The Comprehensive Economic Partnership Agreement signed between the UAE and Australia is aimed at boosting trade and opening new investment opportunities between the two countries, with sectors such as agriculture, renewables, aviation and critical minerals expected to benefit from the deal.
The countries signed the agreement this month after negotiations started in December. It is expected to come into effect next year, subject to Australia’s parliamentary processes.
“There’s a clear focus from both sides that this is not just an agreement about goods and services but it's an agreement that has the aim of driving growth in investment between our countries,” Ridwaan Jadwat, Australia’s ambassador to the UAE told The National in an interview.
The UAE is Australia's largest trade and investment partner in the Middle East, with bilateral trade in goods and services worth about 10 billion Australian dollars ($6.5 billion) and two-way investment of A$20.7 billion last year.
As part of the Cepa, the two countries signed an investment protection deal and five initial pacts to accelerate capital flow into key sectors, including renewable energy, infrastructure, artificial intelligence, mining and agriculture.
It also includes an investment agreement with ministerial level participation “to ensure that this is not just a piece of paper, it's something that is a living, breathing document that is going to have ministerial level buy-in through the course of the next few years so that we can target investment on both sides into areas that are mutually beneficial”, Mr Jadwat said.
Currently, the UAE is investing in Australia’s port sector through DP World and development of waste-to-energy projects through Masdar. In April, Abu Dhabi-based investment and holding company ADQ also bought a stake in Australia’s infrastructure developer Plenary Group, marking its entry into the country.
There is also an opportunity for the UAE to invest in Australia’s critical minerals sector amid green transition efforts, Mr Jadwat said. “Both countries are going through an energy transition, so investing in energy transition and renewables is a particular area of focus for both sides, and there's a clear focus from us on that,” he said.
The UAE, the Arab world's second-largest economy, has been investing heavily in renewable energy projects to achieve net-zero emissions by 2050. It plans to invest Dh200 billion ($54 billion) by 2030 to ensure energy demand is met while sustaining economic growth.
Trade between the two countries is projected to surge following the Cepa. Australia exported A$5.2 billion worth of goods to the UAE last year while importing goods valued at A$4.7 billion.
Australia's exports to the Emirates include alumina, coal, steel, meat, dairy, oil seeds, seafood, canola seeds, nuts and honey. It imports petroleum products and urea.
Under the new deal, Australia will export more than 99 per cent of its products to the UAE without tariffs.
The Cepa, “by becoming the first agreement with any country in the Middle East, obviously opens the door to greater trade in the region, because the UAE is a massive gateway to the Gulf and to the broader Middle East and North Africa”, Mr Jadwat said.
“It's a significant entrepot, and you can see that a lot of the stuff that comes through Dubai and Abu Dhabi ends up in other parts of the world,” he said.
Another sector that is likely to benefit is aviation. There are over 300 flights a month between Australia and the UAE and more are expected following the new deal.
“We have massive connectivity between the two countries. A significant share of Australians that leave the country by plane transit through the UAE," Mr Jadwat said.
Emirates, which relaunched a direct flight between Dubai and Adelaide last month, also aims to reinstate its second daily service to Perth. Etihad Airways, which also flies to Australia, ended its codeshare agreement with Virgin Australia this month.
The agriculture sector is also expected to see growth, with more products being exported to the UAE. Canola seeds are currently Australia's main agricultural export to the Emirates, at more than A$741 million last year, with the export of red meat worth over A$480 million.
“Australian exporters of these products will receive duty-free access from day one of the deal coming into force,” Mr Jadwat said.
