A new free trade agreement (FTA) has been secured between the United Arab Emirates and Australia, making it easier and cheaper for Australian businesses to export to the UAE.
Negotiations on the Australia-UAE Comprehensive Economic Partnership Agreement concluded on September 17, marking a new era of trade between the two countries.
It allows over 99% of Australian products to enter the UAE tariff-free, resulting in estimated tariff savings of $135 million in the first year, increasing to $160m per year once the agreement is fully implemented.
“Under this trade agreement, Aussie exports are expected to increase by $678m per year, but this deal means more for Australia than just numbers,” says Federal Trade Minister Don Farrell.
“More trade means more higher-paying jobs, more opportunities for our businesses, greater investment to build things here in Australia, and cheaper bills for Australian households.”
The UAE is Australia’s largest trade and investment partner in the Middle East with two-way trade worth $9.9 billion in 2023.
The Middle East market has about 58 million consumers and a combined GDP of A$1.4 trillion.
Key Australian exports to the UAE include alumina, meat, dairy, oil seeds, seafood, steel, canola seeds, nuts, honey, coal, chickpeas, lentils and higher education.
The Australian mining industry will receive tariff cuts on exports, including alumina which was valued at $1b in 2023.
Australian farmers and food producers are expected to save about $50m a year.
This is Australia’s first FTA with a dedicated chapter covering First Nations trade, enabling Indigenous businesses preferential market access to export to the UAE.
Major win for investment
Bilateral investment between Australia and the UAE totalled $20.6b in 2023, which is expected to increase significantly with the FTA.
“The UAE has some of the largest sovereign wealth funds in the world,” Minister Farrell says.
“A trade agreement with the UAE will facilitate investment, which is important to achieving the Albanese Government’s ambition of becoming a renewable energy superpower.”
The agreement includes a framework to encourage two-way investment, including in sectors that underpin Australia’s energy transition, such as critical minerals.
Australian import benefits
Australian import tariffs will be cut on UAE-produced furniture, copper wire, glass containers and plastic, making them cheaper at the checkout and lowering business costs for trades.
It is estimated that Australian households and businesses will save around $40m a year.
The deal creates greater certainty for Australian service providers in the UAE and makes it easier for certain skilled professionals to work temporarily in the UAE.
For sectors such as education, financial services, health and research and development services, 100% foreign ownership in the UAE market is guaranteed.
Australia and the UAE are now both working to formalise the legal treaty text in preparation for signing later this year.
CCIWA’s International Trade Services team helps businesses reduce the time, cost and risk of going global. Contact the team for a free consultation on (08) 9365 7620 or via [email protected].
