Agreement on Trade in Wine between the Government of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland
4.1
This Chapter reviews the Agreement on Trade in Wine between the Government of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland (the Agreement). The treaty action was signed in London on 18 January 2019 and is intended, in a post-Brexit environment, to secure existing arrangements under Australia’s Trade in Wine Agreement with the European Union (EU) (EC–AU Wine Agreement).
4.2
The proposed treaty action was tabled in the Parliament on 12 February 2019. A public hearing was held on 1 April 2019. The Committee’s inquiry into the treaty action lased at the dissolution of the 45th Parliament on 11 April 2019. The treaty was re-referred to the Committee by the Minister for Foreign Affairs on 29 July 2019, following the re-establishment of the Committee in the 46th Parliament. Updated advice was sought at the time and the Department of Agriculture advised that no additional comment was needed.
4.3
Timing for the entry into force of the Agreement was expected to depend on the terms of Brexit, which remain uncertain. When the Committee considered the Agreement in April 2019, the United Kingdom (UK) was set to leave the EU on 29 March 2019 (UK time). The National Interest Analysis (NIA) stated that, during an expected transition period, the UK would remain bound by obligations stemming from EU–third country agreements as if it remained an EU Member State. Australia’s treaties with the EU would continue to apply to the UK for the duration of the transition period, and the Agreement on Trade in Wine would not enter into force until the transition period ends.
4.4
However, the NIA explained that there was still considerable uncertainty regarding the withdrawal of the UK from the EU and a ‘no-deal’ scenario remained a possibility. In the event of a ‘no-deal’ Brexit, the Agreement would need to enter into force on the date the UK formally leaves the EU to avoid any legal gaps for Australia.
4.5
The UK is Australia’s equal seventh largest two-way trading partner for goods and services, and ninth largest export market. Consequently, on 8 February 2019, Senator the Hon Simon Birmingham, acting Minister for Foreign Affairs, wrote to the Committee to advise that, in the event of a ‘hard’ Brexit, it may be necessary to ratify the Agreement before the Committee had completed its inquiry and reported on the treaty.
Overview and national interest summary
4.6
The NIA states that the Agreement will ensure ongoing access to the UK market for Australian wine-makers following the UK’s withdrawal from the EU. The NIA notes that it also aims to provide a platform for further facilitation and promotion of wine between the UK and Australia.
4.7
The NIA maintains that the Agreement largely mirrors the rights and obligations provided for under the EC–AU Wine Agreement, subject to some technical changes necessary for replicating those provisions in a bilateral Australia–UK context.
4.8
The Former Department of Agriculture and Water Resources (DAWR) stated that the technical changes relate to:
reading all references to EU law as references to UK law;
updating the designated representative bodies to reflect some changes and new contact points;
a new entry-into-force requirement; and
a modified process for giving each other notices.
4.9
DAWR suggested that the changes would not alter the substance of the Agreement.
4.10
The NIA states that under the Agreement, Australia and the UK will continue to accept each other’s authorised winemaking techniques and simplified wine certification and labelling arrangements. The Agreement also provides for ongoing reciprocal recognition of each Party’s geographical indications (and other terms) in relation to wine.
Reasons for Australia to take the proposed treaty action
4.11
According to the NIA, the UK is Australia’s top wine export market by volume and third largest market by value. In the 12 months to December 2018, Australia exported 246 million litres of wine to the UK, with a value of $389 million. In their submission to the inquiry, Australian Grape and Wine maintain that the UK market is ‘critically important’ for Australian wine.
4.12
The UK is also an important hub for Australian wine exports to Europe. Approximately 80 per cent of wine shipped to the UK is unpackaged (bulk), which is bottled in market and distributed across the EU. The value of unpackaged wine exports to the UK grew by 27 per cent to $214 million in the 12 months to December 2018.
4.13
The NIA advises that the Agreement is intended to ensure that Australia’s wine exports to the UK can continue uninterrupted, and with minimal technical barriers, post-Brexit. Further, the NIA suggests that it underlines the strong commitment of Australia and the UK to the promotion and facilitation of wine trade between the two countries and will help maintain a mutually beneficial trade relationship.
4.14
In their submission to the inquiry, Australian Grape and Wine were supportive of this view, stating:
With the outcome of Brexit shrouded in so much uncertainty, it is great to see this Agreement providing us with a greater possibility of assured access, maintaining access to this vital market for the Australian wine sector.
4.15
The Committee questioned whether Australian producers and exporters had raised any concerns about the EC–AU Wine Agreement, and if this had been taken into account in considering the Agreement. DAWR explained that:
… the UK is still a member of the EU and is only allowed to talk about treaties on the status quo. It’s not actually allowed, at this point in time, to pursue something more ambitious. It was very important that this agreement get put into place so that we have a status quo outcome to ensure the continuation of trade.
4.16
However, DAWR highlighted that further opportunity to consider the conditions for wine trade between Australia and the UK may arise in the future:
… if there is the opportunity for a UK–Australia free trade agreement, that’s a point in time we would all look to work closely with industry to understand their agenda for the outcomes we could seek there.
Obligations
4.17
The following summary of the obligations under the Agreement are taken from the NIA.
4.18
Article 2 incorporates the obligations provided for in the EC–AU Wine Agreement (hereinafter referred to as ‘incorporated’ provisions), including the Protocol, Annexes and Consolidated Exchange of Letters, subject to some technical modifications provided for in the Agreement. The obligations provided for under the EC–AU Wine Agreement are set out in the NIA for that treaty.
4.19
Under Article 4, all references to EU laws and regulations will be read as references to the substance of those laws, as transposed into UK law as at the date on which the UK leaves the EU or the date the UK ceases to be bound by the relevant EU legislation following the expiration of any Brexit transition period. The Agreement further provides that the commitments described in the Declarations made by the parties to the EC–AU Wine Agreement, shall apply with the same effect to the Parties to this Agreement as if the Declarations had been concluded between the Parties and subject to the provisions of the Agreement. These declarations are non-binding.
4.20
Incorporated Article 5 requires the Parties to authorise the importation into and marketing in their territory of wines produced in accordance with the winemaking practices or processes and compositional requirements outlined in the Agreement. Incorporated Articles 6–11 also set out a process for modifications or additions to the list of permitted oenological practices, processes or compositional requirements. Incorporated Article 10 allows disputes about these matters to be subject to a binding arbitration.
4.21
Incorporated Article 12(2) requires the Parties to prevent, where wines produced in their territory are exported and marketed outside their territory, the use of protected names provided for in the Agreement. Australia will be required to prevent, for wines produced in Australia, use of UK geographical indications (incorporated Article 12(1)(a)(I)); traditional wine expressions of the UK (incorporated Article 12(1)(a)(III)); certain categories of wines and sales descriptions (incorporated Article 12(a)(IV)), as well as references to the UK (incorporated Article 12(1)(a)(II)). The UK will be required to prevent, for wines produced in the UK, use of Australian geographical indications listed in incorporated Annex II, Part B (incorporated Article 12(1)(b)(I)) and references to ‘Australia’ or other names to indicate Australia (incorporated Article 12(1)(b)(II)).
4.22
Incorporated Article 13(1) extends Australia and the UK’s obligation to prevent misuse of geographical indications to wine imported from third countries.
4.23
Incorporated Articles 19–25 impose further obligations regarding the presentation and description of wine. Incorporated Article 19 provides generally that wine may not have false or misleading labelling. Incorporated Article 20 contains particular types of wine descriptions which may be used on labels, depending on whether the wine bears an authorised geographical indication. These rules are supplemented by the requirements for terms used to describe certain product types and production methods set out in incorporated Annexes VII and VIII. There are also rules about describing wines by reference to vine varieties (incorporated Article 22) and, for Australian wines, with a geographical indication (incorporated Article 24).
4.24
Incorporated Article 23 allows Australia to continue to use the quality wine terms listed in incorporated Annex V to describe Australian wines. These are commercially important terms used for Australian fortified wine including ‘cream’, ‘ruby’, ‘tawny’ and ‘vintage’.
4.25
Incorporated Article 26 is a ‘stand still’ provision which prohibits Australia and the UK from introducing more onerous labelling requirements than those in force as at the date of signature of the Agreement.
4.26
Incorporated Article 27 requires that the UK authorise the importation of wine, originating in Australia, if accompanied by the simplified certification provisions outlined in the Agreement. Australia is required to provide the certification to the UK via the authorised competent body. It also requires that both Parties will not impose more restrictive certification requirements for wine originating from each other’s territories.
4.27
Incorporated Article 30 provides for the establishment of a Joint Committee to see to the proper functioning of the Agreement. Upon entry into force of this Agreement, any decisions adopted by the Joint Committee established under the EC–AU Wine Agreement immediately before it ceases to apply to the UK, shall, to the extent to which those decisions relate to the Parties to this Agreement, be deemed to have been adopted by the Joint Committee established under this Agreement (Article 7(2)). However, it will be open to the Joint Committee to subsequently make decisions which are different to, revoke or supersede those decisions deemed to have been adopted (Article 7(3)).
Implementation
4.28
The NIA says that Australia’s obligations under the Agreement will be implemented under the Wine Australia Act 2013 and the Wine Australia Regulations 2018.
4.29
The Wine Australia Regulations 2018 will need to be amended to declare the Agreement as a ‘prescribed wine-trading agreement’ for the purposes of Section 4(1) of the Wine Australia Act 2013. The NIA explains that, with this declaration, the UK will be recognised as an agreement country under Section 4(1) of the Wine Australia Act 2013. As such, provisions applicable to agreement countries under both the Wine Australia Act 2013 and Wine Australia Regulations 2018 will apply to wine trade between Australia and the UK.
Costs
4.30
The NIA states that there will be administrative costs associated with amending the Wine Australia Act 2013 and the Wine Australia Regulations 2018 to enable the entry into force of the Agreement but that these will be absorbed within existing budgets. The NIA does not expect any costs to business.
Conclusion
4.31
The Committee understands that, further to Minister Birmingham’s advice of 8 February 2019 and given the ongoing uncertainty about the exact date of the UK’s formal departure from the EU, the Government has exercised the National Interest Exemption (NIE) provisions to ensure that if needed, the agreement could enter into force ahead of the UK’s possible departure date. At the time of the inquiry that date was 12 April 2019.
4.32
Therefore, Australia has provided the UK with advice confirming completion of the domestic processes necessary for entry into force of the treaty action and no further recommendation of the Committee is required.