Australia has signed a significant new free trade agreement with the United Arab Emirates (UAE), a key development in the country’s trade relations with the Middle East. Don Farrell, Australia’s Trade Minister, made the announcement in Canberra about Australia’s first-ever trade agreement with a Middle Eastern nation.
This deal aims to eliminate tariffs on over 99% of Australian products entering the UAE, offering significant benefits for Australian farmers, manufacturers, and producers. Mr Farrell said the trade deal will benefit the agriculture sector by creating up to $50 million annually, particularly key exports like beef and sheep products.
The agreement is seen as a boost for the country’s broader trade diversification strategy, which has previously included agreements with India and the United Kingdom.
One of the standout features of this deal is the potential for investment from the UAE’s massive sovereign wealth fund, worth around US$1.7 trillion. This investment is expected to benefit critical sectors in Australia, particularly the country’s growing renewable energy industry. The agreement will also benefit the construction industry by reducing building costs by around $40 million per year for Australian tradespeople.
Mr Farrell emphasised the UAE’s strategic importance, describing it as Australia’s largest trade and investment partner in the Middle East. The UAE is also a major logistics and travel centre, with Dubai International Airport being a critical centre for international travel. The UAE’s Jebel Ali Port further strengthens its position as a significant player in global trade.
The deal has drawn its share of criticism, especially from the Australian Council of Trade Unions (ACTU) due to concerns over the UAE’s labour rights record. The ACTU questioned whether a trade agreement with the UAE, a nation that does not allow independent unions and has a reputation for repressing workers' rights, aligns with Australia’s recent efforts to strengthen workers’ protections.
In response to these concerns, Mr Farrell defended the agreement, stating that trade deals help businesses and benefit workers by creating jobs and driving economic growth. He expressed hope that unions would eventually support the agreement, as it could facilitate Australia's broader economic ambitions, including the government's "Future Made in Australia" manufacturing agenda.
Despite the controversy, the UAE is seen as a gateway to broader markets across the Middle East and beyond. The two-way trade between Australia and the UAE was valued at $9.26 billion in 2022. The UAE’s sovereign wealth can accelerate investments in several key industries, from renewable energy to minerals. Making these investments can benefit Australia’s position as a growing player in global sustainability initiatives.
This agreement is expected to provide Australian exporters with a new range of commercially meaningful opportunities, especially as they seek to diversify away from traditional markets. With three Australian universities already having established campuses in the UAE, the deal may also bolster Australia’s education sector.
Despite ongoing debates over labour practices and human rights debates, Australia’s new international trade relationships, like the trade agreement with the UAE, will be crucial in the country’s bid to expand its influence in the Middle East.