Labour, environment, development, gender equality, animal welfare, antimicrobial resistance, regulation, cooperation, transparency and anti-corruption
7.1
This chapter covers eight chapters of the Free Trade Agreement between Australia and the United Kingdom of Great Britain and Northern Ireland (AUKFTA) that are largely focussed on reiterating existing commitments, either under other international agreements, or as a matter of government policy. There is a strong emphasis on acknowledging the importance of particular issues and the value of addressing them through cooperation, both bilaterally and in international fora.
7.2
Chapter 21 (labour) requires Parties to implement fundamental labour rights and acceptable conditions of work established in the International Labour Organization Declaration on Fundamental Principles and Rights at Work and its Follow-up (ILO Declaration). Parties retain the right to regulate for labour protection. The chapter also contains articles on modern slavery, and non-discrimination and gender equality in the workplace. The chapter contains no new binding requirements for Parties.
7.3
In Chapter 22 (environment), the Parties agree on the importance of addressing a significant range of environmental issues, including complying with environmental multilateral agreements, controlling ozone depleting substances, climate change, ship pollution, fisheries management, biodiversity, and combatting the illegal wildlife trade. Parties retain the right to establish their own levels of domestic environmental protection and their own priorities, and to adopt and modify environmental laws. Parties undertake not to fail to effectively enforce their environmental laws through a sustained or recurring course of action or inaction, in a manner that affects trade or investment between the Parties, or to encourage trade or investment by weakening or reducing environmental laws.
7.4
In the development chapter (Chapter 23), the Parties acknowledge the importance of fair and sustainable development in promoting inclusive economic growth, as well as the instrumental role that trade and investment can play in contributing to economic development and prosperity. The Parties recognise the value of undertaking a range of joint development activities and delegate matters under the chapter to the Committee on Cooperation.
7.5
Chapter 24 affirms the importance of advancing gender equality for inclusive economic growth, and includes provisions that aim to ensure women can fully benefit from the opportunities within the AUKFTA.
7.6
Chapter 25 on animal welfare and antimicrobial resistance (AMR) stipulates how the AUKFTA would broadly interact with existing policy, law, and regulation in each country, and describes how Parties would cooperate through research, information sharing, and sharing expertise. The chapter affirms the right of each country to legislate and regulate for animal welfare, and the Parties endeavour to ensure no derogation of policies, laws, or regulation to weaken animal welfare standards in order to attract trade advantage. The chapter recognises the seriousness of AMR, and the Parties agree to collaborate on the further development and implementation of standards, promote data collection, and exchange AMR information.
7.7
Chapter 26 promotes good regulatory practices in the design and implementation of regulatory measures to facilitate the achievement of domestic policy objectives and regulatory cooperation between the Parties, with the aim of enhancing bilateral trade and investment, as well as economic growth and employment. Provisions in the chapter do not require either Party to alter existing domestic regulatory procedures or to achieve any particular regulatory outcome.
7.8
The purpose of the cooperation chapter (Chapter 27) is to ensure the effective implementation of the AUKFTA by providing for cooperation to occur through a bilateral cooperation committee.
7.9
Chapter 28 (transparency and anti-corruption) addresses transparency in the implementation of measures relating to the AUKFTA, and certain corrupt practices. The chapter requires Parties to have measures to prevent and combat certain bribery and corruption offences—predominantly related to undue advantage. It also deals with facilitation payments. The chapter requires effective enforcement but allows each territory to deal with the enforcement of corruption within the mechanisms of their own legal system.
Labour
7.10
Globalisation and the trade agreements that promote and regulate economic liberalisation have had an impact on the nature of work, workers’ rights and working conditions around the world. As global supply chains multiply and businesses operate across borders, domestic laws that do not apply beyond a border have been challenged. Absent a multilateral agreement on labour rights, countries since the 1990s have sought to include labour-related commitments in bilateral and plurilateral trade agreements. These provisions often refer to International Labour Organization (ILO) instruments and labour standards, and generally seek harmonisation among partners to prevent another Party obtaining a competitive edge through lower labour costs. The result has been myriad and fragmented labour-standards commitments in trade agreements.
7.11
There are a range of arguments opposing the inclusion of labour provisions in trade agreements that are based on the principle that domestic labour laws should be sheltered against international regulation. In particular, developing countries often argue that requiring costly labour protections and higher wages reduces their comparative advantage. A related view is that international labour standards are a form of disguised protectionism to address the competitive threat posed by developing countries.
7.12
Those who support the inclusion argue global competition should not require lowering domestic labour conditions and trade agreements are a means to regulate the provision of certain minimum labour standards.
Key provisions in the labour chapter
Definition of labour laws
7.13
Chapter 21 defines labour laws as directly related to the following internationally recognised labour rights:
freedom of association and the right to collective bargaining
elimination of forced or compulsory labour
abolition of child labour
elimination of discrimination in employment and occupation
acceptable conditions of work—minimum wage, hours of work, occupational safety and health.
Right to regulate
7.14
Parties recognise the sovereign right of the other Party to establish their own levels of domestic labour protection and their own priorities on labour, and are able to establish, adopt or modify their labour laws and policies accordingly in a manner consistent with international labour commitments referred to in the chapter.
7.15
International labour commitments referred to in the chapter include the ILO Declaration, and ILO Protocol of 2014 to the Forced Labour Convention, 1930 (Protocol to the Forced Labour Convention).
7.16
Parties are required to ‘strive’ to ensure labour laws and policies provide for and encourage high levels of labour protection, and to continue to improve laws and policies. Labour standards, though, should not be used for protectionist trade purposes.
Labour rights and their enforcement
7.17
The chapter requires each Party to adopt and maintain in its laws, regulations and practices, a number of rights stated in the ILO Declaration relating to freedom of association, collective bargaining, forced or compulsory labour, child labour, and discrimination.
7.18
To establish a violation of this obligation, a Party would have to demonstrate the other Party had failed to adopt or maintain a law, regulation or practice to encourage trade or investment, that is, the Party would have to demonstrate the failure was intended to encourage trade or investment.
Non-derogation
7.19
Some countries may try to encourage trade or investment by weakening or reducing the protections afforded in their labour laws. The Parties recognise this is inappropriate and undertake not to waive or otherwise derogate from laws or regulations that implement the labour rights stated in the ILO Declaration (even in special trade or customs areas), in a manner affecting trade or investment between the two Parties.
Enforcement of labour laws
7.20
Parties are not permitted, through a sustained or recurring course of action or inaction in a manner that affects trade or investment between the Parties, to fail to effectively enforce their labour laws.
7.21
Article 21.6 specifies that if a Party fails to comply with an obligation under the chapter, the Party cannot excuse the behaviour by reference to a decision it has made on the provision of enforcement resources. Nevertheless, Parties retain the right to exercise reasonable enforcement discretion and to make bona fide decisions on allocation of enforcement resources, provided the discretion and resourcing decisions are not inconsistent with obligations in the chapter.
Views of participants—Enforcement of labour provisions would be difficult
7.22
The Australian Fair Trade and Investment Network (AFTINET) raised a number of concerns about the bar set for enforcement of specific measures in Chapter 21—labour rights (article 21.4) and non-derogation (article 21.5). When considered with the enforcement provision (article 21.6), AFTINET argued there is a very high barrier to prove breaches. This, in their view, makes the chapter effectively less enforceable than other chapters in the AUKFTA.
7.23
AFTINET pointed out dispute resolution (see below) could only potentially apply if both the following occur:
a government reduces labour rights in order to obtain a trade advantage
the breach is sustained and recurring in a manner affecting trade and investment.
7.24
The consequence, according to AFTINET, is the potential for a two-tier workforce. A government would not be violating the agreement if it reduced the rights of workers in non-trade related areas like the public sector or construction industry. The Australian Council of Trade Unions (ACTU) made the same observations.
7.25
AFTINET recommended the chapter should be amended to ensure it was not less legally enforceable than others. Further, the requirement that reductions in labour rights must be sustained and recurring and affect trade and investment before a dispute may occur, should be removed.
Modern slavery
7.26
The AUKFTA contains a significant new section addressing modern slavery, though the substance of this section is subject to Parties adopting measures to the extent they consider appropriate. The Parties affirm their endorsement of international statements and principles concerning forced labour and human trafficking and underline the importance of the ratification of the Protocol to the Forced Labour Convention.
Non-discrimination and gender equality in the workplace
7.27
The Parties affirm their commitment to non-discrimination and gender equality in the workplace and agree to share information on their respective domestic approaches and cooperate on activities to advance these issues, including improving women’s access to decent work and the benefits of trade or investment. The Parties recognise women should participate in these cooperative activities. This provision does not contain any measurable outcomes.
Views of participants—Aspirational rather than enforceable
7.28
While AFTINET welcomed the inclusion of basic labour rights, and new articles on modern slavery and gender discrimination, it noted the latter two were aspirational rather than enforceable. As to the commitment on basic labour rights, AFTINET stated the commitment related to the ILO Declaration and not the full ILO conventions to which the principles in the declaration refer. AFTINET recommended all commitments on labour rights, modern slavery and gender discrimination should be hard commitments that are legally enforceable.
Corporate social responsibility
7.29
Parties are to endeavour to encourage enterprises to voluntarily adopt corporate social responsibility initiatives on labour issues that have been endorsed or are supported by that Party.
Public awareness and procedural guarantees
7.30
The Parties are to promote public awareness of their labour laws, including by making information on the laws, and their enforcement and compliance requirements publicly available. Parties are also to ensure there is access to impartial and independent tribunals for the enforcement of labour laws. Article 20.10 establishes the requirements for the operation of tribunals (including that they comply with due process of law and allow parties to support or defend their respective positions), and for the right to seek review or appeal. Parties to proceedings are to have access to remedies under the law for effective enforcement of their rights.
Public engagement
7.31
Parties, according with their domestic procedures, are to provide for the receipt and consideration of submissions on matters related to the chapter. Parties are to consider any matters raised in submissions and publish the submission and the results of consideration as appropriate in a timely manner.
7.32
The chapter contains separate provisions that require Parties to maintain and consult a labour consultative or advisory body, to receive and consider views of interested persons on matters related to the chapter.
Cooperation
7.33
The Parties recognise the importance of cooperation, including in international fora, in improving labour standards and in undertaking cooperative activities, and agree to be guided by each other’s particular interests and capacities (including financial). The Parties agree to invite broad participation by stakeholders in cooperative activities.
Committee on cooperation
7.34
Chapter 27 establishes a Committee on Cooperation. It is to consider any matter under this chapter related to cooperation and to support any cooperation activities.
Labour consultations and dispute settlement
7.35
Consultations are the first step in the dispute settlement process with regard to a matter raising under the labour chapter. No dispute can proceed to formal dispute settlement under the provisions of Chapter 30 until the Parties have made every effort to resolve any matter arising under the chapter through cooperation and consultation.
7.36
Article 21.16 contains provisions on how a Party is to go about requesting consultation, the information that must be provided, the timeframe for each step, how consultations can be held, and procedures for involving independent experts.
7.37
If the Parties are unable to resolve the matter, either Party may request the Joint Committee to convene and consider the matter. Further provisions specify timeframes for this.
7.38
If the Parties remain unable to resolve the matter, either Party may request the establishment of a panel under article 30.8, at which time the procedures specified in Chapter 30 would apply. If a panel is convened, panellists other than the chair are required to have sufficient expertise or experience in labour law or practice.
Views of participants—Dispute settlement process is convoluted
7.39
AFTINET argued the dispute settlement process is longer and more convoluted than other chapters where dispute settlement applies. Proceeding through the consultation and then dispute resolution process was potentially time consuming and subject to delays. AFTINET recommended the requirement to engage in consultation prior to recourse to the dispute settlement provisions should be removed and Chapter 21 should apply the same process in other chapters.
7.40
The ACTU stated the dispute settlement process was ‘long and convoluted, rendering the mechanism very weak’.
Views of participants—A more effective labour arbitration mechanism
7.41
The ACTU recommended a renegotiation of the labour chapter to contain an ‘effective, timely, and accessible labour arbitration mechanism’. Under such a mechanism, unions in both countries could challenge exporters for violations of fundamental labour standards, with appropriate penalties for noncompliance, including blacklisting.
Environment
Environmental policy in trade agreements
7.42
Multilateral environment agreements have used trade measures to achieve environmental objectives since the early 1970s, but environmental provisions did not become a fixture of trade agreements until the mid-1990s. It was in response to concerns trade agreements could result in the lowering of environmental standards as businesses sought to maximise trade and investment opportunities that provisions on environmental protection were first substantively embedded in the North American Free Trade Agreement in 1994.
7.43
Environmental provisions are now regarded as having trade benefits: they can ensure a level playing field and strengthen domestic environmental governance and institutions that provide greater certainty for business. While not all environmental provisions in trade agreements are enforceable, they are said to provide an ‘important directional aspect’.
Negotiating objectives
7.44
Australia’s negotiating objectives with regard to the environment were succinct: to ‘[e]nsure high levels of environmental protection, consistent with international agreed principles, standards and rules’.
7.45
The United Kingdom’s (UK’s) strategy for the AUKFTA was more comprehensive—stating it would use free trade agreements (FTAs) to pursue strong environmental commitments and support the UK’s aims in the low carbon economy. The strategy reflected a view Australia’s environmental standards are not as high as the UKs. Many of the UK’s identified negotiating objectives have been incorporated into the text of Chapter 22, though most were provisions often found in environment chapters, or incorporated using language such as ‘shall endeavour’ or ‘shall strive’, or committing the Parties to recognise the importance of such matters.
Key provisions in the environment chapter
Objectives
7.46
Chapter 22 of the AUKFA aims to promote mutually supportive trade and environmental policies; high levels of environmental protection; effective enforcement of environmental laws; and cooperation to address trade-related environmental issues.
7.47
The Parties recognise environmental laws and other environmental measures should not be used in a manner that constitutes a disguised restriction on trade or investment.
Views of participants—Many provisions are not meaningful
7.48
AFTINET made a number of observations about provisions in the chapter including:
the commitment to address climate change did not contain any specific targets on emissions reductions and is a soft, aspirational commitment
new articles on the circular economy, air quality, marine litter, and sustainable forestry were aspirational and not enforceable
the process for proving a breach of commitments on not weakening environment protections to encourage trade and investment had a high barrier.
General commitments regarding environmental laws and their enforcement
High level of environmental protection while retaining the right to legislate
7.49
Provisions link trade and environmental policies with the aim of promoting sustainable development. While Parties have the sovereign right to establish their own level of domestic environmental protection and priorities, and to modify laws and policies accordingly (including compliance and the allocation of resources to enforcement), the Parties are to ‘strive’ to ensure environmental laws provide for and encourage a high level of environmental protection.
Enforcement of environmental laws
7.50
Parties are not permitted to fail to effectively enforce their environmental laws through a sustained or recurring course of action or inaction, in a manner that would affect trade or investment between the two Parties.
7.51
Notwithstanding the commitment to enforce environmental laws, Parties may decide to allocate resources for compliance and enforcement in accordance with their particular priorities. As such, a Party may still meet this requirement if its course of action or inaction reflects a reasonable exercise of its discretion, or results from a legitimate decision regarding the allocation of resources in accordance with priorities for enforcement of its environmental laws.
7.52
The Parties agree encouraging trade or investment by weakening environmental laws is not appropriate and undertake not to do so by derogating from its environmental laws.
7.53
The UK is able to request a dialogue with Australia (and vice versa) if it is of the view a sub-central level of government is not effectively enforcing an environmental law though a sustained or recurring course of action or inaction and in a manner that affects trade or investment between the Parties.
Multilateral environmental agreements
7.54
The Parties recognise the importance of multilateral environmental agreements and affirm their commitment to the implementation of the multilateral agreements to which each is party, including agreements addressing climate change, ozone depleting substances and hydrofluorocarbons, protection of the marine environment from ship pollution, marine wild capture fisheries, and conservation and the illegal wildlife trade.
General matters acknowledged in the chapter
7.55
Provisions in the chapter acknowledge the importance of a number of environmental issues and in some cases the Parties agree to undertake various activities to promote or resolve these issues, including through cooperation frameworks. The issues include:
trade in environmental goods and services
corporate social responsibility.
Ozone depleting substances and hydrofluorocarbons
7.56
Parties undertake to take measures to control the production, consumption and trade in substances controlled by the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol). Parties have identified in Annex 22A the measures through which they implement obligations under the Montreal Protocol, and so long as these are maintained, a Party would be in compliance with this provision.
7.57
To establish a violation of this provision, a Party would have to demonstrate the other Party failed to take the measures in a manner that is likely to result in adverse effects on human health and the environment, in a manner affecting trade or investment between the Parties.
Protection of the marine environment from ship pollution
7.58
The Parties undertake to prevent pollution of the marine environment from ships, as regulated by the MARPOL Convention. Each Party has nominated measures in Annex 22B that implement their respective obligations under MARPOL. A Party would be deemed in compliance with this provision if it maintained these measures.
7.59
To establish a violation of this provision, a Party would need to demonstrate the other Party had failed to take measures to prevent the pollution of the marine environment from ships, in a manner affecting trade or investment between the Parties.
Marine wild capture fisheries
7.60
The Parties agree to operate evidence-based fisheries management systems (reflecting relevant provisions of identified international instruments) that regulate marine wild capture fishing and prevent overfishing, reduce bycatch, and promote recovery of overfished stocks.
7.61
The Parties also agree to undertake a number of measures to promote the long-term conservation of sharks, marine turtles, seabirds and marine mammals, including bycatch mitigation measures.
7.62
The Parties acknowledge specific principles of a fisheries management system that addresses overfishing and undertake, in compliance with the provisions of the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures, not to grant or maintain any of the following subsidies:
subsidies for fishing that negatively affect fish stocks that are in an overfished condition (agreeing to come into compliance no later than three years after the date of entry into force (EIF))
subsidies to any fishing vessel while listed for IUU (illegal, unreported and unregulated) fishing.
7.63
The Parties make a number of commitments with a view to eliminating other subsidies that contribute to overfishing and overcapacity, including fuel subsidies, taking into consideration a Party’s social and developmental priorities. They commit to transparency measures in this area.
7.64
The Parties agree on the importance of improving cooperation internationally to address IUU fishing and agree to a number of activities to this end, including endeavouring not to undermine efforts by entities to manage shared fisheries resources.
Sustainable forest management and trade
7.65
The Parties acknowledge a number of principles with regard to sustainable forest management, including halting deforestation and forest degradation, ensuring trade in forest products is from sustainably managed forests, and taking measures to combat illegal logging and related trade.
7.66
The Parties recognise some forest products, when sourced from sustainably managed forests and used appropriately, can store carbon and avoid greenhouse gas emissions in other sectors. Such forest products can contribute toward achieving global environmental objectives.
Views of participants—Language should be aligned with the Glasgow Leaders’ Declaration
7.67
The Australian Land Conservation Alliance recommended the text at article 22.13(2)(b) should be aligned with the Glasgow Leaders’ Declaration on Forests and Land Use (Glasgow Leaders’ Declaration) made on 2 November 2021 at the United Nations Climate Change Conference COP26, which both Australia and the UK endorsed.
7.68
Article 22.12(2)(b) states the Parties recognise the importance of ‘halting deforestation and forest degradation, including with respect to trade in commodities related to those activities’.
7.69
The Glasgow Leaders’ Declaration states ‘[w]e therefore commit to working collectively to halt and reverse forest loss and land degradation by 2030 while delivering sustainable development and promoting an inclusive rural transformation’.
Trade and biodiversity
7.70
The Parties establish a number of principles including:
the importance of conservation and sustainable use of biodiversity and undertake to promote this in accordance with each Party’s law and policy
respecting, preserving, and maintaining knowledge and practices of indigenous and local communities embodying traditional lifestyles that contribute to the conversation and sustainable use of biological diversity
facilitating access to genetic resources, including where relevant, prior informed consent to access genetic resources and sharing benefits between users and providers
public participation and consultation in measures concerning conservation and sustainable use of biological diversity.
Conservation and illegal wildlife trade
7.71
The Parties acknowledge the importance of combatting the illegal take and trade in wild fauna and flora and affirm their commitment to implement the Convention on International Trade in Endangered Species of Wild Fauna and Flora.
7.72
The Parties commit to: a range of information exchanges and joint activities; protect and conserve wild fauna and flora identified at risk within their territories; maintain or strengthen relevant government capacity and institutional frameworks; strengthen cooperation and consultation with non-government entities.
7.73
The Parties also agree to cooperate in applying relevant sanctions, penalties or other measures to address the illegal take of, and illegal trade in, wild fauna and flora.
Implementing the chapter
Cooperation frameworks
7.74
Cooperation frameworks are recognised as an important mechanism to implement the provisions of Chapter 22. The Parties also agree to cooperate, as appropriate, on matters identified in the chapter—bilaterally and/or in international fora. The substance of the cooperation is not specified beyond suggesting each Party may share its priorities for cooperation, propose cooperation activities related to the implementation of the chapter, and develop and participate in cooperation activities.
7.75
Cooperation might be undertaken through a range of activities, for instance, dialogue, workshops, and technical assistance. The public may be invited to participate in the development and implementation of cooperative activities.
Environment Working Group
7.76
An Environment Working Group, jointly chaired and comprised of official level representatives of each Party, would be established to oversee the implementation of the chapter; provide a forum to seek the resolution of differences as to the interpretation of provisions; coordinate with other groups established under the AUKFTA; and perform any other functions. It would report to the Joint Committee.
7.77
Article 22.6 specifies the Environment Working Group would consider issues identified by Parties related to the trade in environmental goods and services, including potential non-tariff barriers, and the Parties would endeavour to address any such issues.
Resolution of issues
7.78
The chapter provides for a four-stage escalating resolution procedure. This is not an unprecedented approach and reflects broader United States practice and the practices of other countries involved in negotiating the Trans-Pacific Partnership Agreement.
Environment consultations
7.79
Where an issue arises that cannot be addressed through dialogue or cooperation, a Party may request consultations with the other Party. Unless agreed otherwise, Parties would enter into consultations promptly and make every effort to arrive at a mutually agreed solution, seeking relevant expertise where appropriate.
7.80
Special provisions apply to matters arising from a failure to effectively enforce environmental laws or concerns about a Party encouraging trade or investment by weakening or reducing protection afforded under its environmental laws. Before a Party requests consultations on these matters, the Party is required to consider whether it maintains environmental laws that are substantially equivalent in scope to the environmental laws that would be the subject of the dispute, and is to notify and identify those to the responding Party. The Parties are to take this information into account during consultations.
Joint Committee consultations
7.81
If a matter is not resolved through consultations, either Party can request the Joint Committee convenes to consider the matter. The Joint Committee is to seek to resolve the matter, relying on relevant scientific and technical information from a range of sources as necessary.
Ministerial consultations
7.82
If a matter is not resolved through the Joint Committee, either Party can refer the matter to relevant ministers. The relevant ministers are to seek to resolve the matter.
Dispute resolution
7.83
Where a dispute cannot be resolved through consultations, the Joint Committee, and ministers within a period of 120 days of the original request (or any other period as agreed by Parties), a Party may request consultation under the formal dispute resolution procedures in article 30.7, or request the establishment of a panel under article 30.8. Panellists, other than the chair, are to have sufficient expertise or experience in environmental law or practice.
Views of participants—Chapter is less enforceable than other chapters
7.84
AFTINET argued the ‘long and convoluted’ consultation process prior to governments being able to access the state-to-state dispute settlement mechanism means Chapter 22 is less enforceable than other chapters in the agreement to which the dispute mechanism applies.
Development
Trade and inclusive economic growth
7.85
This is the first time a development chapter has been included in an FTA between two developed economies, and Chapter 23 begins by acknowledging the importance of development in promoting inclusive economic growth and the instrumental role that trade and investment can play.
7.86
Inclusive economic growth is not specifically defined within the chapter. Though article 23.1 states inclusive economic growth includes a more broad-based distribution of the benefits of economic growth through the expansion of business and industry, the creation of jobs, and the alleviation of poverty.
7.87
The National Interest Analysis acknowledged the chapter was focused on cooperation, consultation, and information sharing and would not require any regulatory, development policy or practice changes.
Key provisions in the development chapter
Joint development activities
7.88
In Chapter 23 of the AUKFTA, the Parties recognise the value of undertaking joint development activities relating to trade and investment, including the following:
exchanging information between Parties
mutually agreed cooperation, technical assistance, or capacity building on issues such as customs procedures, trade facilitation, technical barriers to trade, trade in services or digital trade
mutually agreed cooperation in international fora
inviting the assistance of relevant international institutions, entities, non-government organisations, or other institutions
exchanging views on methodologies for monitoring the implementation and operation of this chapter.
7.89
Each Party may monitor and assess the role that the AUKFTA plays in relation to development, subject to its own laws, regulation, policies, and practices.
Committee oversight
7.90
Article 23.3 allocates responsibility for matters under the development chapter related to cooperation and support activities, to the Committee on Cooperation (see article 27.4).
Trade and gender equality
7.91
This is the first time Australia has included a trade and gender equality chapter in an FTA.
7.92
A recent report by the World Bank stated:
On its surface, trade policy is gender-neutral. No country imposes tariffs or nontariff measures by gender. But a closer look at the gender dimension of trade policies reveals important differences in how trade policies affect women and men—and even in how those policies affect different groups of women.
7.93
The World Bank report noted that while trade was not a panacea to close the gender gap, trade could create better jobs for women, increase wages, and provide for more economic equality.
Broader trends in trade and gender equality
7.94
An essential part of the trade and sustainable development debate is how increased liberalisation can improve gender equality in trade, investment, and utilisation of trade agreements. Since 1990, the number of regional trade agreements containing specific gender-related provisions has steadily increased. Since 2017, the WTO has also carried forward work in this area, including through the Joint Ministerial Declaration on Trade and Women's Economic Empowerment (Joint Declaration), which acknowledged the importance of incorporating a gender perspective and inclusive trade policies in achieving sustainable socioeconomic development and inclusive economic growth.
Key provisions in the trade and gender equality chapter
Objectives
7.95
In article 24.1 the Parties acknowledge a number of principles with regard to advancing gender equality for inclusive economic growth, women’s empowerment, evidence-based interventions, and sharing experiences in advancing gender equality. The article also affirms each Party’s commitment to the Joint Declaration.
Cooperative provisions
Trade and gender equality cooperation activities
7.96
The Parties undertake to engage in cooperative activities, as appropriate, including activities that support women workers, business owners and entrepreneurs to access the full benefits and opportunities created by the AUKFTA. A range of specific cooperation activities are suggested, and the Parties agree to cooperate and exchange information on the integration of gender in approaches to data collection, analysis and monitoring.
Dialogue on trade and gender equality
7.97
The Parties agree to establish a Dialogue on Trade and Gender Equality to consider any related matter agreed by the Parties and engage in communication with relevant stakeholders.
Views of participants—Provisions on the Dialogue on Trade and Gender Equality need to be expanded
7.98
The ANU Law Reform and Social Justice Research Hub (ANU-LRSJ) raised concerns that the Dialogue on Trade and Gender Equality did not have the same meeting requirements as some of the other cooperative mechanisms within the AUKFTA. The ANU-LRSJ submission stated that the Dialogue should be required to: meet within 12 months of EIF; report every two years; have a mandatory 50 per cent female membership; and consider the effects of the AUKFTA on non-binary, transgender, and gender non-conforming individuals.
Non-application of dispute settlement
7.99
Neither Party is to have recourse to dispute settlement under Chapter 30 for any matter arising under Chapter 24.
Views of participants—No enforceable provisions
7.100
AFTINET raised concerns that provisions within the trade and gender equality chapter were not legally enforceable. It argued any disputes arising from the chapter should be covered by the dispute settlement chapter (Chapter 30).
Animal welfare and antimicrobial resistance
Animal welfare
7.101
Animal welfare is not specifically defined within Chapter 25 of the AUKFTA, rather, the chapter provides guidelines as to how each country should address the issue within their own frameworks.
7.102
International standards developed the World Organization for Animal Health (OIE), specify that animal welfare encompasses the physical and mental state of an animal in relation to its conditions. The OIE states that, in conjunction with animal care, husbandry, and humane treatment, good animal welfare practices ensure that the animal is healthy, comfortable, well-nourished, safe, not suffering from unpleasant states, and able to express behaviours that benefit its physical and mental state.
7.103
Because animal welfare guidelines, standards, and practices differ between Australia and the UK, the language of the provisions in the AUKFTA provides flexibility for each country to follow their own policy, law, and regulation while working collaboratively on areas of mutual interest.
Antimicrobial resistance
7.104
AMR is the evolution of bacteria, viruses, fungi, and parasites (microbials) to become more resistant to antimicrobials used to prevent and treat those infections (such as antibiotics). The Commonwealth Scientific and Industrial Research Organisation has described AMR as one of the greatest threats facing humanity that will have profound impacts on livestock production, global gross domestic product (GDP), and healthcare.
7.105
AMR is increasingly spreading through the international food-supply chain because antimicrobials are used in the food, agricultural and associated industry sectors. Australia and the UK have developed long-term strategies to combat AMR, which affirm the importance of combating AMR through the multisectoral, multilevel and multinational ‘One Health’ approach.
Key provisions in the animal welfare and AMR chapter
Animal welfare provisions
Animals are sentient beings
7.106
In Chapter 25 of the AUKFTA, the Parties recognise that animals are sentient beings, and the connection between improved welfare of farmed animals and sustainable food production systems. They undertake to endeavour to ensure laws, regulations and policies provide for high levels of animal welfare protection and to continually improve these laws, regulations and policies.
Right to legislate and regulate but not derogate
7.107
Parties retain the right to establish and adopt their own laws, regulations, and policies. Nevertheless, they recognise it is inappropriate to encourage bilateral trade or investment by weakening or reducing levels of protection for animal welfare. Each Party would therefore endeavour to ensure it does not derogate from its laws, regulations, and policies in animal welfare to encourage trade or investment between the Parties.
Cooperation
7.108
The Parties agree to exchange information and expertise in the area of animal welfare to improve mutual understanding of approaches and regulatory systems.
7.109
The Parties also agree to establish a Joint Working Group on Animal Welfare to provide a forum for cooperation on initiatives, reviewing developments, promoting high animal welfare practices, and information sharing.
Antimicrobial resistance provisions
7.110
The AMR article (article 25.2) contains no binding provisions beyond agreeing to cooperate, exchange information, and explore initiatives to promote the reduced need for, and appropriate use of, antimicrobial agents in animal and crop production, veterinary practices and biosecurity.
7.111
Article 25.2 recognises AMR as a serious global threat to human and animal health and acknowledges its interdependencies with human health, animal health, the environment, and food safety and security. The Parties agree to cooperate on areas of mutual interest in international organisations and to support the implementation of any agreed international codes, guidelines, standards, recommendations or initiatives.
7.112
The article also contains provisions that:
recognise the need for the One Health approach to combatting AMR
support global harmonisation of surveillance and collection of data
promote strengthened AMR surveillance of antimicrobial use.
7.113
The Committee on Cooperation (established under article 27.4) is to consider matters under this article related to cooperation and support cooperation activities.
Non-application of dispute settlement
7.114
Neither Party would have recourse to dispute settlement under Chapter 30 (dispute settlement) for any matter that arises under Chapter 25.
Views of participants—Unenforceable animal welfare provisions
7.115
AFTINET argued commitments to animal welfare should be legally enforceable and the dispute resolution processes that are applied to other chapters should be applied to animal welfare. It stated targets, standards, metrics, and a means of establishing them, should be included in the chapter.
Good regulatory practice
7.116
In recent years, some negotiations establishing trade, investment, and economic partnerships have resulted in public concern. As countries continue to expand their network of international agreements, they may encounter friction in their ability to freely regulate domestically because the creation and implementation of domestic regulations requires consideration of international obligations to ensure compliance and consistency with those agreements.
7.117
Notwithstanding concerns about the policy substance of regulation, there is a growing consensus among bodies such as the Asia-Pacific Economic Cooperation and the Organisation for Economic Co-operation and Development (OECD) that there is a need to focus on good regulatory practice itself, particularly through the production of thorough regulatory impact assessments.
Key provisions in the good regulatory practice chapter
Purpose
7.118
The purpose of Chapter 26 of the AUKFTA is to promote good regulatory practice with the aim of enhancing bilateral trade and investment, economic growth and employment through a range of measures that would promote transparency and predictability in the regulatory environment, compatible regulatory approaches, information exchange, and bilateral cooperation in international fora.
Right to regulate
7.119
Notwithstanding other requirements in the chapter, each Party remains free to determine its own approach to good regulatory practices and regulatory cooperation, in a manner consistent with its own legal framework, practice and fundamental principles underlying its regulatory system. Provisions within the chapter cannot be construed to require a Party to achieve any particular regulatory outcome.
7.120
Parties are required to make publicly available descriptions of the processes and mechanisms employed by their regulatory authorities in undertaking regulatory impact assessments and other regulatory practices.
Framework for good regulatory practices
7.121
Articles 26.5 to 26.9 establish a suggested framework for good regulatory practice, elements of which Parties variously recognise the importance of, agree to implement or endeavour to undertake, in accordance with their laws, regulations, rules and procedures. The provisions include:
minimum requirements for regulatory impact assessments, including the impact on small and medium-sized enterprises and an explanation of how the selected option best achieves the public policy objective
public consultation on proposed regulatory measures, including consideration of any comments received
use of plain language in regulatory measures
publication online of regulatory measures in effect
7.122
In relation to regulatory impact assessments, Parties are to endeavour to ensure these assess the need for any major regulatory measure, examine feasible and appropriate regulatory or non-regulatory alternatives, and rely on reasonably obtainable existing information within the boundaries of the authorities, mandates, and resources of the particular regulatory authority.
Regulatory cooperation
7.123
The Parties agree to cooperate to facilitate implementation of the chapter. This may involve:
information exchange, dialogue, or meetings with the other Party and/or interested persons
training programs or seminars
strengthening cooperation between regulatory agencies
collaboration in relevant international fora.
7.124
Regulatory authorities are encouraged to consider regulatory measures from the other Party as well as relevant developments in international, regional, and other fora when planning regulatory measures.
Non-application of dispute settlement
7.125
There is no recourse to dispute settlement under Chapter 30 of the AUKFTA for any matter raising under Chapter 26.
Cooperation
Committee architecture in the AUKFTA
7.126
The AUKFTA contains myriad provisions where Parties undertake to cooperate on various matters. Further, the AUKFTA would require the following committees, dialogues, forums, and working groups be established:
Committee on Trade in Goods (article 2.16)
Working Group on Rules of Origin and Customs and Trade Facilitation (article 4.29)
Committee on Sanitary and Phytosanitary Measures (article 6.16)
Committee on Technical Barries to Trade (article 7.12)
Committee on Services and Investment (article 8.13)
Joint Financial Regulatory Forum (Annex 9C.4)
Legal Services Regulatory Dialogue (article 10.8)
Committee on Intellectual Property Rights (article 15.15)
Strategic Innovation Dialogue (article 20.5)
Environment Working Group (article 22.21)
Dialogue on Trade and Gender Equality (article 24.3)
Joint Working Group on Animal Welfare (article 25.1)
Committee on Cooperation (article 27.4)
Joint Committee (article 29.1).
Key provisions in the cooperation chapter
Areas of cooperation
7.127
Chapter 27 of the AUKFTA, in particular article 27.2, establishes three aspects to cooperation:
it is to assist in implementing the AUKFTA, promoting trade and investment between the Parties, and improving the capacity of Parties to take advantage of the economic opportunities created by the AUKFTA
it may include areas such as environment, trade and gender equality, development, labour, anti-corruption and AMR
it may occur through a number of mechanisms including dialogue, workshops, conferences, sharing best practice, and the exchange of experts.
Committee on Cooperation
7.128
Article 27.4 establishes the Committee on Cooperation and outlines the mandatory and discretionary responsibilities of the committee. The committee must undertake a range of activities including: monitoring the implementation of relevant provisions; facilitating exchange of information; coordinating with and supervising other working groups or dialogues where relevant; and seeking to resolve interpretation differences regarding the application of the AUKFTA in relation to cooperation. The committee may make recommendations to the Joint Committee (to which it reports) and facilitate public-private partnerships.
Resources
7.129
Cooperation activities under the chapter are subject to the availability of resources; and subject to applicable laws and regulations.
Non-application of dispute settlement
7.130
The dispute settlement provisions of the AUKFTA do not apply to any matter arising from Chapter 27.
Transparency and anti-corruption
7.131
Corruption is becoming an increasingly widespread, common, and complex issue that has implications domestically and globally. According to the OECD, corruption can:
increase the cost of doing business
exclude poor people from public services
erode public trust and delegitimise the state
undermine the rule of law, peace, and democracy.
7.132
According to the World Economic Forum, the cost of corruption is at least $2.6 trillion, or 5 per cent of the global GDP. The World Bank estimated that every year businesses and individuals pay more than $1 trillion in bribes.
Anti-Bribery Convention
7.133
In Chapter 28 of the AUKFTA, the Parties affirm their adherence to the Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions (Anti-Bribery Convention), which establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions. It is the only international anti-corruption instrument that focuses on the ‘supply side’ of the bribery transaction.
Facilitation payments
7.134
Facilitation payments—which are payments for expediting transactions or services that are already approved, required, or routine—are specifically dealt with in the chapter (and the Anti-Bribery Convention).
7.135
In Australia, a facilitation payment is legislatively recognised as a complete defence to the core foreign bribery offence in the Criminal Code Act 1995 (Criminal Code). As identified by the Senate Economics References Committee in 2018, the facilitation defence is found under section 70.4 of the Criminal Code. In Australia, facilitation payments are considered a business expense and are therefore a legitimate means to reduce a company’s taxable income. Facilitation payments can be claimed as tax deductions under subsections 26.52(4) and 26.52(5) of the Income Tax Assessment Act 1997. In the UK, facilitation payments are considered a form of bribery, and are treated the same as bribery, which is illegal under the Bribery Act 2010.
7.136
Under article 28.9 of the AUKFTA (and as discussed below), the Parties recognise the harmful effects of facilitation payments and in accordance with each Party’s laws and regulations agree to:
encourage enterprises to prohibit or discourage their use
ensure the solicitation, payment or acceptance of such payments is not used to secure a material advantage in matters affecting international trade or investment
take steps to raise global awareness of the harmful effects of facilitation payments with a view to stopping such payments.
Key provisions in the transparency and anti-corruption chapter
Section A—Transparency
7.137
Section A of Chapter 28 deals with transparency in relation to the administration and implementation of the provisions of the AUKFTA.
Publication provisions
7.138
Parties are required to publish any laws, regulations, procedures, and administrative rulings of general application related to any matter covered in the AUKFTA. This provision is similar to article X of the General Agreement on Tariffs and Trade 1994 (publication and administration of trade regulations).
7.139
Where a Party proposes to adopt a measure, the Party is required, to the extent it considers appropriate, to provide for interested persons to comment, and is to endeavour to provide a reasonable period of time after publication for the measures to enter into force.
7.140
A Party must promptly publish on a single website or in an official journal, any regulation of general application adopted by the central level of government relating to any matter covered by the AUKFTA.
Administration and review
7.141
Parties are to ensure their laws, regulations, and procedures are administered in a consistent and impartial manner, and that a person of the other Party affected by an administrative proceeding is provided reasonable notice of its initiation and a reasonable opportunity to support or defend their position.
7.142
Parties are also to have judicial, quasi-judicial or administrative tribunals or procedures for the purpose of prompt review and, if warranted, correction of a final administrative action with respect to any matter covered by the AUKFTA. The chapter specifies the features of the proceedings that such tribunals must include. Where a decision is made, it is to be implemented and govern the practice of the relevant entity.
Requirement to provide information
7.143
Parties are required to inform each other of measures that may materially affect the operation of the AUKFTA, and must respond to a request from the other Party for specific information pertaining to any proposed or actual measure that may affect the operation of the AUKFTA.
Section B—Anti-corruption
7.144
Section B of Chapter 28 applies to ‘measures to prevent and combat bribery and corruption’ relating to any matter covered by the AUKFTA.
General provisions
7.145
The Parties recognise a number of matters relating to combatting bribery and corruption, including:
the important role public and private sectors play
the need to adhere to the Anti-Bribery Convention and the United Nations Convention Against Corruption
the importance of cooperation including the established working relationships of the Parties’ anti-corruption authorities in bilateral and multilateral forums.
7.146
Notwithstanding the provisions in article 28.8, each Party’s law would prevail in terms of applicable legal defences or legal principles controlling the lawfulness of conduct, and offences would be prosecuted and punished in accordance with each Party’s law.
Measures to prevent and combat bribery and corruption—undue advantage
7.147
Article 28.9 includes several provisions that outline the measures Parties must take to prevent and combat bribery and corruption.
7.148
Parties are to establish the following as criminal offences, in matters affecting international trade or investment:
the promise, offering or giving of an undue advantage to a public official
the solicitation or acceptance by a public official of an undue advantage
the promise, offering or giving to a foreign public official of undue advantage to obtain or retain business or other undue advantage in relation to the conduct of international business
aiding or abetting, or conspiracy in, any of these offences.
7.149
Despite these prohibitions, a Party may provide in its law that this is not an offence if the advantage was permitted or required by the written laws or regulations of a foreign public official’s country, including case law.
7.150
Parties are to adopt measures in accordance with their laws and regulations regarding the maintenance of books and records, financial statement disclosures, and accounting and auditing standards to prohibit the following acts carried out for the purpose of committing any of the offences relating to undue advantage (identified above): establishment of off-the-books accounts; making of off-the-books or inadequately identified transactions; recording of non-existent expenditure; use of false documents; and intentional early destruction of bookkeeping documents.
7.151
Parties are to adopt measures to establish liability of legal persons for offences relating to undue advantage described above.
7.152
Other provisions relate to a prohibition on tax deductibility of bribes, and adopting measures that allow a Party to impose visa restrictions on foreign public officials (and their spouses, civil partners, unmarried partners, children, dependent household members, and any person who assists), who engage in the commission of an undue advantage offence.
Provisions to protect persons who report bribery or corruption offences
7.153
Article 28.10 contains requirements relating to the undue advantage provisions in article 28.9, to protect persons who report bribery or corruption offences, ensure that procedures to report such offences are publicly available, and ensure that authorities responsible for enforcement are publicly known, when considered appropriate.
Promoting integrity and increased civil participation
7.154
In article 28.11 the Parties undertake to endeavour to implement a number of measures and policies to promote and strengthen integrity, honesty, and responsibility among public officials. While this article places a heavy emphasis on integrity and responsibility, it only requires Parties to ‘consider’ establishing procedures through which public officials accused or convicted of an undue advantage offence (that is, offering, giving or receiving undue advantage) may be removed, suspended, or reassigned, bearing in mind respect for the principle of the presumption of innocence.
7.155
Article 28.12 encourages the active participation of groups outside of the public sector to combat bribery and corruption in matters affecting trade or investment through raising public awareness, and encouraging internal auditing controls and compliance programs.
Application and enforcement of measures to combat bribery and corruption
7.156
In accordance with its legal system, a Party is not to fail to effectively enforce measures adopted or maintained to comply with articles 28.9 (undue advantage), 28.10 (protection of persons that report bribery and corruption offenses), and 28.11 (promoting integrity among public officials), through a sustained or recurring course of action or inaction, as an encouragement for trade and investment. Parties retain the right to exercise discretion with respect to the enforcement of these measures and to make decisions with regard to the allocation of resources to enforcement.
7.157
The Parties affirm their cooperative commitment to enhance law enforcement actions to combat the undue advantage offences, and agree more generally to endeavour to cooperate in a rage of areas including in identifying, tracing, freezing, seizing, and confiscating the proceeds of crime, using both conviction and non-conviction-based confiscation powers.
Modification of dispute settlement arrangements
7.158
A Party can only have recourse to the dispute settlement procedure in Chapter 30 if it considers a measure of the other Party is inconsistent with its obligation under Section B, or the other Party has otherwise failed to carry out its obligations under Section B, in a manner affecting international trade or investment between the Parties.
7.159
With regard to article 28.13, which deals with the application and enforcement of measures adopted or maintained to comply with articles 28.9 (relating to undue advantage), 28.10 (protection of persons that report bribery and corruption offenses), and 28.11 (promoting integrity among public officials), there is no recourse to dispute settlement.
7.160
Where a matter can be dealt with under the dispute settlement chapter, a range of requirements apply to the expertise of officials involved.