A free trade agreement between Australia and the United Kingdom begins on Wednesday. When it was announced in 2021, then-prime ministers Boris Johnson and Scott Morrison cheerily exchanged packets of chocolate biscuits. Meanwhile, one British newspaper celebrated the prospect of cheaper steaks.
The agreement eliminates tariffs on a range of Australian exports, including beef and lamb and makes it easier for Australians to work in the UK. British exporters of cars, whisky and confectionery will also benefit. But the deal is notable for another reason.
As our research has found, it does relatively little to tackle climate change. In the context of growing damage from climate change — internationally, in Australia and in the UK — this is a missed opportunity.
The Albanese government inherited this free trade agreement and describes it as “gold standard“. It is not, however, gold standard on climate action. Both the Australian and UK governments must now ensure the deal does not damage efforts to keep global warming at safe limits.
Hopes were high
Trade is vital to the global economy. It is also inextricably linked to climate change.
Trade increases greenhouse gas emissions. And climate change can damage trade when severe weather disrupts supply and distribution networks.
Free trade agreements can be used to tackle climate change. For example, they can lower the cost of goods needed in the low-carbon transition, such as solar panels and bicycle parts. And trade partners can provide leadership on emissions reduction.
When the UK hosted the COP26 climate conference in 2021, it sought to establish a reputation as a global leader on climate action. The nation seemed well-placed to ensure emissions reduction was on the agenda when it negotiated a post-Brexit trade deal with Australia.
But the free trade agreement with Australia failed to put climate change at the forefront.
‘Regrettable’: The deal lacks climate ambition
The final text of the deal acknowledges each nations’ commitment to addressing climate change and notes “the role of global trade and investment in these efforts”. It also recognizes the Paris Agreement.
However, a report last year by a British parliamentary committee noted the agreement’s lack of climate ambition, saying:
Given the UK’s generous tariff offer, it could have pressed [Australia] for more ambitious commitments on climate change, stronger enforcement provisions, and for an explicit reference to the Paris temperature goals.
The report also noted:
it is regrettable that the agreement did not include any references to reducing or reviewing Australia’s reliance on coal.
There was speculation that the UK government prioritized securing the agreement over holding Australia to account on climate action.
In Australia, the Department of Foreign Affairs and Trade analysed the impact of the free trade agreement with the United Kingdom and did not raise concerns over its climate ambition.
What the deal should have done
So how might the trade pact have properly addressed climate change? There are many options.
A UK-New Zealand trade deal, for example, signals that in some circumstances, it may be justifiable for climate action to affect trade. The European Union has proposed such action, in its plan to impose reporting – and potentially, a financial charge — on emissions-intensive imports.
The UK-NZ agreement also takes steps to eliminate fossil fuel subsidies, in recognition that government support for the coal, oil and gas industries distorts prices and discourages climate action.
And the pact between the European Union and Canada requires the development of climate-friendly labelling and certification standards on products.
The Australia-UK deal seeks to ensure that each nation encourages high levels of environmental protection. These provisions could be strengthened with respect to climate change — for example, by tying them to each party’s emissions-reduction commitment under the Paris Agreement.
The agreement requires Australia and the UK to promote trade and investment in environmental goods and services, such as low-emissions technologies and renewable energy infrastructure. Yet the UK-NZ deal goes further. It eliminates customs duties on listed environmental goods, such as bicycle parts and plants.
The Australia-UK deal might have had stronger climate provisions if it incorporated a wider range of public views.
In Australia, a parliamentary committee last year examined the deal. It said while peak business groups were often satisfied with the level of consultation on free trade agreements, others — including civil society groups and unions — were frequently not.
The Albanese government was elected on a platform of enhanced climate action and has since entrenched temperature targets in national legislation. While the Australia-UK trade deal was finalized when it took office, opportunities exist to strengthen its climate ambition.
The agreement establishes a working group to review and monitor environmental provisions relating to matters such as marine pollution from ships, ozone-depleting substances, illegal logging and the wildlife trade. This group could also work to better integrate the climate and trade goals of both nations.
This might involve monitoring land-use change caused by agricultural trade between the countries and exploring prospects for sustainable food systems. It could mean removing customs duties for low-emissions goods and discussing ways to constrain subsidies on fossil fuels.
Doing so would help ensure this agreement and others to come, meet the urgent need to avert dangerous global warming.