An Australia – United Arab Emirates Free Trade Agreement
Australian Industry Group submission to the Department of Foreign Affairs and Trade
April 2005
CONTENTS
Summary and Recommendations Executive Summary Summary of Recommendations
1 1 2
Background The UAE The content of the FTA Trade Policy in the UAE The Trade Relationship The Investment Relationship
3 3 4 5 5 6
Key Recommendations Recommendation 1: clear benefits for Australian industry Recommendation 2: stay ahead of competition Recommendation 3: harmonization of rules with other FTAs Recommendation 4: a comprehensive agreement Recommendation 5: reciprocal tariff elimination Recommendation 6: rules of origin Recommendation 7: transitional safeguards Recommendation 8: anti dumping & countervailing measures Recommendation 9: non tariff barriers Recommendation 10: intellectual property protection Recommendation 11: government procurement Recommendation 12: bilateral investment flows Recommendation 13: review mechanisms Recommendation 14: integrated trade strategy
7 7 7 8 8 9 9 10 10 11 13 13 14 14 15
SUMMARY AND RECOMMENDATIONS Executive Summary The Australian Industry Group (Ai Group) supports the negotiation of a Free Trade Agreement (FTA) with the United Arab Emirates (UAE) that is able to deliver clear benefits to Australian industry. The Australian economy has been unilaterally liberalized, and as a result, it is critical that industry gains unimpeded access to export markets. Furthermore, this access must provide Australia with competitive positioning in the complex web of international trade agreements. The UAE is our second largest trading partner in the Middle East, imports most of its requirements for capital goods, consumables and services, and has high levels of disposable income. Further, the UAE is an important transhipment centre servicing the region – Dubai alone re-exports 72% of its imports. There are around 6000 Australians and 100 Australian companies based in the UAE. While both countries have relatively open economies, there is scope for improvement in trade in goods and services, including investment flows, which could be addressed by an FTA. The Agreement should be comprehensive in nature, and provide immediate liberalization across merchandise trade to all but a minimum of sensitive items, to which transitional tariff reduction arrangements should be applied. The rules of origin for preferential tariff treatment should follow the product-specific methodology employed in the Thailand-Australia FTA. Defensive tools of trade including safeguard measures, anti-dumping and countervailing measures should be assured to ensure trade occurs on an equitable basis. Apart from tariff barriers, non-tariff barriers should also be addressed, including issues relating to conformity to technical and other standards. In this regard, UAE agent/distributor requirements are particularly noteworthy, as they reduce opportunities for investment as well as the sale of Australian goods. Mechanisms to provide more equitable treatment of Intellectual Property issues, access to Government procurement and investment opportunities are also critical. Finally, it is Ai Group’s recommendation that a regular review mechanism, to be attended by industry representatives, be incorporated into any agreement to ensure the agreement evolves in a manner that continues to facilitate trade to the fullest extent possible.
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Summary of Recommendations 1. Ai Group welcomes the commencement of negotiations between the two countries and fully supports the conclusion of an equitable Australia - UAE FTA. The deal must however, deliver clear benefits to Australian industry. 2. Australia’s goal must be to win access for its exporters to the UAE market, which, as a minimum, matches the preferences awa rded any of the UAE’s other trading partners. 3. An FTA with the UAE, or any future FTA partner, must be approached on the basis that harmonisation with the rules of trade in Australia’s existing FTAs is critical. 4. The Agreement should be comprehensive, covering all sectors of trade, services and investment. 5. The FTA should deliver immediate tariff elimination on the largest number of products possible, while accommodating transitional arrangements for sensitive sub-sectors. For those items for which phased tariff reduction is necessary, zero tariffs should be achieved within a maximum of 10 years. 6. Rules of Origin should follow the product-specific methodology employed in the Thailand-Australia FTA. 7. Transitional safeguards must be in place and readily accessible to support industry from import surges that cause or threaten to cause serious injury. 8. Both countries’ rights to WTO-consistent anti-dumping and countervailing mechanisms should be preserved. 9. Elimination of non-tariff barriers and close attention to standards and conformity issues, to ensure equitable treatment. 10. Intellectual Property laws should be harmonised to ensure universal protection. 11. Equitable access to Government procurement arrangements. 12. Barriers hindering bilateral investment flows to be removed and supported by provisions facilitating the temporary entry of business people. 13. Industry to be included in review mechanisms to be incorporated into the Agreement to ensure that as the Agreement evolves, it continues to facilitate trade and investment to the fullest extent possible. 14. The negotiations must be integrated with Australia’s global trade strategy encompassing simultaneously multilateral, sub-regional and bilateral activities.
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BACKGROUND The Australian Minister for Trade and the UAE Minister for Economy and Planning announced on 15 March 2005 the agreement to launch negotiations for an FTA. They agreed that the FTA would be WTO-compliant, comprehensive and cover trade in goods and services, as well as investment. The Ministers agreed to work towards concluding the agreement in 2006 and endorsed a forward work program to ensure the pace of negotiations was sufficient to meet the target date. The FTA represents a strengthening of Australia’s relationship with UAE and is a natural step in the progression of our growing trade relationship. As the UAE is akin to Singapore, in so much as being a hub for its region, this FTA will secure an important launch pad for Australian business into Middle Eastern markets. The Australia-UAE bilateral relationship has developed strongly through such fora as the Joint Ministerial Commission (JMC), which was inaugurated in 1992. The JMC, for example, as facilitated the successful conclusion of a Memorandum of Understanding on the live animal trade and an Air Services Agreement in recent years. The UAE The United Arab Emirates is a federation of seven emirates on the Arabian Gulf, which was founded in 1971. The emirates are: Abu Dhabi, Dubai, Sharjah, Ras al Khaimah, Fujairah, Ajman and Umm al Quwain. Abu Dhabi, the capital, is the largest and most affluent emirate with over 80% of the land area and most of the oil wealth. The prosperity and buying power of UAE citizens is due in no small part to being atop almost one -tenth of the world’s proven oil reserves. The UAE is the commercial and business hub of the Arabian Gulf, and has the 3 rd busiest port in the world in terms of volume, only behind Singapore and Hong Kong. It has capitalised on its strategic trading position between Central Asia, the former Soviet Union, the Middle East, and Africa for centuries, and is in constant growth. The domestic market of almost 4 million people has a per capita income of around US$18,400 (or over US$20,000 including both national s and on-citizen residents) according to UAE Central Bank statistics. Expatriates constitute more than 85% of the population and 93% of the labour force. Emiratisation of the UAE economy remains a national objective, with the imposition of quotas for the hiring of Emiratis in certain sectors. Principal growth sectors in the UAE are as follows: • Agriculture Vegetable oils, beverage bases, breakfast cereals, poultry parts, fresh apples and pears, honey, frozen vegetables and snack foods.
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•
Oil and Gas Project work focusing on upstream development and gas handling capacity, oil and gas field equipment, spare parts and services.
•
Non-oil Sector As a portion of GDP, the largest contributors in 2003 after oil (40%) were manufacturing (11%), wholesale and retail trade (10%), government services (10%) and construction (8%). o Environmental and pollution control products/services o Medical equipment o Architecture, construction, engineering o Safety and security equipment
The content of the FTA It is expected that the content of the FTA would be: •
WTO consistent, meaning among other principles that for merchandise trade the FTA must cover “substantially all trade”, and services trade must have “substantial sectoral coverage” and eliminate “substantially all discrimination”;
•
WTO-plus, or in other words, deliver liberalisation more rapidly as well as go beyond issues that are covered on WTO such as investment, intellectual property protection and people movement; and
•
cover a similar scope to that of the Thailand-Australia FTA (TAFTA).
More specifically, TAFTA covers the following areas: Tariff liberalisation on goods Standards and mutual recognition of conformity assessment Technical Barriers to Trade Customs Procedures Movement of business persons Intellectual Property Anti Dumping and Countervailing Measures Government Procurement Institutions a nd Dispute Settlement
Liberalised services trade Investment Policy Safeguard Measures Sanitary and Phytosanitary Measures Competition Policy Rules of Origin Transparent Administration of Laws and Regulations Electronic Commerce
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Trade Policy in the UAE The UAE is an active participant of the Gulf Cooperative Council (GCC), which includes Saudi Arabia, Kuwait, Oman, Qatar and Bahrain. The GCC’s stated economic goal is to create a seamless trading environment among its member nations. There are no consumption taxes and no customs duties on most products traded with the GCC. To qualify as a GCC national product, the value added in a GCC member state must be not less than 40% of the final value, and produced in a factory with at least 51% local ownership and licensed by the respective Ministry of Finance and Industry. The US began FTA negotiations with the UAE on 8 March 2005. The GCC has been conducting talks with the European Community on an FTA between the respective blocks for a number of years, but so far with little progress. The GCC also conducts economic dialogues with Japan. The UAE is a founding member of the WTO. The Trade Relationship The UAE is Australia’s second -largest trading partner in the Middle East and our 24th largest trading partner over-all. Australia’s two-way trade in merchandise goods with the UAE totalled $2.2 billion in 2004, resulting in a trade surplus to Australia of $343 million. Australia’s largest export to the UAE is passenger motor vehicles, which represent 18% (or $235 million) of total exports. Australia’s imports from the UAE are dominated by crude petroleum. Top 5 exports to UAE
Top 5 imports from UAE
Passenger Motor Vehicles Zinc Meat (excl. bovine) Motor vehicle parts Telecommunications equipment
Crude petroleum Liquefied propane & butane Structures of iron, steel or aluminium Jewellery Glassware
Merchandise exports grew significantly between 2003 and 2004 – by 15%. Importantly, elaborately transformed manufactures (ETMs) are also growing as a share of exports, with growth from 19% of our total merchandise exports in 1994 to 37% in 2004. Two-way trade in services is also a significant factor in our trading relationship, totalling almost $1.5 billion in 2004. Australia chiefly exports professional services (architectural, financial and construction) and imports transport and travel related services. Tourism and educational ties are growing but remain low: 19,800 UAE tourists visited Australia in 2004, up 31% on the previous year, and UAE students in Australia grew by 36% in the same period.
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There are almost 6000 Australians and over 100 Australian companies based in the UAE. The Investment Relationship The UAE Ministry of Planning reported that FDI inflows reached US$17.2 billion in 2003, and is forecast to increase to US$17.7 billion in 2004 as a result of the improving environment for foreign direct investments. Principal foreign investors were from the United Kingdom, the United States, France, India, Japan and Germany. The Abu Dhabi Chamber of Commerce and Industry notes that the leading sectors for investment in the UAE in 2003 were (in order of magnitude of investment): oil and gas-field machinery and services, pollution control equipment, medical equipment and supplies, architecture/construction/ engineering, power and water, sporting goods/recreation equipment, air conditioning and refrigeration, building products, computer/peripherals, and safety and security equipment. There are no figures available for investment flows between the UAE and Australia.
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KEY RECOMMENDATIONS
1. Ai Group welcomes the commencement of negotiations between Australia and the UAE, and fully supports the conclusion of an equitable FTA. The deal must however, deliver clear benefits to Australian industry. The negotiation of an FTA with the UAE represents a natural evolution in our complementary trading relationship, and will set the stage for improved trade with all the countries in the Middle East. The UAE has traditionally been, and continues to be, a leading trading centre. It holds a key role in the Middle East as a trading hub for the region and is therefore an important entry point for Australian goods and services. While tariff and other barriers are relatively low in the UAE, exports in some key sectors do face barriers that could be gainfully addressed via an FTA. While FTAs are an excellent tool to obtain critical market access, particularly in light of the slow progress of liberalisation under the WTO, each FTA must be assessed on its own merits. It is imperative that each FTA delivers a balance of benefits that is in Australian industry’s favour.
2. Australia’s goal must be to win access conditions for its exporters to the UAE market, which, as a minimum, matches the preferences awarded any of the UAE’s other trading partners. Countries such as Australia and the UAE, which have embraced a policy for the development of FTAs, are set upon a course of so-called “competitive liberalisation”. It is theorized that this policy will force the hand, and indeed the pace, of liberalization (in other words, the multilateral WTO process itself) through this highly competitive environment. Meanwhile, the surge in FTAs continues unabated with a complex web of bilateral arrangements developing. The UAE has (and will) award preferential market access arrangements to its treaty partners, which provide them with a competitive advantage. This emphasises the importance to Australia of ensuring it is not out-manoeuvred in the relative competitiveness stakes. Australia should seek to obtain, as a minimum, the same preferences awarded to GCC member states. Further, it should ensure that any access rights accorded to the USA in that bilateral FTA, should not leave Australia at a competitive disadvantage.
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3. An FTA with the UAE, or any future FTA partner, must be approached on the basis that harmonisation with the rules of trade in Australia’s existing FTAs is critical. The rules and conditions of international trade have become more complex in recent years with the proliferation of preferential trade agreements. Australia already has four FTAs (with New Zealand, Singapore, Thailand and the USA) and has initiated negotiations for a further four (the UAE, ASEAN, China and Malaysia). The result of these bilateral (and regional) arrangements must not be to cause added costs and complications to the business of trade. There is increasing imperative to align/harmonise the rules of trade so that the number of trading rules do not become a trade barrier in itself. Ai Group is alert to the issues that are becoming apparent as a result of being party to numerous FTAs, and is particularly concerned that the rules, (and particularly the rules of origin), which attach to FTAs do not become a barrier to trade. The principle of convergence on rules is critical to Ai Group’s support for any FTA.
4. The Agreement should be comprehensive, covering all sectors of trade, services and investment. We note, and endorse, the Australian and UAE Minister’s statement that the FTA would cover all sectors of trade, services and investment. An effective agreement should weigh “whole of country” issues simultaneously. Ai Group therefore support the following principles: •
No ‘a priori’ exceptions. The negotiation would cover all products and sectors, involving liberalization and facilitation across trade in goods, services and investment, without prior exceptions.
•
Single undertaking. Nothing is agreed until everything is agreed.
Ai Group takes a rigorous position with regard to the definition of a WTO-compliant FTA, which stipulates, “substantially all trade” should move to free trade as well as “substantial sectoral coverage” in services trade to eliminate “substantially all discrimination”. Exceptions to free trade should only be under highly limited and extenuating circumstances, in which the overall economic benefit to Australia remains clear.
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5. The FTA should deliver immediate tariff elimination on the largest number of products possible, while accommodating transitional arrangements for sensitive sub-sectors. For those items for which phased tariff reduction is necessary, zero tariffs should be achieved within a maximum of 10 years. While the overriding goal would be to eliminate tariffs on the largest possible number of tariff lines immediately, certain items within manufacturing may require a phased tariff reduction period. Ongoing and extensive consultation with industry (particularly the automotive and TCF sectors) is necessary to provide a definitive list of items requiring transitional arrangements. This does not preclude the possibility of zero-for-zero tariff arrangements being suitable within these sectors. As for tariffs on the UAE side, liberalisation will be of benefit to Australian exporters. Most tariffs in the UAE are 5%, with substantial tariff peaks remaining only on alcohol (50%) and tobacco (100%).
6. Rules of Origin should follow the product-specific methodology employed in the Thailand-Australia FTA. Extensive research undertaken by Ai Group has found that industry considers a Change in Tariff Classification (CTC) based methodology such as the one employed in the Thailand-Australia FTA (TAFTA) to be acceptable. As Australia has employed the CTC based methodology in our FTAs with Thailand and the USA (and will use this methodology with New Zealand in the near future), we believe that a similar principle should be used in all future FTAs. It is desirable that we achieve the highest level of harmonization between the various trade agreements that Australia has or will be party to, so as to reduce the complexity of world trade rules in which Australian companies must operate. The Rules of Origin (ROO) under TAFTA largely employ CTC tests to confer origin. In other words, CTC tests, which differ slightly for each tariff code, state that, if the imported inputs come from “different parts” of the Customs tariff schedule, then the finished product has undergone sufficient transformation to be deemed as originating. The classifications of the “different parts” of the tariff schedule from which imported inputs may be derived impacts the degree of tariff classification change required. Some 15% of tariff lines have a local content percentage test applied in addition to the CTC test. The local content test utilises a so-called “Build-Down” formula, which starts at the customs value of the goods (excluding international transportation costs), and subtracts the value of the non-originating materials. The total is divided by the customs va lue to get the qualifying percentage.
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7. Transitional safeguards must be in place and readily accessible to support industry from import surges that cause or threaten to cause serious injury. A safeguard action is the temporary restriction of imports of a product to support a specific domestic industry from an increase in imports of any product which is causing, or which is threatening to cause, serious injury to domestic industry. An import “surge” justifying safeguard action can (and should in this case) be a real increase in imports (an absolute increase); or an increase in the imports’ share of a shrinking market, even if the import quantity has not increased (relative increase). Safeguard action is not only WTO-consistent, but is one of the last few defensive measures available to industry, and most importantly, can be invoked rapidly. Australian industry is looking to have in place strong safeguard provisions to provide manufacturing ready recourse against import surges from any FTA partners. Given the current complementarities in bilateral trade with the UAE, the likelihood of implementing the provisions may be reduced, however, safeguard provisions should be included as a matter of principle.
8.
Both countries’ rights to WTO-consistent anti-dumping and countervailing mechanisms should be preserved.
Access to appropriate anti-dumping and countervailing mechanisms is essential to ensure industry is not disadvantaged as a result of unfair trading practices. As with the previous recommendation, while we do not expect this trade remedy to be employed, a chapter preserving antidumping and countervailing rights should be included in the FTA. "Dumping" occurs when: • a company exports its goods at a price below that of the sales price in the country of origin • a company exports its goods at a price that is lower than the cost of production. A "countervailing subsidy" occurs when: • a government provides financial assistance to benefit the production, manufacture, or exportation of goods If dumping or a countervailing subsidy is alleged, an investigation may be initiated, and ultimately, if the allegations are proven, duties will be assessed against imports of the product entering the country that initiated the investigation.
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9. Elimination of non-tariff barriers and close attention to standards and conformity issues, to ensure equitable treatment. There should be a firm commitment in the FTA that both parties to the agreement will not apply non-tariff measures (except in cases where such measures are in accordance with GATT regulations) and will provide one another non-discriminatory treatment. The most commonly cited non-tariff barriers in the UAE are as follows. • Import Licensing Only firms with the appropriate trade license can engage in importing, and only UAE nationals can get such a license. • Export Subsidies Subsidies for manufacturing firms are available only to those companies with at least 51% local ownership. • Agent and Distributor Rules The UAE’s Commercial Agency Law requires that foreign pri ncipals distribute their products in the UAE only through exclusive commercial agents that are either UAE nationals or companies wholly owned by UAE nationals. All commercial agents must be registered with the Ministry of Economy and Commerce. Once chosen, agents/distributors have exclusive rights, and the law provides that an agent may be terminated only by mutual agreement of the foreign principal and the local agent, notwithstanding the expiration of the term of the agency agreement. These agents have rights that can severely impede the ability of foreign principals to distribute and service their products. For example, agents have the ability to arbitrarily stop imports and it is extremely difficult to terminate non-performing agents without protracted litigation. A government committee that has usually ruled in favour of the local agent handles such legal cases. In most cases, compensation for a terminated agent is required even if the committee rules for the foreign firm. It is difficult, if not impossible, to sell without a local agent. • Shelf-life requirements for foodstuffs Restrictive requirements for foodstuffs are maintained. Since June 1996, the UAE Federal Government elected not to register new food agency agreements. GCCmandated shelf-life requirements for close to 100 products require that all processed products carry both production and expiration dates on the original manufacturer applied label. In addition, all imported food products must have one-half of more of their shelf life in effect at the time of import in order for import clearance to be granted. • Documentation The UAE requires that documentation for all imported products (invoices, Certificates of Origin and other associated documentation accompanying invoices) must be authenticated (“legalised”) by the UAE embassy in Canberra, Page 11
after having been authenticated by a local Chamber of Commerce. Companies therefore incur two sets of fees on processing paperwork, not to mention the associated inconvenience and delays. It is noteworthy that the UAE Embassy charges for legalisation of export invoices are calculated as a percentage of the good’s CIF value. The fee is calculated on a sliding scale with smaller percentages applied as invoice value increases. (Non-tariff barriers in the areas of Investment, Intellectual Property Rights and Government Procurement are covered in the following three “Key Recommendations”.) Another area that is of particular concern relates to Technical Barriers to Trade – barriers that occur as a result of technical regulations and standards. Technical Barriers are an impediment to free trade and investment, and as such a commitment to reciprocity and transparency is important. As with the Australia-US FTA, it will no doubt be necessary to establish an ongoing mechanism to facilitate communication and the exchange of information on technical standards and regulations. It is particularly important that the mechanism provides a framework for exporters to work with government on tackling barriers. It is also vital that the mechanism include clear time frames and targets for progress, and sufficient impetus to achieve harmonisation with international norms, and mutual recognition of standards and conformance testing. In general, the agreement should seek to facilitate trade and investment through cooperative efforts that minimise the impact of technical regulations and or assessments and build on mutual recognition arrangements. This includes: •
Working together wherever possible to harmonise respective technical regulations and seeking to accept as equivalent each other’s technical regulations; and
•
Making compatible wherever possible the conformity assessment procedures.
The UAE has established an independent entity responsible for formulating and enforcing UAE/GCC standards, called the Emirates Authority for Standardization and Metrology (ESMA). However, the national and emirate governments, as well as various professional associations, are constantly reviewing standards requirements. The construction indus try provides an excellent example of this, as standards are stipulated on a project-by-project basis. This allows for a wide range of acceptable product performance, makes health and safety monitoring difficult, and permits the use of low quality products and manipulation of tender specifications. Food standards are another obvious area for address by the FTA. Particular attention needs to be given to Halal standards. Australia is an obvious and qualified Halal food supplier to the UAE, and as such cooperative development of standards is critical to ensure Australia can maximize this opportunity.
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10. Intellectual Property laws should be harmonised to ensure universal protection. Improved protection of intellectual property systems should be included in the FTA, and achieved via harmonisation of respective laws. Harmonisation of the national intellectual property laws in export markets within agreed international frameworks (Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) administered under the WTO for example) is necessary to bring the benefits of intellectual property protection within the practical reach of Australian enterprises. This offers the best mechanism to improve the global intellectual property environment for Australian companies. The UAE has begun to make IPR a priority in recent years, by issuing improved legislation for copyright, trademarks and patents in 2002. As a result, high levels of protection are afforded: the rate of software piracy in the UAE is the lowest in the Middle East. The FTA however, should ensure conformity with global standards and while the UAE has acceded to TRIPS, the WIPO Copyright Treaty and the Berne Convention; it has not yet joined the WIPO Performances and Phonograms Treaty. The FTA should also ensure transparent and consistent intellectual property enforcement procedures.
11. Equitable access to Government procurement arrangements. In general terms, the Agreement should seek to impose practices which promote and apply transparency, open and effective competition, fair dealing, accountability and due process and non-discrimination in their government procurement practices. The UAE federal procurement regime (Public Tenders Law of 1975) generally requires foreign entities to have local UAE participation in order to be eligible to bid on a contract. Specifically: •
A 10% price preference is granted to local firms;
•
A company must be registered to be invited to receive government tender documents, and to be registered, a company must have 51% UAE ownership.
•
Tendering is not conducted according to generally accepted international standards. Re-tendering is common, often three or four times. Federal tenders myst be accompanies by a bid bond in the form of an unconditional bank guarantee for 5% of the value of the bid.
•
(These rules do not apply on major projects or defence contracts where there is no local company able to provide the goods or services required.)
The FTA should produce procurement rules which promote national treatment, technology neutrality, and open and competitive bidding, while decreasing Page 13
opportunities for bias through commitments to transparent, predictable and fair tendering processes.
12. Barriers hindering bilateral investment flows to be removed and supported by provisions facilitating the temporary entry of business people. As in Australia’s other FTAs, an obligation to provide national treatment to the investors and investments of each Party (except where specific reservations are listed) should be followed. Protections against expropriation should be included as well as guarantees regarding full repatriation of funds. The UAE regulatory and legal framework favour local over foreign investors. There is no national treatment for investors in the UAE and foreign ownership of land and stocks is restricted. Foreign ownership of freehold properties is only permissible in Dubai, (and not the other six Emirates) within certain government properties. The exact legal status of this scheme is still uncertain. Only one stock is currently open to foreign investors and is capped at 20% total foreign ownership, although limited participation by foreigners in a few mutual funds is permitted. Investment regulations vary from emirate to emirate. Regulation of the establishment and conduct of a business in the UAE is shared at the federal and emirate levels. Foreign companies have the following options: entering into a joint venture with UAE nationals for the establishment of limited liability companies, appointing commercial agents, or setting up branch offices. Except for companies located in the free zones, at leat 51% of a business establishment must be owned by a UAE national. A business engaged in importing and distributing a product must be either 100% UAE-owned agency/distributorship or a 51/49% UAE/foreign limited liability company. Provisions facilitating the temporary entry of business people (and their families) are also important in achieving the benefits of the investment provisions. Efforts must be made to cut red tape for foreign investors requiring visas. The imposition of quotas for the hiring of Emiratis in certain sectors should also be examined. Expanding foreign direct investment has become an increasingly significant catalyst of global economic integration a nd new economic growth and opportunity. A strong investment chapter is critical to the FTA and should ensure high levels of protections for Australian investors in the UAE, including protections related to national treatment and most-favoured-nation treatment, and fair and equitable treatment.
13. Review mechanisms to be incorporated into the Agreement to ensure that as the Agreement evolves, it continues to facilitate trade and investment to the fullest extent possible. It is important that industry representatives are party to review mechanisms in the course of each year, so that they can feed vital information into the annual Ministerial review process. We suggest that such review mechanisms that involve industry
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could meet quarterly to monitor the progress of the agreement and identify where the impediments to trade and investment continue to be, as the relationship develops.
14. The negotiations must be integrated with Australia’s global trade strategy encompassing simultaneously multilateral, sub-regional and bilateral activities. Ai Group believes any bilateral FTA must not only stand on its own merits, but also be complementary to Australia’s position in negotiations in simultaneous multilateral, sub-regional and bilateral activities. The Australian Government is clearly committed to progressing WTO negotiations to achieve liberalisation and expansion of international trade under agreed and enforceable rules for reciprocal benefit. Simultaneously, Australian Government policy holds that pursuing FTAs is favoured if there are clear commercial and trade policy benefits and if better results can be secured more quickly than is possible in the WTO negotiations. FTAs clearly should be consistent with WTO guidelines. The WTO and the multilateral trading system have generated significant benefits for Australia and the world economy. Since World War II average tariffs on manufactured goods in industrialised countries have fallen from 40% to 4%. In the same period, whilst there has been some growth in non-tariff barriers, world trade has increased 18-fold. The role of the WTO is an evolving one to some extent, and with membership of 148 countries, over two -thirds of which are made up of developing countries, reaching final agreements can be a time consuming process. While Australia has seen advantage to date in complementing its multilateral and subregional trade action with bilateral FTAs, nonetheless Ai Group reiterates to Government the critical importance in simultaneously progressing all these avenues in order to improve market access for Australian industry.
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