Australia and the United Arab Emirates (UAE) have reached a trade agreement that would eliminate over 99% of tariffs on Australian products entering the UAE. It is the first free trade agreement (FTA) that has been signed under Prime Minister Anthony Albanese’s centre-left government, which took power in 2022.
The deal is expected to facilitate the export of Australian agricultural products and give the UAE more access to green energy investments and critical minerals.
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Australian Trade Minister Don Farell said at a press conference on Tuesday that the deal is expected to boost the country’s exports by $458m annually. Farrell expressed confidence that the trade agreeement would be a signal to other international investors.
“Where there’s been a free trade agreement with the UAE, the sovereign wealth fund has followed […] I’m absolutely certain because of the interest in the critical minerals space by so many countries, including the UAE, that we’ll get lots and lots of extra investment,” he told reporters.
Australia has large deposits of critical minerals including cobalt, lithium, manganese, rare earth elements, tungsten and vanadium. These minerals are essential for green transition technologies.
Two-way investment between Australia and the UAE reached $20.6bn in 2023, a figure which the Australian Trade Ministry says is “expected to increase significantly” as a result of the deal.
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By GlobalDataAustralian exports to the UAE include alumina, meat, dairy, oil seeds, seafood, steel, canola seeds, nuts, honey, coal, chickpeas, lentils and higher education. The agreement will also reduce tariffs on UAE exports to Australia including furniture, copper wire, glass containers and plastic imports.
EU fumble
The deal comes almost a year after talks to secure an EU trade deal collapsed in Japan.
At the time, Australia wanted to get a deal that would provide EU market access to its farming sector. The EU was also facing pressures to protect its own farming market, with substantial sectors in France, Ireland and Poland.
Ksnenija Simovic, a senior trade policy advisor for a group that represents EU farmers said, “I don’t think anyone benefits from a no-deal, but it also depends on what kind of deal. We definitely want the Commission to stand their ground.”
Farrell dismissed the deal offered by the EU as “not good enough” and was praised by the Australian sugar lobby, Canegrowers, who said it “took guts and determination to walk away.”
After the dramatic exit from the EU trade deal, Albanese’s government welcomes the trade deal with the UAE which Farrell says will mean “more higher-paying jobs, more opportunities for our business, greater investment to build things here in Australia and cheaper bills for Australian households.”
