligned with government's policy to improve business conditions for Australian exporters of goods and services. Investors will benefit as will Australia's geostrategic interests in promoting transparent and rules-based approaches to prosperity and economic integration.

Government action to sign and implement CEPA will lock in freer trade on a legally binding basis and provide a gateway for business to engage and open new markets more effectively. Also, while CEPA will cover all UAE investors, many of these investors such as the UAE's sovereign wealth funds, have representatives from both government and the private sector, and prefer to focus investments in countries where the UAE has put in place a legal and institutional investment framework through government-to-government action.

More specific information on the Australia-UAE CEPA negotiating objectives is outlined on the DFAT website.^[32]

Measuring the success of the above objective will be done on an ongoing analysis of CEPA's implementation by DFAT in consultation with regular feedback and engagement with stakeholders on the agreement. We will also assess its impacts quantitively, through using Australian Bureau of Statistics trade data to measure changes in two-way trade between Australia and the UAE once the UAE CEPA is in force.

Current trade statistics monitor goods, services and investments between Australia and UAE. This will provide an indication of changes in trade and investment between the two countries on an overall basis and for specific sectors.

The potential barriers and constraints that may prevent this objective being realised include the need for both countries to first complete their respective constitutional processes for signature and ratification of treaties. By signing CEPA, both countries manifest their intention to implement the treaty. However, it does not come into force until it has also been ratified. The UAE Constitution^[33] sets out its relevant treaty making procedures. For Australia, Figure 3 sets out the legislative and executive processes after signature required before the treaty can be ratified and enter into force.

3. What policy options are you considering?

This Impact Analysis considers two options: to sign or not to sign the negotiated CEPA with the UAE.

3.1 Option 1 – Do not sign CEPA

This option would involve ending the current CEPA negotiations and reverting to the status quo. Trade negotiations entail ongoing discussions between government officials on an agreed outline of topics which will make up the trade agreement. These topics have changed over time for Australia. Issues beyond tariff reduction for goods which are hallmarks of traditional FTAs are now usually included. For example, many of the FTAs Australia has recently signed address behind-the-border barriers (including labelling requirements and organic certification) that would otherwise impede the flow of goods and services; encourage investment; and improve the rules affecting such issues as intellectual property, e-commerce and government procurement.

Reverting to the status quo means relying on any further trade liberalisation with the UAE to proceed under the auspices of the WTO rules, which is slower and not guaranteed of progress^[34]. The WTO operates by consensus and all Members must agree before a decision can be made. In recent times this has led to very slow progress across a range of issues^[35]. It would also mean relying on a unilateral decision by the UAE to reform domestic regulatory settings applicable to all trading partners.

3.2 Option 2 – Sign and implement CEPA

CEPA negotiations have shown strong progress throughout 2024. Parameters have been reached on a draft treaty which can be prepared for signature following agreement to final details and the legal scrub. A summary of these outcomes is below and are consistent with the objectives outlined under Question 2.

On Goods, the UAE will eliminate fully tariffs on 98.2 per cent of its schedule, covering 99.9 per cent of Australia's exports to the UAE market by value. Tariff elimination by the UAE will be either immediate on entry into force (90.6 per cent of tariffs, covering 95.4 per cent of our exports by value) or phased over three or five stages (7.5 per cent of tariffs, covering 3.7 per cent of our exports by value). Table 3 outlines the savings that will occur for selected Australian exports to the UAE.

This outcome is the most liberalising the UAE has agreed to date, exceeding its agreements with India (97.1 per cent of tariffs fully liberalised), Israel (96.3 per cent), Indonesia (92.3 per cent) and South Korea (90.0 per cent).

Australia's current conditional offer to the UAE liberalises 96.8 per cent of tariffs immediately. The remaining 3.2 per cent of tariffs on Australia's most sensitive products – including aluminium and steel – will be phased over five stages, allowing those industries additional time to adjust to any competitive pressures from UAE imports. This offer is broadly equivalent to Australia's other recent bilateral FTAs, such as the Australia-India Economic Cooperation and Trade Agreement and the Australia-UK FTA^[36].

Australia has also achieved other modern, flexible and trade-facilitating outcomes on rules of origin, complemented by inclusion of commitments for customs procedures.

Table 3: Australia- UAE Comprehensive Economic Partnership Agreement - Tariffs eliminated across the board on Australian exports

Footnotes

(1) Annual average 2021-2023 of Australian export figures reported by the Australian Bureau of Statistics

(2) Share of tariff lines

(3) On full elimination of duty, calculated on import figures reported by the UAE (annual average 2019-2022)

On Services, CEPA will include a comprehensive set of rules to provide Australian service suppliers with greater certainty and predictability to support their operations in the UAE. These rules will address restrictions and discrimination when accessing the UAE services market, as well as behind-the-border procedural and related domestic regulation barriers that have a negative impact on two-way trade and investment in services.

Australia's offer to the UAE is consistent with our trade in services market access commitments in the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) upgrade and the Regional Comprehensive Economic Partnership (RCEP) Agreement.^[37]

On Investment, CEPA will support and promote quality two-way investment, including in key sectors relevant to Australia´s clean energy transition and Future Made in Australia objectives.

An Investment Agreement will include investment protections that provide certainty to Australian and UAE investors (but will not include Investor-State Dispute Settlement). It will include modern provisions on the environment and corporate social responsibility.

Provisions will support the Government's right to regulate in the public interest and encourage meaningful engagement and dialogue between investors and First Nations peoples and local communities.

A Council on Investment will be established to facilitate continued political level exchanges on the investment relationship and five Investment Cooperation MOUs will also form part of the CEPA package in sectors of national priority including Green and Renewable Energy, Data Centres and Artificial Intelligence Projects, Food and Agriculture, Minerals and Infrastructure.

The investment outcomes, including the MOUs, will not affect existing legal or regulatory processes, nor impact the operation of Australia's Foreign Investment Review Framework.

On Skilled Labour Mobility, CEPA will support the flow of skilled personal and business visitors. It will guarantee temporary entry for service providers, investors, and other business visitors. It will not include new labour market testing waivers.

CEPA will have a dedicated chapter covering trade and labour, a first for the UAE. Australia and the UAE will affirm our obligations as members of the International Labour Organization (ILO) and our commitments under the ILO Declaration on Fundamental Principles and Rights at Work. CEPA will also promote compliance with ILO standards and enforcement of labour laws. It will establish a Dialogue on Labour to advance Labour Rights, including through engaging with stakeholders. In addition, CEPA will promote cooperation on labour matters of mutual interest.

CEPA will have a dedicated chapter covering Environment and the Transition to Net Zero. The chapter recognises that international environmental agreements, including the Paris Agreement, play an important role in protecting the environment and that implementation of these agreements is an important and common goal. Australia and the UAE will work together to address a range of trade-related environmental challenges, including addressing climate change, promoting the circular economy, reducing plastics pollution, improving air quality, and preventing overfishing and illegal wildlife trade.

CEPA will include a standalone chapter acknowledging the importance of 'gender balance' along with women's economic empowerment. The chapter recognises and affirms key international instruments, such as CEDAW and the Beijing Declaration, along with commitment to cooperate on policies and initiatives to address barriers and promote the benefits of trade to all.

CEPA will include a dedicated chapter covering First Nations trade, the first of its kind in Australia's FTAs. The chapter will establish a framework for cooperation to promote First Nations trade and investment interests, including in arts and crafts, dance and music, tourism, food and agribusiness, biological diversity, environmental management, green economy and resources.

The CEPA will include Australia's first standalone chapter on sustainable agriculture and food systems. The chapter will recognise the role of agriculture in ensuring food security and driving climate resilience, emissions reductions and other environmental outcomes.

CEPA will include outcomes on cooperation to support animal welfare and to continue to improve both countries level of animal welfare protection.

The digital trade rules avoid impediments to data flows whilst retaining flexibility to regulate for legitimate public policy purposes. They also facilitate cooperation, typically in areas like emerging technologies, cyber security and technical assistance and capacity building to share knowledge and best-practice and support digital trade.

CEPA will promote adequate, effective and balanced protection and enforcement of Intellectual Property (IP) rights and also encourage innovation and creativity.

The Micro, Small and Medium-Sized Enterprises (MSMEs) chapter in CEPA contains articles providing for an online hub of resources for MSMEs considering trading or investing in the other country; along with pathways to cooperate on exchanging best practice in promoting MSME engagement in international trade and addressing specific barriers faced by MSMEs to trade.

CEPA contains a dedicated chapter on competition and consumer protections, including provisions on state-owned enterprises. The chapter demonstrates a mutual understanding of the importance of transparency and procedural fairness in our respective competition landscapes, as well as protecting the rights of consumers. It recognises the importance of a level playing field for both government and non-government businesses operating in the market.

CEPA will establish a legal and institutional framework that ensures its effective and efficient implementation, including through a streamlined committee structure and a robust state-to-state dispute settlement mechanism.

The CEPA will include exceptions to ensure both governments can continue to regulate in the public interest, including to protect essential security interests.

CEPA will include cross-cutting provisions that reflect existing Australian laws and practices around transparency in public administration. These provisions will sit alongside Australia's and the UAE's existing obligations under other international agreements, including the UN Convention against Corruption and the UN Convention against Transnational Organized Crime.

In addition to other areas of cooperation identified across chapters, CEPA will promote practical economic cooperation in a range of areas to support the agreement, including closer business to business engagement.

Once concluded, Australia can proceed to sign the treaty following normal domestic treaty making processes and implement its provisions to achieve entry-into-force, see Figure 3 for details.

4. What is the likely net benefit of each option?

There are multiple influences on international trade and investment flows, such as current economic conditions, exchange rate fluctuations, supply and demand factors, and environmental issues such as natural disasters. This has an impact on determining a 'cause and effect' relationship between CEPA and trade and investment outcomes.

Measuring what would have happened if CEPA had not entered into force is complex. Data considered in isolation may not always reveal the full picture. Comparisons between Australian and partner-country trade data can be difficult, reflecting valuation differences, transhipments through third-party countries, and timing issues. If we do not sign the proposed CEPA, trade will likely continue, though may decrease if we become less competitive and the opportunity cost may be significant: DFAT considers that the benefits to Australia in signing CEPA, as explored in detail below, are greater than not signing.

DFAT's qualitative assessment is that signing the proposed CEPA will result in a net benefit for Australia. This is due to the likelihood of increased business activity and confidence, a greater range of competitively priced goods imported from the UAE for consumers, and improved access and competitiveness of Australian goods and services into the UAE. It will be good for Australian business and consumers.

4.1 Option 1 – Do not sign CEPA

There would be no benefits and a likely reduction in trade for Australia in taking this option. There would be no further direct regulatory costs involved with this option.

Not proceeding with the CEPA would be inconsistent with Australian Government's commitment to diversify and promote further trade opportunities for Australian business. Without a CEPA, while the UAE would remain a significant trading partner for Australia, we would not be able to address the problem of losing competitiveness in securing valuable opportunities to build trade and investment with a dynamic, growing and globally focused strategic partner.

If this option is taken, Australian exporters would remain disadvantaged against competitors that are already gaining preferential access to the UAE market. The size of this disadvantage would be expected to increase over time as competitors ratified further trade agreements with the UAE, either bilaterally, or via agreements with the GCC.

Under this option, Australian goods exporters would continue to face tariffs at 5.55 per cent for agricultural products and 4.5 per cent on average for non-agricultural products, with some specific commodities subject to very high duties^[38]. See Table 2 for details.

It is impossible to calculate the exact cost of this option in monetary terms, however, a figure between the estimated export gains from CEPA and the potential decline in exports without CEPA as we lose competitiveness based on tariff differentials over time can be estimated (see Figure 4, conversion of Table 2 from Table 5.2 in the initial Feasibility Analysis compared with baseline trade projections based on ABS trade statistics)^[39].

Non-tariff barriers on trade in certain agricultural and food products that stakeholders have identified as concerns (such as the UAE's document attestation requirements for export consignments identified by the red meat industry) would continue, as would behind-the-border impediments to further liberalising trade in services. These barriers are outlined in the Feasibility Analysis.^[40]

Under this option, we would need to rely on progress through the WTO for any market access liberalisation. Australia is a founding member and strongly committed to promoting and protecting the open, rules-based global trading system through the WTO. However, the WTO operates by consensus where every member's opinion carries the same weight, and all members must agree before a decision can be made. Thus, progress to reduce trade barriers can be slow, although once an agreement is reached, all members are obliged to honour it.

As the WTO Doha Round failed to make progress, there is no realistic timeframe for liberalisation through the WTO. Even if it did, the potential tariff benefits for Australia would be lower than under CEPA as many of our competitors would have had an FTA in place with UAE for a significant amount of time before any WTO outcomes would be achieved. Those competitors would have first-mover advantage in terms of establishing stronger trade, investment and people and people linkages through their FTA with the UAE. Beyond tariff liberalization, it is also highly unlikely that the broader CEPA outcomes in areas such as in investment, services and non-tariff barriers, would be addressed under WTO auspices and even less likely that binding outcomes could be achieved.

4.2 Option 2 – Sign and Implement CEPA

Signing CEPA would open valuable opportunities for trade and investment outcomes with a dynamic and growing globally focused strategic partner. Consistent with Australian Government policy, it would diversify trade and investment opportunities and strengthen our strategic engagement with an important partner in the Middle East Region.

Benefits

The Feasibility Analysis examined the potential benefits of the CEPA. This study was undertaken prior to negotiations commencing, but relied on certain expectations and assumptions which have been borne out in the actual negotiation of the CEPA. As such, the study is an accurate analysis of CEPA´s potential impacts.

Estimated potential financial benefits outlined in the Feasibility Analysis provided by CEPA to Australia could be as high as $490 million per year. This equates to a 14 per cent increase in annual Australian exports to the UAE, with an 11 per cent increase in agricultural goods and a 15 per cent increase in non-agricultural goods^[41].

In August 2024, DFAT commissioned the CIE to update its independent estimate on the tariff benefits of a CEPA with the UAE, based on Australia's negotiated tariff outcomes. This updated analysis indicated a greater financial benefit, with the potential increase in Australia's exports to the UAE estimated to at $678 million per year, or equivalent to 16 per cent of the recent level of Australian exports. It represents a 37.7 per cent increase from previous estimates, due to higher base value of exports and the change in export composition since its original estimate^[42].

These analyses conclude that a CEPA would provide "potentially healthy gains in Australian exports for particular products and services, providing a welcome extra source of diversification for exporters"^[43], and could enhance the investment relationship between Australia and the UAE^[44].

For example, while Australia is a leading supplier of alumina to the UAE, elimination of the 5 per cent tariff under CEPA will support Australia's price competitiveness against other suppliers to the UAE aluminium smelting industry. This will ensure that Australian raw materials continue to feed into the products the UAE ultimately exports. It will also support the Future Made In Australia agenda, providing better conditions for Australia to export green aluminium and other metals to the UAE.

An important point made by the Feasibility Analysis was that behind the border barriers and restrictions currently vary between Emirates, which creates additional difficulties in seeking access for services suppliers and investors. A UAE-wide CEPA would support greater consistency and certainty for businesses.

The agreement will create new opportunities for Australia to benefit from the UAE´s position as a growing global and regional transport and logistics hub. CEPA will enable rules facilitating transshipment, and efficient customs procedures providing value-add and re-export opportunities, opening further diversification of markets for our exporters.

The agreement aims to provide high levels of environmental protection, consistent with internationally agreed principles, standards and rules. Also, Australia's values on inclusive and sustainable trade through internationally recognised labour standards, cooperation and collaboration on women's economic empowerment will be promoted.

CEPA will promote First Nations trade and investment and protection of the integrity of indigenous arts and cultural products. It will reserve Australia's right to implement policy measures that provide more favourable treatment to First Nations Australians.

Beyond the Feasibility Analysis, a further economic assessment of the outcomes of the CEPA is not possible prior to the treaty entering into force. This is due to the factors impacting international trade and investment as outlined at the start of this section. However, DFAT's qualitative assessment is that CEPA will deliver trade liberalising gains across the breadth of Australia's trading relationship with the UAE. It will improve access for Australian goods and services into the UAE, reduce the costs of imports for Australian consumers, and provide greater regulatory certainty for Australian and UAE businesses.

This estimation of the likely positive impact of a CEPA is supported by recent studies of the impacts of Australian FTAs. The FTA Utilisation Study^[45] found Australia's FTAs - focusing on our FTAs with China, Japan and Korea - were being widely used and having a positive impact on business confidence, activity, strategy, expansion planning, and international investment, including in services sectors.

This research highlighted the 'head turning' effect of Australia's trade agreements with China, Japan and Korea, contributing to the positive perception of Australia as a place to invest and do business. It also noted businesses reporting increases in domestic demand for goods and services from businesses trading internationally^[46].

Post-implementation reviews of Australia's free trade agreements with Japan and China (conducted in 2020 and 2021 respectively) also support the benefits of concluding FTAs with chosen economic partners^[47] and ^[48]. Both concluded that those agreements had delivered a net benefit to Australia including through reduction of trade barriers and increased value of goods and services trade.

Costs

The main cost associated with the CEPA is expected to be a reduction in tariff revenue from UAE imports, estimated to be $16 million in 2025-26 and increasing to $23 million per year by 2029-30, when all tariff reductions are fully implemented. The broader economy-wide benefits of the agreement will far exceed this revenue cost.

CEPA will not impose any regulatory burden on businesses, communities or individuals. An analysis of any regulatory burden within the agreement is outlined in Appendix B.

Figure 4: Comparing potential economic gains in goods exports from Australia to UAE with and without a CEPA^[49] and ^[50]

This a graphical representation of Table 5.7 in the Feasibility Analysis^[51]. The baseline scenario was developed using Australia's annual goods trade data^[52]. The figure shows the impact of the potential UAE FTA scenario as outlined in the Feasibility Analysis compared with past Australian trade data, had the agreement entered into force in 2024.

It is not anticipated lower tariffs on UAE imported products to Australia will apply any competitive pressure on domestic production as there are no industries in direct competition with imported UAE goods.

Under CEPA, Australia will cut tariffs on a selection of consumer (jewellery, perfumes, furniture) and industrial products (copper wire, glass containers, plastic) imported from the UAE. This will make them cheaper at the checkout and lower businesses input costs, with savings for consumers at around $10 million in the first year or $40 million a year when tariffs are fully phased out after five years. See Table 4 below.

Table 4: Australia's Top 20 Imports from the UAE^[53] and ^[54]

Impacts of specific outcomes

As noted in Question 1, the positive impacts of CEPA (as further outlined in Question 3.2) will be felt across the Australian economy. The specific stakeholders mentioned in Question 1 will particularly benefit in relation to the areas below.

Trade in Goods

Removal of the UAE's import tariffs will create commercially significant benefits for Australian exporters. Elimination of duties opens opportunities for Australian exporters to diversify into this important Middle East market and provides greater certainty on tariff treatment. Australian exporters will benefit across the board, including farmers and food and beverage producers, who stand to gain from preferential access to the UAE´s growing market for premium food and agricultural products.

Although UAE tariffs are low (generally up to 5 per cent across most agricultural and non-agricultural products) their elimination under CEPA will nevertheless benefit Australian exporters.

In competitive sectors such as food and resources commodities, even a 5 per cent margin could result in tilting the balance in favour of Australian suppliers. Australia already exports $946 million worth of food and agricultural products to the UAE (annual average 2019 to 2021) and has a favourable reputation for being a safe and reliable supplier. The UAE's reliance on imports (over 90 per cent of its food consumption) continues to drive demand for premium food and agricultural products. A tariff advantage will assist Australia consolidating its status as a preferred supplier.

A wide range of Australian merchandise exports will benefit from CEPA including exporters of aluminium oxide, automotive parts, frozen red meat, gold, nickel, coal, diamonds and dried legumes. First Nations businesses will benefit from preferential market access for exports in areas of interest such as bush foods, bush skincare and fashion.

Stakeholder feedback (see Question 5) noted the challenges associated with non-tariff barriers (NTBs) in the UAE market, particularly in agriculture and food trade. CEPA will include the establishment of a 'non-tariff barriers mechanism' to allow Australia to engage the UAE and resolve NTBs after entry into force of the Agreement.

These outcomes would create an environment that encourages exports and provides greater certainty to Australian business. These benefits would provide Australian exporters with an advantage in the UAE market or, at a minimum, ensure Australia is on level terms with our competitors.

Trade in services

CEPA will provide greater certainty for Australian service providers, by locking in access in sectors of key commercial interest. This will not only assist exporters seeking access to, or operating in, the UAE but also provide a foothold for those service suppliers, particularly professional services firms, wanting to use the UAE to service the broader region. These regions include Africa where the establishment of a local presence poses greater risk.

The UAE has offered commitments in 124 sectors and subsectors in its market access offer to Australia. This includes commitments in line with the UAE's best offer to previous CEPA partners. The UAE's offer greatly improves upon its WTO services commitments, which were limited to 35 sectors and subsectors only.

Sectors that will benefit from these commitments include professional services (such as legal, medical, management consulting and services incidental to manufacturing), distribution, environmental, education, health and financial services.

The UAE's offer locks in 100 per cent foreign equity caps for certain financial services in the Dubai International Financial Centre free trade zone and particular health services including hospital services the Dubai Health Care City free trade zone.

CEPA will include a comprehensive set of rules to provide Australian service suppliers with greater certainty and predictability to support their operations in the UAE. Australian service suppliers are subject to limitations on foreign ownership, registration and licensing requirements, and other restrictions that local service suppliers are not subject to. These barriers can vary from emirate to emirate, creating uncertainty for Australian service suppliers. These rules will address restrictions and discrimination when accessing the UAE services market, as well as behind-the-border procedural and related domestic regulation barriers that have a negative impact on two-way trade and investment in services.

The trade in services chapter in CEPA will contain a Domestic Regulation article that aims to address behind-the-border protectionist measures in respect of licensing requirements and procedures, qualification requirements and procedures, and technical standards affecting trade in services. This includes obligations such as publication of requirements and procedures for authorisation, addressing ease of submitting applications for authorisation, and other such measures. This approach to addressing behind-the-border and domestic regulatory barriers to trade is in line with Australia's general approach to addressing these issues in its other FTAs, and largely builds on the WTO's Joint Initiative on Services Domestic Regulation, the benefits of which have been previously examined by Australia's Office of Impact Analysis^[55].

Investment

CEPA's investment outcomes will facilitate more UAE investment into Australia through the Council on Investment established to facilitate continued political-level exchanges on the investment relationship and the five Investment Cooperation MOUs which will facilitate and promote two-way investment in sectors of national priority including Green and Renewable Energy, Data Centres and Artificial Intelligence Projects, Food and Agriculture, Minerals and Infrastructure.

It is impossible to accurately calculate the direct impact on investment as a result of CEPA due to the variety of factors impacting investment decisions. Nevertheless, with CEPA strengthening the Australia's attractiveness to the UAE as an investment destination through various instruments and facilitation measures that are highly valued by UAE investors, it is likely that UAE's current investments of $12.6 billion in Australia will grow significantly following CEPA's entry-into-force.

Other Potential Impacts & Outcomes

Australian businesses, workers and consumers will benefit from a range of digital trade rules, ensuring that we have compatible systems across borders and making cross-border trade less burdensome and costly for our businesses. The rules provide for the acceptance of electronic trade documents; prohibiting the charging of customs duties on electronic transmissions; promoting digital trade standards; and acceptance of e-signatures on e-invoicing and e-payments and provide protections for consumers and personal data.

The Intellectual Property (IP) outcomes will facilitate trade and investment in IP, provide increased clarity for Australian businesses and innovators and balance the legitimate interests of IP rights holders, IP users and the public interest while protecting the right to regulate in important public policy areas. These outcomes will also protect the integrity of Australia's health and pharmaceuticals systems, including the Pharmaceutical Benefits Scheme, and are consistent with our existing FTA and multilateral obligations that preserve Australia's ability to regulate and pursue its public policy interests. They do not require changes to Australian law.

Micro, Small and Medium-Sized Enterprises (MSMEs) will also benefit from the provisions in CEPA which support them to take advantage of the agreement.

CEPA will provide Australian suppliers with guaranteed access to the UAE's government procurement market for the first time. Australia has secured access and commitments equivalent to other partners who have secured government procurement market access with the UAE. This will ensure Australian suppliers of goods and services of all sizes – including SMEs and Indigenous-owned businesses – are able to compete in the UAE market. Providing UAE suppliers with guaranteed access to Australia's market will stimulate competition and drive value for money in government procurement.

Australia has reciprocated the level of coverage and value offered by the UAE in key sectors of their market, notably withholding coverage of construction services until such time as the UAE offers this access to Australia. As the UAE grows their network of trade agreements, Australia has secured a commitment to revisit the market access commitments in the future if the UAE offers additional market access or coverage to another trading partner beyond what was offered to Australia.

Australia has maintained its standard exceptions in priority public policy areas, such as SME and Indigenous procurement, the protection of essential security, health and welfare services, and other specific exceptions. These exceptions are consistent with Australia's existing trade agreements, and the commitments made will not require any substantive changes to Australia's existing government procurement policies and systems. Australia has not covered state and territory government procurement, as the UAE was unable to offer coverage of individual Emirati government procurement.

Through references across different chapters of the text, CEPA also provides pathways for promoting shared values on trade and sustainable development, environmental protection, labour standards, human rights, and gender issues in line with Australia´s objectives in these areas.

The inclusion of a chapter in CEPA promoting First Nation's trade and investment cooperation and ensuring appropriate protections for First Nation's exporters is an important for First Nations stakeholders.

The chapter is based on cooperation between Australia and the UAE and recognises the important contribution that First Nations people and businesses make to global trade and investment, and the importance of empowering First Nations people and businesses to benefit from the opportunities created.

CEPA will encourage cooperation and exchange of information through joint trade and investment promotion activities relevant for First Nations businesses, including businesses that relate to or derive from traditional knowledge and traditional cultural expressions such as arts and crafts, dance and music, tourism, food and agri-business, biological diversity and environmental management, the green economy and resources. Genetic resources, traditional knowledge and traditional cultural expressions are acknowledged in the agreement including with respect to the names and uses of plants, traditional foods, language, song, stories, songlines, dance and works of art.

CEPA also includes preferential access and rules open to all Australian businesses, allowing First Nations businesses to target exports in areas of interest such as bush foods, bush skincare and fashion.

5. Who did you consult and how did you incorporate their feedback?

Australia CEPA Stakeholder Consultations

In negotiating the Australia-UAE Comprehensive Economic Partnership Agreement (CEPA), DFAT has consulted extensively across business, civil society, industry and worker organisations.

Given CEPA´s coverage of policy areas across government and noting that policy leads and experts on a range of topics covered in the agreement are situated within different agencies, DFAT consulted across government including with Treasury, Department of Agriculture, Forestry and Fisheries, Department of Finance, Attorney General's Department, IP Australia, Department of Health, Department of Industry Science and Resources, Austrade and Department of Home Affairs as well as others. These consultations ensured policy experts from agencies on the relevant subject matter areas were involved from the beginning as part of the negotiation process.

Prior to the commencement of CEPA negotiations in December 2023, DFAT started stakeholder consultations in Australia from March 2022 inviting both individuals and groups to consider and comment on the commercial, economic, regional, and other opportunities and impacts that could be expected to arise from a future Australia-UAE CEPA. This resulted in 45 formal written submissions – 31 of which were public submissions and have been published on the DFAT website^[56]. Fourteen submissions were commercial-in-confidence, with only the name of the organisation published.

While details of submissions varied and some requests were commercial-in-confidence, some common themes came through across the submissions. Several stakeholders from the agricultural industry expressed their desire to achieve elimination of UAE tariffs on their exported products through CEPA, while industrial exporters expressed similar views. Several service providers, including in education and financial services, welcomed CEPA outcomes which would enhance recognition of Australian degrees taught in the UAE and support the expansion of current operations in the UAE. Other stakeholders expressed their desire for CEPA to support further investment from the UAE into Australia, including in the field of renewable energy.

Various groups expressed views on the importance of including inclusive trade outcomes in CEPA, such as provisions on animal welfare, environment, labour rights, First Nations trade and women´s rights. The ACTU in its submission indicated it did not support moving forward with CEPA unless the UAE demonstrated certain preconditions to safeguard workers´ and human rights. AFTINET also had a clear view that CEPA should not include Investor State Dispute Settlement (ISDS).

DFAT continued to provide stakeholders with the opportunity to provide written submissions on the CEPA via the DFAT website throughout the negotiations.

DFAT held consultations with Peak Bodies and government ahead of the Chief Negotiator visit to Dubai for the first negotiation round in January 2024. With the exception of some stakeholders´ concerns on labour and human rights related issues, consistent feedback from the strong majority of stakeholders during these consultations showed broad support for CEPA. Verbal feedback provided during these consultations indicated particularly interest on progress being made furthering outcomes on certificates of origin, investment opportunities, market access (through tariff reductions), and research collaboration.

DFAT's Chief Negotiator held regular open forum virtual debriefs to provide updates for all interested stakeholders on the status of negotiations. DFAT officials also met separately with over 95 public, private and civil society stakeholders (Appendix A).

The Chief Negotiator gave a series of updates after each negotiation round to government agencies and State and Territory governments, meeting three times in the period January to August 2024.

Consultations with stakeholders used a range of channels including virtual and in-person meetings. Hybrid meetings of virtual and in-person participants involving over 100 attendees representing 63 organisations occurred in June 2024 and in August 2024.

Feedback from these consultations continued to be positive, with stakeholders welcoming progress and continuing to express their desire for CEPA to secure outcomes which would enhance market access for exports to the UAE, further UAE investment into Australia and support inclusive trade areas (environment, labour, animal welfare, First Nations and women´s rights).

DFAT met with and briefed Trade Unions both prior to and immediately after the January 2024 negotiation round. Further consultations and briefings were held with Trade Unions in May and June 2024. The June 2024 Chief Negotiator stakeholder meeting was also attended by Trade Unions.

Trade Unions continued to oppose CEPA, reiterating the points outlined in the ACTU submission provided to DFAT^[57].

There were six consultations with the National Farmers Federation held both virtually and in-person, discussing market access interests, progressive trade issues, and non-tariff barriers. These discussions included agricultural trade with the UAE and the sensitivities around market access for wine and pork. Peak bodies for wine and spirits were consulted several times to discuss technical barriers to trade for wine, wine tariffs, excise taxes and labelling. The Chief Negotiator also held further in-person meetings in Adelaide (June 2024) with Wine Australia and Australian Grape and Wine.

The consistent feedback from these talks was the importance for Australian farmers and premium food and beverage exporters in receiving enhanced market access to the UAE for their products through CEPA. This would result in substantial commercial opportunities in a growing market.

Key stakeholders, individuals and organisations, including those who had made submissions and others DFAT had identified as having an interest in CEPA were invited to the Chief Negotiator's general stakeholder update in June 2024. Of the 96 individuals and organisations invited, 53 attended.

In August, ahead of the final round of negotiations, the Chief and Deputy Chief Negotiators held virtual meetings with Commonwealth agencies, State and Territory governments, and a broad range of stakeholders from business civil society, industry and worker organisations, to provide an update and seek input.

DFAT found that business, government and many non-government stakeholders were supportive of the Australia-CEPA negotiations and saw clear benefits for Australia in the CEPA process.

Similar to views expressed throughout the negotiations, the value for Australia in achieving enhanced market access to the UAE market for goods and services, as well as the potential for CEPA to promote significant UAE investment into priority sectors for Australia´s transition to net-zero across the country, continued to be key reasons for stakeholder support. Likewise, many stakeholders welcomed the progress being made on inclusive trade outcomes in CEPA, especially the first stand-alone chapter in an Australian FTA covering First Nations Trade and Investment.

Consultations with Trade Unions showed strong opposition to CEPA, raising the UAE's issues with human and labour rights and concerns around environment, gender and LGBTQI+ rights. Continuing engagement with Trade Unions has not reduced concerns, though efforts to engage with them have been appreciated. Trade unions have reiterated they would not support a CEPA with the UAE unless some fundamental changes are made to UAE labour rights^[58].

While not all these concerns could be addressed through CEPA, these stakeholder views were taken into account by negotiators in pursuing the best possible outcomes for Australia in this area. As a result, CEPA will have a dedicated chapter covering trade and labour, a first for the UAE. Under this chapter, Australia and the UAE will affirm our obligations as members of the ILO and our commitments under the ILO Declaration on Fundamental Principles and Rights at Work. CEPA will also promote compliance with ILO standards and enforcement of labour laws and establish a Dialogue on Labour to advance Labour Rights, including through engaging with stakeholders. In addition, it will promote cooperation on labour matters of mutual interest.

6. What is the best option from those you have considered and how will it be implemented?

Based on the reasoning set out above, the potential benefits of signing CEPA under Question 4 (Option 2), outweigh the costs of not proceeding with signing (Option 1). Under Question 4, the benefits for exporters, business and consumers are outlined and these are extensive. None of these benefits will be secured if we do not sign the CEPA with the UAE.

During the negotiations phase, the specific objectives for the agreement which were envisaged at the commencement of negotiations have been achieved. Through CEPA, the growing risk to Australian business of losing competitiveness in the UAE market, and potentially the broader region, will be addressed. Expanding trade and investment opportunities as outlined under Question 4, will assist Australian business across a range of goods and services sectors. The benefits from CEPA to the wider Australian economy will be an important contribution to the government's trade diversification and investment promotion objectives.

To ensure CEPA operates as intended, Australia will be able to activate the technical consultation mechanisms set up in the agreement, as necessary, to address any unforeseen regulatory barriers impacting implementation. Similarly, the mechanisms set up on investment such as the Investment Council will be able to consider and discuss any issues which may be impacting CEPA's implementation as intended. This will ensure that there are no risks in implementation that could impact Australian business' ability to take advantage of the outcomes achieved under CEPA.

Following signature, CEPA will enter into force in accordance with Australia´s normal domestic treaty procedures.

Changes to Australia´s tariff schedules, as agreed in the treaty text, will be the only implementation steps requiring legislative changes for CEPA to enter into force, see Figure 3.

7. How will you evaluate your chosen option against the success metrics?

In terms of built-in measures contained in the CEPA, every five years the Parties will jointly conduct a general review with a view to updating and enhancing the Agreement. In addition, a Joint Committee will meet at Ministerial or senior officials level one year after the Agreement's entry into force, and every two years thereafter, to monitor and review the implementation and operation of the Agreement.

This formal structure will provide an avenue for any issues Australia needs to discuss with the UAE in relation to the implementation of the CEPA, including any issues which may be raised by Australian businesses and other stakeholders.

In the lead up to and following entry-into-force of CEPA, DFAT will conduct advocacy with a range of stakeholders across various fora to promote the benefits of CEPA, answer queries and provide information to encourage businesses to utilise and benefit from CEPA. DFAT´s FTA portal^[59] will be updated with official information on CEPA and the treaty text will also be published on DFAT´s website. The Australian Trade and Investment Commission (Austrade) will also promote the opportunities CEPA provides to business through its mandate to grow Australia's prosperity by delivering quality trade and investment services.

After entry-into-force, analysis of publicly available official trade and investment figures between Australia and the UAE will provide statistical evidence of CEPA's impact on trade and investment. DFAT monitors the utilisation of Australian FTAs, through the exchange of data on preference utilisation with partners. The factors influencing utilisation include the margin of preference available, specific rules of origin under the FTA, and integration of an FTA into business processes.

Additionally, DFAT will gather feedback from a range of stakeholders, including through diplomatic reporting, to feed into future reviews of CEPA's effectiveness and to address any concerns business may raise regarding their use of the agreement.

CEPA will also be included in the list of Australia´s FTAs that DFAT will provide regular reporting and commentary on to Parliament, under the auspices of the Government´s Response to the Joint Standing Committee on Trade and Investment Growth Inquiry into FTA negotiations^[60].

At this stage, an evaluation of the Australia-UAE CEPA is not planned. However, if this changes, consistent with Commonwealth Evaluation Policy, CEPA will need to be evaluated through the principles outlined by the Australian Centre for Evaluation and will reflect how CEPA has achieved the objective that is outlined in this Impact Analysis^[61].

Appendix A – List of stakeholders consulted through CEPA negotiations

Appendix B: Estimate of Regulatory Burden

The proposed CEPA provides rules for traders to access preferential tariff treatment over existing business-as-usual arrangements with the UAE. The following outlines an analysis of key chapters within the agreement to assess any regulatory burden it may impose on businesses, communities or individuals. This analysis estimates there will be no regulatory burden costs associated with the Australia-UAE CEPA coming into force.

The Chapter on Trade in Goods establishes the basic rules governing trade in goods between the Parties. The Chapter contains provisions covering the Parties' tariff commitments and on non-tariff measures, pursuant to the agreement's objective to liberalise and facilitate bilateral trade in goods. Its implementation will not require any changes to Australian regulations nor impose any regulatory burdens on Australian businesses.

This Chapter on Sanitary and Phytosanitary Measures affirms the Parties' rights and obligations under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), in regard to relevant measures to protect human, animal or plant life or health in the Parties. It preserves each Parties independent SPS regimes, while providing for recognition of equivalence and regionalisation settings by Parties where these achieve their respective appropriate levels of protection. It also incorporates trade facilitative provisions which strengthen transparency and cooperation between the Parties. Its implementation will not require any changes to Australian regulations nor impose any regulatory burden on Australian businesses.

The Chapter on Technical Barriers to Trade builds upon the Parties' rights and obligations under the WTO Agreement on Technical Barriers to Trade, ensuring technical barriers to trade are non-discriminatory and do not create unnecessary obstacles to bilateral trade, while preserving both Parties' ability to take measures to fulfil legitimate objectives. It includes strengthened transparency, information exchange and cooperation provisions. Its implementation will not require any changes to Australian regulations nor impose any regulatory burden on Australian businesses.

The Chapter on Trade Remedies affirms Australia's rights and obligations under the WTO Agreement. Additionally, it requires notification of antidumping investigations and global safeguard investigations. Its implementation will not require any changes to Australian regulations nor impose any regulatory burden on Australian businesses.

The Chapter on Sustainable Agriculture and Food Systems commits the Parties to promote sustainable agriculture and food systems, consistent with a set of explicit principles. The Parties recognise that sustainability approaches must be tailored according to each Party's unique national circumstances, the role of rules-based and market-oriented trade in supporting global food security, and the importance of science-and evidence-based metrics. It also facilitates cooperation between the Parties on sustainability-related issues. Its implementation will not require any changes to Australian regulations nor impose any regulatory burden on Australian businesses.

Regulatory Burden Estimate (RBE) Table