Professional services, temporary entry, telecommunications, intellectual property, government procurement, state-owned enterprises, small and medium-sized enterprises, and innovation
Background
6.1
This chapter covers the following chapters of the Free Trade Agreement between Australia and the United Kingdom of Great Britain and Northern Ireland (AUKFTA):
professional services and the recognition of professional qualifications (Chapter 10)
temporary entry for business persons (Chapter 11)
telecommunications (Chapter 12)
intellectual property (Chapter 15)
government procurement (Chapter 16)
state-owned enterprises and designated monopolies (Chapter 18)
small and medium-sized enterprises (Chapter 19)
Professional services and the recognition of professional qualifications
6.2
The professional services chapter provides a framework to encourage Parties to work towards developing systems of recognition for professional qualifications in conjunction with the relevant bodies, which remain responsible for professional recognition decisions. There are no obligations in the chapter to modify laws or regulations for the practice of professionals. However, specific provisions deal with legal services.
6.3
The definition for professional services in the AUKFTA is left open. Chapter 10 of the AUKFTA defines professional services as including, but not limited to: accountancy and auditing services, architectural services, engineering services, legal services, and other types of professional services. The Regulation Impact Statement (RIS) suggested it also includes health services—doctors, medical specialists, dentists and radiologists.
Key provisions in the professional services and qualifications chapter
6.4
Chapter 10 of the AUKFTA aims to encourage the development of qualifications recognition, and develop best practice in the regulation of professional services.
General principles for professional services
6.5
Parties are required to consider, or encourage their relevant bodies to consider, subject to laws and regulations, whether or in what manner to:
apply in a non-discriminatory manner ethical, conduct and disciplinary standards to professionals of the other Party
accommodate professional services on a fly-in, fly-out basis, using technology across borders, or establishing a commercial presence
permit service suppliers of each Party to work together
permit enterprises of the other Party to use a firm name of their choice
establish dialogues with a view towards developing mutual recognition arrangements (MRAs).
6.6
The AUKFTA suggests Parties may encourage their relevant bodies to consider implementing procedures for the temporary or project-specific licensing of professional service suppliers of the other Party.
6.7
Parties are required to encourage relevant bodies to establish and operate systems for the recognition of professional qualifications obtained in the other Party’s jurisdiction in cases where pursuit of a regulated profession requires the possession of specific professional qualifications.
6.8
Parties, or their relevant bodies, remain able to require a natural person to meet additional conditions that apply to the practice of a particular profession.
Views of participants—Facilitate negotiations on recognition of architects
6.9
The Architects Accreditation Council of Australia (AACA) was supportive of the AUKFTA because it was of the view it would assist the United Kingdom (UK) Architect Registration Board and the AACA to agree on an MRA, which is currently being negotiated.
6.10
The AACA stated the Architecture MRA would allow the exchange of skills, expertise, collaboration and employment opportunities. The AACA identified architecture as one of the professions that benefits most from collaboration, providing opportunities to transform the industry in Australia. The MRA could also promote architecture qualifications from Australian institutions in the international student market. Since the announcement of the AUKFTA in June 2021, the AACA had received over 150 enquiries from architects interested in mutual recognition.
Legal services
6.11
The provisions for legal services cover the supply of legal advisory services and legal arbitration, conciliation and mediation services in relation to the law of the other Party, other foreign law (to the extent qualified to practice), or international law.
6.12
Though a Party’s right to regulate and supervise the supply of legal services in a non-discriminatory manner is not affected, each Party is required to (subject to limitations below):
allow a national of the other Party who is professionally qualified and authorised in the other Party to practise as a lawyer to supply the specified services, without having to requalify as, or be authorised to practise as, a domestic lawyer
not impose disproportionately complex or burdensome administrative or regulatory conditions on, or for, the supply of these services.
6.13
The requirement does not apply in a number of contexts, including broadly, in proceedings before administrative agencies, the courts or official tribunals, with regard to certain public functions of notaries and bailiffs, and services supplied by patent or trademark attorneys.
6.14
The Parties are to establish a Legal Services Regulatory Dialogue (the Dialogue) composed of representative from specified professional associations of the legal profession of each Party. The Dialogue is to work towards removing barriers to the practice of legal professionals from one jurisdiction in the other.
Temporary entry for business persons
6.15
The provisions within the AUKFTA for the temporary entry of business persons build on and extend those in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP was notable at the time for going beyond the then existing requirements for services suppliers under Mode 4 of the General Agreement on Trade in Services.
6.16
A business person is defined within Chapter 11 of the AUKFTA as ‘a national of a Party who is engaged in trade in goods, the supply of services or the conduct of investment activities’. The chapter applies to measures affecting the temporary entry of business persons as outlined in each Party’s schedule to Annex IV. Each Party has made commitments with regard to the following categories of business persons.
Table 6.1: Categories of business persons covered
|
|
|
|
Business visitors
Installers and servicers
Intra-corporate transferees
Independent executives
Contractual service suppliers
|
Business visitors for establishment purposes
Short-term business visitors
Intra-corporate transferees
Investors
Contractual services suppliers
Independent professionals
|
Source: AUKFTA.
6.17
These categories are further defined in each Party’s schedule to Annex IV of the AUKFTA, which outlines the corresponding requirements, conditions, limitations, and length of stay for each category of business person.
6.18
While there are some differences in the categories of business persons between Australia and the UK, when broken down, the only significant difference is the UK schedule does not specifically include agriculture and animal husbandry persons under their temporary entry processes. This issue is subject, however, to a joint declaration (see below).
Key provisions in the temporary entry for business persons chapter
6.19
Chapter 11 of the AUKFTA, which provides for the temporary entry of business persons, contains provisions that deal with transparency, application and processing requirements.
6.20
While Parties retain the ability to apply measure regulating the entry of nationals of the other Party, provided the measures do not impair the benefits accruing to the other Party under this chapter, a Party is required to grant temporary entry or extension of temporary stay provided the person follows the application procedures and meets all eligibility requirements for temporary entry or extension.
6.21
A person applying for a visa is not exempted from meeting any applicable licencing or other requirements, and each Party’s laws regarding employment continue to apply, including those concerning minimum wages or collective wage agreements.
6.22
Other provisions deal with the application and assessment process including the provision of information, expeditiously processing applications, communicating with applicants on the status of their applications, and charging only reasonable fees.
Refusal in case of labour disputes
6.23
A Party may refuse a visa application if temporary entry of that person might adversely affect the settlement of a labour dispute or the employment of any natural person who is involved in such a dispute.
Dispute settlement
6.24
Neither Party has recourse to dispute settlement under Chapter 30 of the AUKFTA unless the matter involves a pattern of practice and the business persons affected have exhausted all available administrative remedies regarding the matter.
6.25
Parties undertake to endeavour to cooperate on the return and readmission of business persons, where such business person is in contravention of the host Party’s measures relating to temporary entry.
Innovation and Early Career Skills Exchange
6.26
Side letters to the AUKFTA provide for Australia to pilot visas for an Innovation and Early Career Skills Exchange enabling workplace exchanges for people early in their career and people involved in innovation.
6.27
Visas granted under this pilot would be capped at 1,000 in the first year and rise by an additional 1,000 for the second year. The pilot would be implemented by Australia within one year of entry into force (EIF) of the AUKFTA.
Telecommunications
6.28
Chapter 12 of the AUKFTA applies to trade in telecommunications between Australia and the UK. The purpose of the chapter is to:
… ensure that any service supplier of the other Party has access to and use of any public telecommunications network or service, including leased circuits, offered in its territory or across its borders on a timely basis and on reasonable, transparent, and non-discriminatory terms and conditions.
Key provisions in the telecommunications chapter
6.29
Chapter 12 of the AUKFTA applies to measures of a Party affecting trade in all telecommunications services except:
any regulation of services providing content transmitted using telecommunications networks or services, such as mandating local content quotas and limiting damaging or offensive content
any regulation affecting broadcast or cable distribution of radio or television programming (except some provisions with regard to access and use and transparency continue to apply).
Regulation
6.30
The chapter permits each Party to determine its own approach to regulating telecommunications.
6.31
Parties retain the ability to define the kind of universal service obligation they wish to maintain, and to administer scarce resources such as radio spectrum and rights of way, providing this is done in a non-discriminatory manner.
6.32
The Parties are obliged to ensure telecommunications regulatory authorities are separate, not accountable to any supplier of public telecommunications services and operate in a transparent manner, and that information with regard to licencing criteria, the licencing process and licences themselves are publicly available.
Access and use to facilitate competition
6.33
In effect, significant provisions in the chapter deal with what constitutes ‘access’ to public telecommunications networks, including what technical functions may be performed on or through such networks, whilst allowing Parties to protect the integrity of public telecommunications networks or services.
6.34
Amongst other things, the provisions require access to be provided on a timely basis and on reasonable and non-discriminatory terms, including ensuring that service suppliers of the other Party are able use public telecommunications networks or services to move information within or across the borders of its territory.
6.35
Major suppliers are required to provide access to essential facilities and network elements on an unbundled and non-discriminatory basis for suppliers from the other Party providing public telecommunications networks or services. In general, major and other suppliers of telecommunications networks or services must provide interconnection with suppliers of the other Party. A range of transparency obligations apply with regard to measures relating to public telecommunications networks or services.
Competition
6.36
In terms of competitive practices, Parties are not allowed to prohibit the resale of any public telecommunications services and must maintain competitive safeguards to prevent anti-competitive practices and support equal treatment of services providers from the other Party.
Other provisions
6.37
The chapter also contains a number of provisions intended to facilitate access to telecommunications networks and services and competition in these areas including in relation to number portability and access to numbers; access to submarine cabling landing stations and systems; and confidentiality for users of public telecommunications networks and services (providing it does not unduly restrict trade in services).
6.38
Specific provisions deal with international roaming, including requirements that information on retail rates for international mobile roaming services for voice, data, and text messages offered to consumers when visiting the territory of the other Party is publicly available. Regulation of rates for wholesale international roaming services is not prohibited, but is subject to some conditions.
Intellectual property
6.39
Intellectual property (IP) is defined in Part II of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which entered into force in January 1995, as: copyright and related rights, trade marks, geographical indications (GIs), industrial designs, patents, layout-designs (topographies) of integrated circuits, and protection of undisclosed information—this definition is carried across to the AUKFTA.
Intellectual property filings in Australia and the UK
6.40
A range of statistics providing international comparisons of IP is available from the World Intellectual Property Organization (WIPO) and the Organisation for Economic Co-Operation and Development (OECD). The following table provides a comparison of IP filings (by residents, and by residents filing for IP rights abroad) between Australia and the UK.
Table 6.2: IP filings, Australia and the UK
|
|
|
|
|
Year
|
Patent
|
Trade mark
|
Industrial Design
|
Patent
|
Trade mark
|
Industrial Design
|
|
2015
|
11,251
|
197,378
|
12,767
|
53,470
|
1,343,657
|
196,250
|
|
2016
|
11,788
|
208,758
|
12,093
|
53,004
|
1,222,860
|
194,114
|
|
2017
|
11,660
|
206,471
|
18,204
|
53,825
|
1,147,493
|
211,626
|
|
2018
|
12,263
|
211,334
|
23,887
|
56,225
|
1,219,117
|
196,882
|
|
2019
|
12,611
|
211,039
|
15,766
|
54,794
|
1,250,134
|
193,733
|
|
2020
|
11,906
|
224,927
|
15,680
|
53,064
|
1,304,176
|
196,183
|
Source: WIPO.
6.41
The 10 largest users of the Patent Cooperation Treaty system accounting for over 88 percent of patent applications in 2021 are (in order): China, United States, Japan, Republic of Korea, Germany, France, UK, Switzerland, Sweden, and the Netherlands.
6.42
The RIS stated one of the fastest growing UK exports to Australia is IP, specifically music and entertainment. This has been growing by over 10 per cent a year over the past decade. The UK imports from Australia mainly licensing fees for software and commercial brands.
Intellectual property in plurilateral and bilateral trade agreements
6.43
Since TRIPS entered into force, developed countries have sought to improve protections for IP. Mechanisms under the WIPO, WTO, and other forums have been perceived by some as insufficiently effective for negotiating and developing standards of protection for IP. Consequently, many countries have redirected their IP development efforts toward bilateral negotiations. This has resulted in changes to IP protections and law largely taking place in free trade agreements (FTAs) that contain so-called TRIPS-plus provisions.
6.44
The AUKFTA IP chapter closely follows the CPTPP chapter. The CPTPP regulated all categories of IP rights established in TRIPS, but extended further to: technological protection measures, right management information, satellite signals and cable, country names, domain names on the internet and internet service providers (ISPs).
6.45
The AUKFTA follows the same structure as the CPTPP and can thus be categorised as TRIPS-plus, but there are some differences in provisions. The AUKFTA does not include the CPTPP provisions related to satellite signals and cable or country names. It does, however, contain several provisions that are not present in the CPTPP including provisions relating to: article 31bis of TRIPS; breaking patents in cases of experimental use; conditions on patent applicants; providing for blocking orders in the online environment.
6.46
According to the National Interest Analysis (NIA) and the RIS, the ‘vast majority’ of the chapter is consistent with existing Australian legislation, but some amendments to Australia’s designs and artist resale right settings would be required after EIF.
Areas in the AUKFTA that would require action by Australia
6.47
Some commitments under Chapter 15 of the AUKFTA, while not requiring any immediate regulatory change, would require change over time including:
provisions requiring Australia to make all reasonable efforts to accede to the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs (Hague Agreement)
provisions dealing with reciprocity in artist’s resale right—reciprocal provisions that require Parties to enter into consultations to allow for creators to receive royalties when their works are resold through other commerce channels within both territories, such as art dealerships or markets
provisions seeking changes to recognised UK GIs within Australia (Section D).
Hague Agreement
6.48
The Hague Agreement governs the international registration of industrial designs and establishes an international system that allows industrial designs to be protected in multiple countries or regions, thereby making it easier for designers to file applications for design protection in other jurisdictions.
6.49
According to the NIA, if Australia were to accede to the Hague Agreement, the most significant regulatory change would be a requirement to increase Australia’s maximum term of design protection from 10 to 15 years. Acceding to the Hague Agreement, according to IP Australia, would result in a net cost for Australia. IP Australia, which conducted an economic cost-benefit analysis of the Hague Agreement, found the small net benefits gained by Australian applicants (between $0.03 million and $6 million over 10 years) were overshadowed by net costs to Australian consumers (between $23 million and $114 million, with a best estimate of $58 million over 10 years). Its best estimate of the net cost was around $61 million over 10 years. The RIS, drawing on PriceWaterhouseCoopers research, stated the overall net cost to the Australian economy was estimated to be between $44.3 and $48.7 million over 16 years.
6.50
Should Australia accede to the Hague Agreement (see below), some amendments would be required to the Designs Act 2003 and associated regulations.
Artist resale royalty scheme
6.51
In the UK, the artist’s resale right entitles creators to continued royalties (between 0.25 per cent and 4 per cent) when their work is sold through an auction house or art market professional. Royalties can be claimed for the same period as copyright, which is 70 years after the death of the artist.
6.52
Similar legislation relating to auction houses and galleries exists within Australia under the Resale Royalty Right for Visual Artists Act 2009 that sets a 5 per cent royalty, subject to a range of conditions.
6.53
Provisions in Chapter 15 of the AUKFTA concerning artist’s resale rights require Parties to enter into consultations to conclude reciprocal arrangement for artists to receive royalties for eligible resales of works in the territory of the other Party.
Geographical indication recognition
6.54
The AUKFTA also contains side letters addressing the UK’s intention to seek the protection of certain GIs in Australia in the event a new standard of protection is implemented through an international agreement with a third party. The side letters contain an annex listing the GIs for which the UK intends to seek protection, though this may not include all GIs for which the UK would seek protection. The letters also state that when protection is sought pursuant to that provision, the UK may amend its list of proposed GIs so that it reflects the GIs that are protected within the UK at the time.
6.55
If Australia enters into another international agreement that also addresses GIs, for instance with the European Union, Australia would be required to enter consultations with the UK with a view to amending the AUKFTA so it provides treatment no less favourable than that within the new international agreement. If Australia has not entered into an international agreement after two years, Parties are required to review the GI provisions of the AUKFTA with a view to considering further protections for GIs.
Key provisions in the intellectual property chapter
6.56
The following summaries key provisions in the lengthy Chapter 15 of the AUKFTA.
Section A – General provisions
6.57
Section A of Chapter 15 addresses objectives and principles, certain health measures, national treatment, transparency, the exhaustion of IP rights, and genetic resources. Section A also contains an affirmed list of international agreements that Parties have ratified or acceded to.
6.58
Section A deals with:
‘understandings regarding certain public health measures’, in that the Parties affirm the Declaration on the TRIPS Agreement and Public Health, and agree the chapter does not prevent a Party taking measures to protect public health and should be interpreted and implemented in a manner supportive of each Party’s right to protect public health and access to medicines
protecting the effective utilisation of article 31bis of TRIPS and associated annex and appendix, which permits a country to import pharmaceutical products under a compulsory license from a producing country without violating TRIPS provisions
requiring national treatment for the protection of all categories of IP covered by the chapter, subject to exceptions provided for in a range of international treaties, and in relation to judicial and administrative procedures
promoting transparency in the Parties’ IP systems by endeavouring to publish online laws, regulations, procedures and administrative rulings; details of application requirements; and registered or granted trade marks, GIs, designs, patents, and plant variety rights
the general principle that obligations under the chapter do not apply to acts that occurred before the date of EIF of the AUKFTA.
Section B – Cooperation
6.59
Section B of Chapter 15 addresses cooperation and suggests a range of areas where the Parties may cooperate, including: between each Party’s respective collecting societies, engagement with small and medium-sized enterprises (SMEs), education and awareness of IP rights protection and enforcement, IP policy and laws to support the development and deployment of low-emissions technologies, best practices in reducing infringement, and improving the international IP regulatory framework.
6.60
The Parties agree to establish a Committee on Intellectual Property Rights, which would undertake a number of activities including:
consider matters related to the implementation and operation of the IP chapter
exchange information pertaining to IP rights matters
consult on and monitor the implementation of any amendments arising from reviews of the GI section.
6.61
Section B also contains non-binding provisions relating to patent cooperation and work sharing, recognising the importance of a public domain, and cooperating in the area of traditional knowledge and associated genetic resources, specifically in terms of quality patent examinations.
Section C – Trade marks
6.62
Section C of Chapter 15 establishes:
what constitutes a trade mark (it need not be visually perceptible), the rights conferred by a trade mark (such as the exclusive right to prevent third parties using the trade mark without the owner’s consent), and limited exceptions including for fair use of descriptive terms
the period of initial trade mark registration and each renewal of registration for terms no less than 10 years, which exceeds the 7 years provided for in TRIPS
that Parties protect well-known trade marks consistent with international agreements
that Parties provide a system for the examination and registration of trade marks with particular specified features
that competent authorities are to have the authority to refuse bad faith applications, including suggested remedies for domain names registered in bad faith
that the trade mark system be electronic.
Section E – Patents and data
6.63
Section E of Chapter 15 contains provisions related to patents and includes articles addressing:
the exclusive right of patent owners to their product or process and the right to prevent third parties from using, selling, or importing the product, process, or product obtained directly by that process
making patents available for any invention in all fields of technology, providing the invention is new, involves an inventive step and is capable of industrial application
excluding inventions from patentability on a number of grounds including to maintain public order; protect human, animal or plant life or health; or avoid serious prejudice to the environment
excluding certain diagnostic, therapeutic and surgical methods, along with plants and animals and certain essentially biological processes for the production of plants or animals
providing for limited exceptions if they do not unreasonably prejudice the legitimate interests of the patent owner, amongst other things
providing exceptions for experimental use and for purposes connected with obtaining regulatory approval.
6.64
A range of provisions provide for situations where an invention is made independently by more than one inventor; for a patent applicant to have the opportunity to make amendments, corrections or observations with regard to an application, or to respond to a notice of a patent revocation or invalidation; for the publication of patent applications; and for the details required in a patent application.
6.65
Article 15.47 requires Parties to make available either an adjustment (extension) in patent term, or a period of additional protection to compensate the patent owner for the reduction of patent term resulting from administrative authorisation procedures.
6.66
Section F also contains provisions related to the protection of undisclosed test data for agricultural chemical and pharmaceutical products. The articles stipulate that if a Party requires the submission of undisclosed data as a condition for market approval, then that Party shall not permit for a period of 10 years (agricultural chemicals) or five years (pharmaceuticals), third persons (without consent) to place the same or a similar product on the market based on:
the marketing approval granted to the person that submitted that information.
6.67
This is similar to the system that exists in the UK, which has provisions for protecting agriculture products for 10 years and pharmaceutical products for eight years. Australia also has similar provisions.
Section G – Registered industrial designs
6.68
Section G of Chapter 15 contains provisions regarding the protection, application process, classification and registration of industrial designs:
Parties must protect independently created registered industrial designs that are new or original for not less than 10 years, with limited exceptions permitted so long as they are consistent with TRIPS.
Parties are to endeavour to use a classification system for industrial designs consistent with the Locarno Agreement Establishing an International Classification for Industrial Designs.
6.69
Section G also contains a commitment that Australia would make all reasonable efforts to accede to the Hague Agreement (see discussion above).
Section H – Copyright and related rights
6.70
Section H of Chapter 15 contains provisions regarding copyright and related rights and deals with authors, performers, producers of phonograms, broadcasting organisations, and the artist’s resale right (discussed above).
6.71
Broadly, each Party is to provide a range of exclusive rights to creators to authorise or prohibit the use of their work in a range of situations. Any limitations or exceptions to exclusive rights are to be confined to special cases that do not conflict with a normal exploitation of the activity, and do not unreasonably prejudice the legitimate interests of the right holder. Notwithstanding this requirement, Parties are to endeavour to achieve a balance between copyright and legitimate purposes such as criticism, comment, news reporting, teaching, scholarship, research, and facilitating access to published works for people with disability.
Terms of protection
6.72
Section H contains different terms of protection and does not prevent Parties from providing longer terms of protection:
author—life of the author and 70 years after death
for a work with no reference to the life of a natural person—70 years from the creation of the work, or if lawfully made available to the public within 50 years from creation, 70 years from the first such making available
broadcasting organisation—50 years from first transmission
performances in phonograms—50 years from fixation in phonogram, or if lawfully made available to the public during this time, 70 years from first being made available
producers of phonograms—50 years from fixation in phonogram, or if lawfully made available to the public during this time, 70 years from first being made available (subject to profit sharing between performers and producers).
Technological protection measures
6.73
Effective technological measures are defined as any technology, device or component which is used by authors, performers, or producers of phonograms to prevent the unauthorised use of their copyright or related rights. Except where they relate to computer programs, Parties are to prohibit the unauthorised circumvention of effective technological measures, subject to a limited range of exceptions.
Rights management
6.74
Parties are required to provide adequate legal remedies against the removal or alteration of any electronic rights management information, or the distribution of copyrighted material knowing the electronic rights management information has been removed or altered.
Section I – Trade secrets
6.75
Under Section I of Chapter 15, each Party is to ensure trade secret holders have the legal means to protect trade secrets being disclosed or used without consent in a manner contrary to honest commercial practices. The article identifies what would and would not be considered contrary to honest commercial practices, and the instances where a Party may provide limited exceptions.
Section J – Enforcement
6.76
The enforcement section in Section J of Chapter 15, largely follows TRIPS and the CPTPP, and like the CPTPP, some optional TRIPS provisions have been made binding obligations. The enforcement provisions are as follows:
In relation to the enforcement of IP rights, Parties must provide for enforcement procedures that must, among other things, be fair and equitable, not be unnecessarily complicated or costly, not be a barrier to legitimate trade, permit effective action against infringement, and be proportionate.
In relation to civil remedies, Parties are to make available civil judicial procedures concerning the enforcement of IP rights in the chapter. The section contains an extensive list of powers a Party’s judicial authorities must have.
Border measures
6.77
Subsection J.3 provides that in relation to border measures:
Parties must provide for applications to suspend the release of or to detain suspected goods
rights holders initiating proceedings are required to provide adequate evidence there is prima facie an infringement of an IP right, and to supply sufficient information to make the suspected goods recognisable.
6.78
The subsection also requires Parties to ensure their competent authorities have the power, amongst other things, to:
require a right holder initiating procedures to provide security or assurance to protect the defendant and competent authorities, and to prevent abuse
inform the right holder of the people involved with the importation of the infringing goods
initiate border measures without a formal complaint from a third party or right holder
destroy or dispose of goods following a determination that the goods are infringing.
Criminal remedies
6.79
Subsection J.4 contains articles dealing with criminal offences:
Parties must provide for criminal procedures and penalties to be applied in cases of wilful trade mark counterfeiting or copyright piracy on a commercial scale
criminal procedures and penalties are to be applied in cases of trade mark infringement involving the wilful importation and domestic use, in trade on a commercial scale, of a label or packaging
Parties are required to provide penalties that are sufficiently high to provide a deterrent to future acts of infringement
judicial or competent authorities are to have the authority to order the seizure of certain goods and forfeiture of assets derived from infringing activity and order the forfeiture or destruction of goods that are infringing on IP rights
authorities are to have the power to act on their own initiative in relation to the criminal offences without the need for a formal complaint.
Enforcement in the digital environment
6.80
Subsection J.5 addresses obligations regarding enforcement in the digital environment:
the subsection requires that the same enforcement measures apply to infringements that take place in the digital environment as those that do not
Parties are to provide for limitations on the liability of ISPs, for copyright and related rights infringement by a user
a Party may require an ISP to take action to prevent access to materials infringing copyright or related rights
in certain cases, civil judicial authorities may grant an injunction against an ISP to block access to a specific online location outside the territory of the Party
Parties are to encourage domain registries to act against IP infringements, and if desired, providing for orders requiring ISPs to disclose certain information to a right holder, including subscriber information.
Enforcement practices with respect to IP rights
6.81
Subsection J.6 addresses enforcement practices with respect to IP rights. Parties must maintain a certain level of transparency with regards to final judicial decisions and administrative rulings; use reasonable efforts to develop specialised expertise within competent authorities of IP rights; and use reasonable efforts to enhance public awareness on IP rights and the detrimental effects of infringements. Parties are to recognise the importance of having due regard to the environment when disposing of infringing goods.
Government procurement
6.82
Government procurement refers to the purchase of goods and services, including construction services by public authorities. Globally, government procurement constitutes a significant proportion of economic activity, on average around 15 per cent of gross domestic product, though not all procurement is potentially tradeable. As it currently stands, only about 1.5 per cent of government procurements are ‘cross-border awards’. A higher proportion are awarded to locally established foreign suppliers (in some markets, up to 15 per cent).
6.83
Although government procurement is excluded from the WTO’s multilateral agreements, it has been addressed through plurilateral agreements. The current agreement is the Agreement on Government Procurement (GPA), which has been in force since 2014. There are presently 21 parties to the GPA including Australia (since May 2019) and the UK (since 1 January 2021).
6.84
Procurement agreements establish thresholds for eligible procurements in International Monetary Fund Special Drawing Rights (SDR). Both Parties have adopted almost identical thresholds for triggering requirements under Chapter 16 (converted below from SDR to national currencies), which are the same as those in the GPA.
Table 6.3: Government procurement thresholds, Australia and the UK
|
|
|
|
|
Section A—Central government entities
|
|
Goods and services
|
$256,000
|
£138,760
|
|
Construction
|
$9,861,000
|
£5,336,937
|
|
Section B—Sub-central government entities
|
|
Goods and services
|
$700,000
|
*
|
|
Construction services
|
$9,861,000
|
*
|
|
Procurement by regional and local contracting authorities
|
|
Goods and Services
|
|
£378,785
|
|
Construction services
|
|
£5,336,937
|
|
Procurement by bodies governed by public law
|
|
Goods and services
|
|
£426,955
|
|
Construction services
|
|
£5,336,937
|
|
Section C—Other entities
|
|
Goods and services
|
$789,000
|
£426,955
|
|
Construction services
|
$9,861,000
|
£5,336,937
|
* The UK has separated this section into two types of sub-central entities, this is the only difference in thresholds. Source: AUKFTA.
New entities in schedules to Annex 16A
6.85
Australia has included a range of entities in its schedule to Annex 16A that are not included in its schedule to the GPA.
6.86
The UK has made significantly fewer changes to its schedule in comparison to the GPA, which does not necessarily mean the UK has more restrictions. Section A contains a small number of additional regional colleges and a handful of other entities. Section B and Section C are provided as indicative (not exhaustive) lists. The UK is more prescriptive in Section D with regard to the items that may be procured by the Ministry of Defence and agencies for defence or security activities in the UK, and more prescriptive in terms of services in Section E.
Key provisions in the government procurement chapter
6.87
Broadly, procurement covered under Chapter 16 of the AUKFTA means government procurement:
of a good, service, or any combination thereof as specified in each Party’s schedule
that meets the threshold specified in each Party’s schedule
by a government entity identified in the relevant schedule
not otherwise excluded from coverage under the AUKFTA.
6.88
In addition to some general exclusions in article 16.2(3)—for instance for the acquisition of land or existing buildings, management services for regulated financial institutions, and international assistance—each Party has listed additional entities and/or procurement activities not covered by the chapter in their respective schedules to Annex 16A.
6.89
A Party may modify or rectify its schedule to Annex 16A. Where a modification results in a different level of coverage, a Party is to provide appropriate compensatory adjustments to maintain a level of coverage comparable to the coverage that existed prior to the modification.
6.90
While Parties cannot apply a measure in a way that would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade between the Parties, they are permitted to adopt or maintain a measure:
necessary to protect public morals, order or safety
necessary to protect human, animal or plant life or health (including environmental measures)
relating to the good or service of a person with disabilities, of philanthropic institutions, or of prison labour.
6.91
Each Party is responsible for ensuring its procuring entities comply with Chapter 16 in conducting covered procurements.
6.92
Procuring entities are not permitted to arrange a procurement to avoid obligations under the chapter, for instance by structuring a procurement into smaller parts to reduce the overall value of a procurement.
General principles for procurement processes
6.93
Chapter 16 of the AUKFTA provides that with respect to any measure regarding a covered procurement, a range of requirements apply, including the following:
Parties are to accord national treatment to the goods and services of the other Party
methods of tendering can include open, selective and limited, where appropriate
an entity is to evaluate the financial capacity and commercial and technical abilities of the supplier (inside and outside the territory), and base its evaluations on the conditions specified in advance in notices or tender documentation
a Party, on the basis of supporting evidence, may exclude a supplier on grounds including bankruptcy, false declarations, significant or persistent deficiencies in performance, final judgements in respect of serious crimes or other serious offences, professional misconduct or acts or omissions adversely reflecting on the supplier’s commercial integrity, and failure to pay taxes
Parties and procuring entities are permitted to maintain supplier registration systems.
6.94
In addition, a number of transparency measures apply with regard to procurement processes themselves, the availability of procurement notices and any relevant legislation, regulation or procedural requirements.
Technical specifications and tender documentation
6.95
The chapter contains prescriptive requirements for the technical specifications of goods or services being procured in tender documents, requiring, amongst other things, that any technical specifications or conformity assessments not create an unnecessary obstacle to trade between the Parties. It requires technical specifications to be established in terms of performance and functional requirements rather than design or descriptive characteristics, where appropriate.
6.96
Parties are able to use technical specifications to promote conservation of natural resources or protect the environment, and Parties can apply certain technical specifications to protect sensitive government information, including with regard to limits on storage, hosting or processing information outside the territory of the Party.
6.97
Similarly detailed provisions apply to the availability and content of tender documentation, and to requirements for notification where modifications are made to tender documents.
Evaluation and awarding a tender
6.98
Specific time periods and deadlines are established for certain types of tendering.
6.99
Procuring entities are required to receive, open and treat all tenders under procedures that guarantee the fairness and impartiality of the procurement process, and the confidentiality of tenders.
6.100
Chapter 16 establishes a number of requirements before a contract is awarded, including that the tender was submitted in writing and complies with the essential requirements set out in relevant notices and tender documentation. A contract shall be awarded to the entity that submits, based solely on the evaluation criteria specified in the notice and tender documentation, the most advantageous tender or where price is the sole criterion, the lowest price.
6.101
Procuring entities must promptly inform participating suppliers of the contract award decision, and upon request provide an explanation of the reasons an unsuccessful supplier was not selected.
6.102
A Party, at the request of the other Party, must promptly provide information necessary to determine whether a procurement was conducted fairly, impartially and in accordance with Chapter 16. However, provision is made for the non-disclosure of information in certain circumstances.
6.103
Parties are to ensure criminal or administrative measures exist to address corruption, fraud and other illegal acts in government procurement while providing due process. Successful suppliers must maintain and enforce appropriate measures to prevent and detect corruption, fraud and other illegal acts.
Domestic review procedures
6.104
Provisions in the chapter require domestic review procedures to provide aggrieved suppliers a right of recourse through national courts or an independent review body (with specific requirements specified), but emphasise resolution through consultation as the first step.
Facilitation of participation by SMEs
6.105
Chapter 16 of the AUKFTA recognises the role of SMEs in contributing to economic growth and allows for preferential treatment for SMEs providing the criteria for eligibility is transparent.
Side letters – Local government procurement
6.106
Although local government entities are not included in Chapter 16 of the AUKFTA, there are side letters stating that if the Australian Government agrees to give procurement access to local government in another agreement, Australia would notify the UK and enter into consultations with a view to providing the same access.
State-owned enterprises and designated monopolies
6.107
State-owned enterprises (SOEs) constitute an increasingly important share of the global economy: around 204 of the world’s 2,000 largest publicly listed companies are SOEs. The world’s top 10 largest SOEs originate in China (7), Brazil (1), Russia (1), and France (1) and operate across resource extraction, transportation, telecommunications, and utilities.
6.108
Although they commonly operate like any other enterprise, by virtue of their state control, SOEs may be used for government policy objectives instead of or in addition to, commercial objectives. Governments may also give preferential treatment to SOEs. Provisions around SOEs in trade agreements are intended to ‘level the playing field’ to ensure SOEs and the private sector can compete on the same terms.
Australian state-owned enterprises
6.109
Australia generally designates SOEs as ‘government business enterprises’ (GBEs). At the federal level, rules made pursuant to the Public Governance, Performance and Accountability Act 2013 prescribe nine GBEs that are either:
Corporate Commonwealth entities
Competitive neutrality
6.110
Australia is regarded as having one of the strictest pro-competitive domestic policies on SOEs through its early promotion of ‘competitive neutrality.’ Since 1996, the Australian Government has applied a competitive neutrality policy to GBEs and some non-GBE authorities. The policy applies to the business activities of publicly owned entities, not to non-business, non-profit activities.
6.111
Competitive neutrality does not require governments to restructure the delivery of social programs into competitive market-based mechanisms, to remove community service obligations from government businesses, or mean government businesses cannot compete successfully with private businesses. The policy specifies that governments should not use their legislative or fiscal powers to advantage their own businesses over the private sector. The policy establishes a number of ‘neutrality elements’ and the manner in which these apply to different types of government entities.
UK state-owned enterprises
6.112
Drawing on data from 2017, the UK House of Commons Library found there were 303 companies that were jointly, majority or fully owned by the UK public sector. There is significant public ownership of rail, water and energy infrastructure and/or assets in parts of the UK, though not solely by the central level of government.
6.113
The OECD in 2014, identified entities operating across manufacturing, finance, electricity and gas, other utilities, and ‘other activities’, and found they employed approximately 300,000 people with a value of approximately US$66.2 billion.
Key provisions in the SOE chapter
6.114
Chapter 18 does not prohibit SOEs or designated monopolies but rather aims to prevent such entities receiving advantages by virtue of government ownership when competing with private enterprises.
6.115
An SOE is defined in the AUKFTA as an enterprise principally engaged in commercial activities in which a Party either:
directly owns more than 50 per cent of the share capital
controls, through ownership interests, the exercise of more than 50 per cent of the voting rights
holds the power to appoint a majority of members of the board of directors or any other equivalent management body.
6.116
Chapter 18 of the AUKFTA applies to the activities of SOEs and designated monopolies of a Party that affect trade or investment between the Parties. The chapter does not regulate SOEs when they are engaged in non-commercial activities that are not regarded as having the potential to distort competition. This allows governments to use SOEs to provide public services and achieve other policy objectives such as addressing market failure.
6.117
The chapter contains extensive exemptions, provisions for non-conforming activities, and exceptions, including for central banks, and financial and regulatory authorities to carry out their regulatory and/or policy functions. Amongst other things, the chapter does not apply to government procurement or audio-visual services, and provisions also deal with cases of national or global economic emergencies.
6.118
Certain provisions established in Annex 18-D do not apply to sub-central SOEs and designated monopolies, including those relating to non-discriminatory treatment and commercial considerations; non-commercial assistance; and transparency.
6.119
A threshold amount is set for requirements relating to non-discriminatory treatment and commercial considerations, non-commercial assistance, and transparency.
Non-discriminatory treatment and commercial considerations
6.120
SOEs are required to act in accordance with commercial considerations in their purchase or sale of a good or service, aside where they are fulfilling their public service mandate.
6.121
When purchasing or selling a good or service, SOEs are required to accord treatment no less favourable to an enterprise of the other Party than it accords to an enterprise of the Party or any non-Party. Similar requirements apply to designated monopolies.
6.122
Notwithstanding this requirement, SOEs and designated monopolies can purchase or sell goods or services on different terms or conditions including those relating to price, and can refuse to purchase or sell goods or services, providing this differential treatment or refusal is undertaken in accordance with commercial considerations.
Courts and administrative bodies
6.123
Provisions relating to courts and administrative bodies require procedural fairness. Courts are to be provided with jurisdiction over civil claims against foreign government-controlled or owned enterprises in relation to commercial activity carried on in its territory, providing courts have jurisdiction over similar claims against enterprises not foreign government-controlled or owned.
6.124
Parties are to ensure administrative bodies that regulate SOEs exercise regulatory discretion in an impartial manner with the enterprises it regulates.
Non-commercial assistance and adverse effects
6.125
Significant provisions in the chapter deal with non-commercial assistance and its capacity to cause adverse effects. Adverse effects cannot be caused to the other Party through non-commercial assistance a Party provides to an SOE, or by an SOE using non-commercial assistance it provides to any of its SOEs, with respect to:
production and sale of a good by an SOE (no territorial delimitation)
supply of a service by the SOE from the territory of the Party into the territory of the other Party
supply of a service in the territory of the other Party through an enterprise that is a covered investment in the territory of the other Party.
6.126
Parties are not to cause injury to a domestic industry of the other Party through the use of non-commercial assistance provided to any SOE that is a covered investment in the territory of the other Party where:
the non-commercial assistance is provided with respect to the production and sale of a good by the SOE in the territory of the other Party, and
a like good is produced and sold in the territory of the other Party by the domestic industry of that Party.
6.127
Adverse effects may arise in general where non-commercial assistance provided to an SOE results in a market for imports of like goods, sales of like goods or like services supplied being impeded or displaced, or in significant price undercutting. Any such displacement or impediment must be ‘significant’, which is further defined.
6.128
Injury to a domestic industry of the other Party through the use of non-commercial assistance means material injury to a domestic industry, threat of material injury to a domestic injury, or material retardation of the establishment of such an industry.
6.129
Provisions detail requirements for a determination of material injury, including providing significant detail on how various factors are to be understood and assessed.
6.130
A determination of a threat of material injury must be based on facts and not merely on allegation, conjecture or remote possibility. It is to be considered with special care and requires the consideration of a number of specified issues.
Transparency
6.131
In general, the purpose of transparency obligations is to require Parties to report how they control and support their SOEs. It also allows countries to request information to determine whether SOE decisions are being made on a commercial basis. The transparency obligations are necessary to determine whether SOEs are complying with the obligations in Chapter 18.
6.132
Parties are required to take a number of measures to improve transparency with regard to SOEs, including publishing a list of SOEs and any designation of a monopoly; and responding to requests for information from the other Party on certain matters.
Further negotiations
6.133
Within five years, the Parties are to conduct further negotiations on extending the application of certain provisions in Chapter 18 to:
SOEs and designated monopolies operating at a sub-central level of government (when the provisions are listed in Annex 18-D)
address the effects caused in a market of a non-Party by the supply of services by an SOE.
Dispute settlement and process for developing information
6.134
The dispute settlement procedures in Chapter 30 of the AUKFTA apply to matters arising from Chapter 18. Annex 18-B applies when a panel has been established pursuant to Chapter 30 to examine a complaint that has arisen with regard to the non-discriminatory treatment and commercial considerations, or non-commercial assistance provisions. The annex specifies the process for obtaining evidence, and allows Parties to exchange written questions and responses and for the panel to seek additional information in certain circumstances. It provides guidance for the panel in determining whether a Party has cooperated with the information gathering process.
Small and medium-sized enterprises
What is a small and medium-sized enterprise?
6.135
The AUKFTA does not provide a precise definition for an SME, only that it includes micro-sized enterprises.
6.136
In Australia, there are various definitions of what constitutes an SME. For the Australian Bureau of Statistics (ABS), business size categories are determined by their employee size:
micro: 0–4 employees (includes non-employing businesses such as sole proprietorships and partnerships)
large: 200 or more employees.
6.137
The Australian Taxation Office defines a small business entity (whether an individual, partnership, company or trust) as a business with less than $10 million aggregated turnover.
6.138
According to the ABS, in 2020-21 SMEs accounted for 99.5 per cent of all ‘employing’ Australian businesses (that is, not sole proprietorships or partnerships), constituted approximately 61 per cent of the operating profit before tax, and contributed approximately 54 per cent in industry added value.
6.139
In 2019-20, the total value of merchandise exports reached $382 billion. Small-medium sized exporters accounted for approximately 89 per cent of all exporters, but only 3.75 per cent of the value.
Challenges for businesses utilising trade agreements
6.140
Due to the complexity of FTAs and exporting in general, it can be difficult for some SMEs to understand what is often significant regulatory detail in order to take full advantage of liberalisation measures in trade agreements.
6.141
A 2019 inquiry into supporting SMEs to export, heard from KPMG that regulatory compliance challenges faced by SME exporters included:
the collection of production documentation
identifying and applying rules of origin to determine whether a product qualifies for FTA benefits
completion of certificate of origin templates
getting certificates 'rubber stamped' by an industry body.
Key provisions in the small and medium-sized enterprises chapter
6.142
Article 19.1 of the AUKFTA contains provisions that recognise the importance of SMEs in bilateral trade and investment relations; affirm the Parties’ commitment to promoting an environment that facilitates SME growth and competitiveness, including from the AUKFTA; recognise the importance of SME initiatives in international fora; and recognise the relevance of working to address barriers to SME access to international markets.
6.143
Article 19.2 stipulates that Parties must establish or maintain a publicly accessible website containing a specified range of information regarding the AUKFTA, including: information for SMEs on relevant provisions in the AUKFTA; a link to information of a Party’s own government agencies/entities that may assist a person interested in trading in the country’s territory; and a link to an electronically searchable database containing information relevant to market access (such as tariffs and rules of origin).
Views of participants—Strategic dialogue on small and medium-sized enterprises
6.144
The ANU Law Reform and Social Justice Research Hub stated Chapter 19 should establish a strategic dialogue on SMEs. The creation of a strategic dialogue with SME representation would ensure regular discussions are properly informed on current challenges, that matters discussed under the chapter accurately reflect the real concerns of SMEs, and that timely government action can be produced upon which SMEs can capitalise.
Innovation
6.145
Chapter 20 of the AUKFTA defines innovation as ‘the development or implementation of a new or improved product, process, or organisational method, or combination thereof’.
6.146
This is a simpler definition to the OECD Oslo Manual, the international reference guide for collecting, reporting and using data on innovation, which defines innovation as ‘a new or improved product or process (or combination thereof) that differs significantly from the unit’s previous products or processes and that has been made available to potential users (product) or brought into use by the unit (process).’ The OECD definition does not include a new organisational method as innovation.
6.147
The OECD noted better definitions and measurements are a prerequisite for the pursuit and analysis of policies aimed at fostering innovation.
Key provisions in the innovation chapter
6.148
The Parties recognise the importance of innovation, confirm their intention is for the AUKFTA to support innovation in each Party’s economy, and foreshadow the strengthening of existing collaborative relationships.
6.149
Article 20.4 of the AUKFTA recognises the importance of emerging technologies, including artificial intelligence and other digital technologies. The Parties commit to cooperate in this area through the Strategic Innovation Dialogue, where appropriate.
6.150
Parties recognise the importance of developing internationally aligned governance frameworks for the trusted, safe, and responsible use of emerging technologies. Article 20.4 stipulates that Parties shall endeavour to collaborate on the development and adaption of governance frameworks, and consider internationally recognised principles or guidelines. In particular they agree to collaborate in the Global Partnership on Artificial Intelligence.
6.151
The Parties agree to establish a Strategic Innovation Dialogue to facilitate an open business environment that supports and stimulates innovation and identify unnecessary barriers to trade in innovative goods and services.
6.152
Article 20.6 of the AUKFTA recognises the importance of ensuring the disciplines in the AUKFTA remain relevant to trade and investment, including innovation. Upon review of the AUKFTA in accordance with article 32.6(3)(a), the Parties must consider developments in innovation.
6.153
Neither Party would have recourse to dispute settlement under Chapter 30 (dispute settlement) for any matter arising under Chapter 20.
Views of participants—Support for innovation provisions
6.154
A number of participants to the inquiry, including BSA—The Software Alliance, the Business Council of Australia, Amazon Web Services, and the European Australian Business Council (EABC) supported the innovation chapter in the AUKFTA.
6.155
However, the EABC stated that:
… clarification as to how the governments will foster the innovation cooperation between the two countries would be greatly appreciated so businesses and researchers can effectively make use of the new opportunities offered. Channelling knowledge, skills and investment will be critical to ensure competitiveness in fast paced innovative markets. Further information and engagement with stakeholders on the Strategic Innovation Dialogue would also be welcome.
Matters of interest
6.156
Participants in the inquiry discussed a number of issues related to the AUKFTA chapters covered by this chapter of the report. The particular issues of interest were:
the inclusion of installers and servicers in the list of business persons Australia has included in Annex IV of the AUKFTA
the side letters concerning the mutual understanding on mobility
the mutual recognition of qualifications in relation to teachers
non-conforming measures in relation to vocational education and government procurement.
Temporary entry for business persons
6.157
Article 11.1(2) of the AUKFTA identifies ‘installers and servicers’ and ‘contractual service suppliers’, amongst others, as business persons from the UK who would be permitted Australian temporary working visas under the AUKFTA.
6.158
Participants in the Committee’s inquiry raised concerns about three of the classes of temporary working visas discussed in the AUKFTA:
installers and servicers identified under Item B of Annex IV
contractual service suppliers identified under Item E of Annex IV
contractual service suppliers identified under Appendix IV-a of Annex IV.
6.159
Different rules apply to each of these identified categories of business person permitted temporary working visas.
6.160
In relation to the AUKFTA, provided all other immigration requirements are met, there would be no limit on the number of available visas and no labour market testing as a condition of entry.
Installers and servicers under Item B
6.161
An installer and servicer is defined as:
A business person who is an installer or servicer of machinery or equipment, where such installation or servicing by the supplying enterprise is a condition of purchase under contract of the said machinery or equipment, and who must not perform services which are not related to the service activity which is the subject of the contract.
6.162
Provided the installer and servicer meets the criteria, they are permitted to work in Australia for up to three months. In other words, a UK business person who is engaged to install or service machinery or equipment in Australia could obtain a three month visa to complete that work. The number of visas available is not limited and no market testing is applied.
Contractual service suppliers under Item E
6.163
Contractual service suppliers are defined as:
Business persons with trade, technical or professional skills and experience who are assessed as having the necessary qualifications, skills and work experience accepted as meeting the domestic standard in Australia for their nominated occupation, and who are:
(a) employees of an enterprise of the United Kingdom that has concluded a contract for the supply of a service within Australia and that does not have a commercial presence within Australia; or
(b) engaged by an enterprise lawfully and actively operating in Australia in order to supply a service under a contract within Australia.
6.164
The conditions applying to contractual service suppliers covered by Item E are more complex than those applying to installers and servicers. Contractual service suppliers covered by Item E require a visa sponsor (an Australian employer) and must be engaged in an eligible occupation. An eligible occupation means an occupation identified on the relevant skilled occupations list.
6.165
Contractual service suppliers under Item E are permitted to stay for up to four years, with the possibility of extension. There is no limit on the number of visas available and no requirement for labour market testing.
Contractual service suppliers under Appendix IV-a
6.166
Contractual service suppliers covered by Appendix IV-a can only remain in Australia for a cumulative period of not more than six months in any 12-month period or for the duration of the service contract, whichever is less. They must only undertake work that is the subject of the contract. The applicants must have a relevant tertiary or technical qualification and have the relevant professional qualification or licences requires under Australian law. The number of contractual service suppliers engaged must be limited to the number required to meet the contract.
6.167
In Appendix IV-a, Australia makes commitments under two separate lists of sectors and subsectors. The first list of sectors applies to:
employees of an enterprise of the United Kingdom that has concluded a contract for the supply of a service within Australia and that does not have a commercial presence within Australia.
6.168
Contractual service suppliers covered by this list must have:
been employed on a temporary basis by the UK enterprise which has obtained a service contract of up to 12 months
been with same employer for at least 12 months before applying to enter Australia
at least two years professional experience in the relevant sector the subject of the service contract.
6.169
Provided these criteria are met, there is no limit on the visas available and no market testing is undertaken.
6.170
The second list applies to people:
engaged by an enterprise lawfully and actively operating in Australia in order to supply a service under a contract within Australia.
6.171
Contractual service suppliers covered by this list must be:
temporarily employed by an enterprise in Australia under a service contract of up to 12 months
possess at least six years professional experience in the relevant sector the subject of the service contract.
6.172
Provided these criteria are met, there is again no limit on the visas available and no market testing is undertaken.
Issues raised by inquiry participants
6.173
Inquiry participants raised the following issues in relation to these business persons from the UK who would be permitted Australian temporary working visas:
the lack of market testing and the unlimited number of visas associated with these business persons
the capacity for businesses to tender for work in Australia using installers and servicers provisions under Item B of Annex IV and contractual service suppliers under Appendix IV-a of Annex IV without having to consider employing Australian workers
the lack of similar concessions on the part of the UK.
Views of participants—Concerns about labour market testing and visa numbers
6.174
The Australian Council of Trade Unions (ACTU) and the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) have a long-standing opposition to bringing skilled workers into Australia on temporary visas. The ACTU argued that trade agreements should not include provisions on temporary workers, but where such provisions do exist, strict labour market testing criteria and skills testing requirements must be applied. For the ACTU, labour market testing ensures that employers seek to employ local workers.
6.175
The Australian Fair Trade and Investment Network (AFTINET) supported the ACTU and CFMMEU’s concerns. AFTINET supported Australia’s arrangement for temporary overseas workers, but believed that the entry of temporary workers should be based on the principle that they address genuine labour shortages evidenced by local labour market testing:
We would argue that the entry of temporary workers should be based on the principle that they address genuine labour shortages; that the government not proceed with the removal of labour market testing …
6.176
The Department of Foreign Affairs and Trade (DFAT) responded to these concerns:
For contractual service suppliers, the way in which that commitment is effected or administered is through our temporary skills shortage [TSS] visa. The TSS list is a flexible list. It applies to a list of occupations which can be entitled to get the visa, and that flexibility is untouched by the outcomes of the agreement. So we retain the flexibility of the skilled migration occupation list through the agreement itself. That's very much a demand-driven visa, so, in that respect, where the demand is determines what occupations are included on the list. That is my understanding.
Views of participants—Contracting for work without having to employ Australians
6.177
The ACTU and CFMMEU were also concerned that UK based companies would be free to tender for and win work on building and construction projects in Australia, asserting that UK based companies would be able to bring in their own workers for the installation of equipment or machinery that could be completed in a period of three months or less, such as the installation of components on solar farms or refurbishment of buildings.
6.178
DFAT responded that there would be substantial benefits for Australia arising from these provisions:
It can be in areas of research and development, advanced manufacturing or renewable energy. That's really to encourage the bringing of technical experience and know-how to Australia to further support the development of our industries, and I think it would be something of key interest, particularly in advanced manufacturing, where we're trying to re-establish particular expertise.
Views of participants—Lack of similar concessions on the part of the UK
6.179
A number of inquiry participants pointed out that it appeared that Australia would provide greater access to temporary workers than the UK would. The CFMMEU stated that it is surprising and questionable as to why ‘installers and servicers’ only applied in Australia and not the UK.
6.180
However, DFAT confirmed:
Installers and servicers are indeed covered by the short term business visitor category in the UK's commitment as ‘after-sales or after-lease service: installers, repair and maintenance personnel and supervisors’, which is listed in section A(iv) and allowed stays of 90 days in any 12-month period, quite similar to the three months in our commitment.
6.181
DFAT noted the need to look at the temporary entry outcomes in their entirety:
What you have to look at in terms of the temporary entry outcomes is the overall balance on both sides. As I said, because the categories don't necessarily always line up, we had to look in a holistic way at the overall package to see where the balance of the agreement was.
6.182
In addition, on labour market testing DFAT stated:
The agreement sets up a commitment where both sides waive labour market testing around the categories that are in their schedules. Within the category in each schedule, each country sets out the conditions and limitations that flavour the commitments that it's making. In there, Australia has retained the ability to decide which occupations are eligible for the commitment [contractual service suppliers], and that can reflect requirements such as the conditions in the market.
Committee view
6.183
As a basic principle, the Committee is of the view that employers in Australia and relevant policy settings, including the provisions in trade agreements, should prioritise the development and employment of Australian workers. Australian employers should also balance their need for skilled workers with the responsibility to develop those skills in Australians, rather than rely on temporary access to overseas expertise.
6.184
Nevertheless, Australia will from time to time, and does at the moment find itself in a position of significant skills shortage, and trade agreements like the AUKFTA have a role to play in addressing those skills shortages. The Committee notes DFAT’s view that the use of temporary installers and services also provides opportunities to develop technical expertise in Australia.
6.185
The commensurability of commitments with respect to contractual service suppliers is a complex aspect of the chapter and Australia divides its commitments in this area between its schedule and an appendix, whereas the UK’s commitments are contained in its schedule only.
6.186
Contractual service suppliers within certain sectors of the economy (as specified in the appendix to Australia’s schedule to Annex IV) may potentially stay in Australia for a cumulative period of not more than six months in every 12 months, or the duration of the contract, whichever is less. The lists of sectors in the appendix are broadly similar to the commitments the UK makes in its schedule to Annex IV, but the UK offers stays for a cumulative period of not more than 12 months in any 24 month period or the duration of the contract, whichever is less. This is a doubling of the stay offered by Australia.
6.187
Australia also makes a separate commitment for occupations outside the lists of sectors in its appendix, where a stay may be for up to four years. While the UK has not made a similar commitment, the Committee recognises a key principle in trade agreements is that of non-discriminatory treatment. Australia offers similar opportunities in other trade agreements, such as those with Singapore (up to two years with possibility of extension), Japan (up to one year with possibility of extension), and China (up to four years with possibility of extension, subject to some numerical limitations on certain occupations).
6.188
The Committee also notes that while there is no labour market testing for contractual service suppliers under the AUKFTA, the commitment for stays of up to four years remains bounded by Australia’s Skilled Migration Occupations List, which can be amended as required by the relevant minister. There is a valid question as to whether the responsiveness of the list to changes in workforce need/availability is well-aligned with the period in which temporary foreign workers can seek to stay in Australia under the agreement.
6.189
While it is difficult to precisely align the Australian and UK commitments in relation to temporary access for contractual service suppliers, the Committee accepts DFAT’s evidence that the commitments in relation to temporary access have been carefully considered.
6.190
The Committee believes there is value in tracking the outcomes with respect to temporary foreign labour access that has occurred under trade agreements settled in recent years, with particular reference to outcomes within the contractual service supplier category. It would assist the Committee to receive information about the temporary foreign labour outcomes that have been enabled by trade agreements in the last decade, and the Committee will consider inquiring into that matter in the course of 2023.
Holiday worker program
6.191
The AUKFTA contains side letters outlining mutual understandings on mobility and a Joint Declaration on Agriculture and Agribusiness Workers. The mutual understanding on mobility outlines the understandings on the Working Holiday Maker and Youth Mobility schemes, agriculture and agribusiness mobility, and the Innovation and Early Career Skills Exchange. The arrangements regarding the Innovation and Early Career Skills Exchange are offered only by Australia (discussed above).
Working Holiday Maker Program Visa and Youth Mobility schemes
6.192
The Parties permit citizens aged between 18 and 35 to participate in their respective Working Holiday Maker and Youth Mobility schemes and remain in the country for a maximum of three years without being required to undertake specified work during their stay. Individuals under either scheme could apply to switch to an alternate visa route where a longer length of stay may be granted, subject to meeting the relevant criteria. The AUKFTA provides for an increase of the existing cut off age for these schemes to 35.
Agriculture and agribusiness
6.193
The Parties outlined their understandings on support for agriculture and agribusiness, undertaking to ensure they support the growth of those industries by providing opportunities for mobility. The side letters state that the Parties would continue to offer visa pathways that facilitate mobility of workers with relevant skills to address agricultural needs. Australia and the UK outline these existing pathways in their Joint Declaration on Agriculture and Agribusiness Workers.
Views of participants—Support for agriculture and agribusiness mobility outcomes
6.194
The Australian Red Meat Industry spoke to the Committee about the workforce challenges facing agriculture in Australia:
It is our No. 1 constraint to increasing production. I believe through various industry bodies we've been approaching parliament for support to increase availability for visa workers to come into the country, as that appears to be the only immediate management tool to be able to increase production.
6.195
The National Farmers’ Federation (NFF) was concerned that the AUKFTA did not directly address the agricultural labour shortage:
The NFF was supportive of proposed changes to the rules in place around British backpackers visiting Australia on the proviso that we have introduction of an agricultural visa. We don't have the agriculture visa in place that we were promised, and the changes will reduce the availability of farm labour at a time when Australian agriculture is facing an estimated 170,000-odd workforce vacancies, manifesting in supply chain disruptions and higher prices on supermarket shelves. This remains an issue for the government to address.
6.196
The NFF was particularly concerned about changes to the ‘backpacker visa’ scheme:
We've been long and loud in our support for the backpacker visa and the important part that they play in addressing the labour shortage. On the record, we maintain our firm and strong support for a backpacker workforce. It's certainly around addressing the labour shortage, but, again, we have a genuine view that there are cultural experiences and benefits that people can get from going and working on farms and in rural and regional Australia. We'd like to think that that's still there, but we were very clear around our views on supporting the backpacker system and the backpacker visa arrangements.
Professional services
Teaching qualifications
6.197
As identified above, the AUKFTA encourages the recognition of professional qualifications while retaining the ability to apply conditions to the practice of a particular profession.
6.198
Australia currently operates a jurisdiction-specific registration system for teacher registration, and the Australian Education Union (AEU) advised it is through state and territory legislation and teacher registration authorities that any developments in professional recognition must occur.
6.199
While the AEU was supportive of consistency of teacher registration processes across jurisdictions, it did not support any provision in the AUKFTA that could facilitate the lowering of teacher professional standards in Australia.
6.200
The AEU was concerned that UK teachers who have not completed initial teacher education in the UK may be able to obtain UK Qualified Teacher Status (QTS) and thereby obtain registration to teach in Australian schools.
6.201
Though QTS is not sufficient for teacher registration in Australia, the AEU was concerned that with the encouragement of provisions in the AUKFTA, QTS could become the established system and the qualification standard for the recognition of professional teaching qualifications. The AEU opposed any potential lowering of the qualification requirement for teacher registration in Australia.
6.202
The AEU raised further concerns about varying requirements across jurisdictions for police and criminal checks. The AEU viewed this as emphasising the need for relevant bodies in the UK and Australia to retain their independent capacities to ensure robust child protection standards are applied in teaching.
6.203
According to DFAT, the AEU’s concerns were addressed by mechanisms outside the AUKFTA that would apply to the employment of teachers:
The commitments negotiated under the agreement in relation to mutual recognition of professional services are essentially a framework for the relevant professional bodies—non-government bodies generally, but professional bodies—to negotiate mutual recognition. In no way does it undermine licensing or other security regimes checks. It really just provides a framework for governments to urge the professional bodies to come together to decide what they would consider an equivalent qualification for the purposes of teaching, for example, in Australia.
… what I would say is that the commitments do not affect the current state of the process, and in no way do the governments decide what the qualifications are. It's the professional bodies.
Government procurement
Non-conforming measures – Vocational education and training
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Some participants to the inquiry such as AFTINET, the AEU and the ACTU, noted that some vocational education and training (VET) institutions, such as TAFE NSW and TAFE SA, are on the list of entities the state governments have specified would be subject to the AUKFTA government procurement chapter.
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The AEU pointed to the contestable funding model for VET in New South Wales and South Australia that allows private training providers to bid for access to public funds. It argued the inclusion of VET institutions in Chapter 16 of the AUKFTA could potentially limit the ability of future federal governments to guarantee specific proportions of public funds for VET.
6.207
The AEU was concerned that the government procurement provisions of the AUKFTA could permit governments to outsource and privatise teaching content, which in the past had led to poor quality materials and poor student outcomes.
6.208
DFAT pointed out the list of entities came from the state and territory governments themselves and advised the Committee there were carve-outs for education services:
… all of the entities listed at state and territory level were put forward by states and territories. So it's those that the states and territories would like to see reflected in the agreement, not vice versa. In the case of New South Wales TAFE [Technical and Further Education], the commitment is for goods and construction services, but there is a carve-out for education services. So, really, what we're looking at with New South Wales TAFE are back-office type functions, or goods and construction services needed for the infrastructure.
… there's a carve-out for education services, which tends to include vocational training services as well. New South Wales and South Australia both maintain that carve-out, so they're not bound by the terms of the agreement for TAFE in those instances. For any covered procuring entities, as we call them—in this case, TAFE—it only applies above certain monetary thresholds in the agreement. In this case, for goods and services, it's procurements above $700,000.