Scrutiny of international agreements: UK-Australia free trade agreement Contents

Chapter 4: Environment and climate

105.Modern free trade agreements typically include shared commitments to ensure increased trade does not come at the expense of the natural environment. This is reflected in the Government’s Negotiating Objectives stating that the agreement should reaffirm the Parties’ commitments to international standards on the environment and climate change, including the Paris Agreement; and include measures that would allow the UK to maintain its world-leading environmental standards and 2050 net zero emissions target. It also stated the agreement should contain mechanisms for the implementation, monitoring and dispute resolution of environmental provisions.120

106.There is an extensive Environment Chapter which includes a section on climate change, affirms the Parties’ existing commitments to address climate change and commits them to continual improvement. It provides that “a Party shall not waive or otherwise derogate from, or offer to waive or otherwise derogate from, its environmental laws in a manner that weakens or reduces the protection afforded in those laws in order to encourage trade or investment between the Parties.”121

107.The Environment Chapter covers climate change, air quality, marine environment, sustainable forest management, biodiversity, and illegal wildlife trade. Many commitments are aspirational or co-operative, though some are stronger—specifically on controlling ozone depleting substances, ship pollution and the regulation of marine wild capture fisheries. The chapter is subject to dispute settlement.

108.Nonetheless, we received a range of negative responses to the environmental commitments. WWF stated that “the UK government has failed to achieve its stated Negotiating Objectives to ensure high standards and protections for UK consumers”,122 while the Professional and Business Services Council considered it “a missed opportunity to include innovative environmental protections”.123 The National Sheep Association considered that “there is a serious risk that we may see environmental gains in Britain but will not see the environmental damage done away from our shores”.124 Dr Giulia Claudia Leonelli, an expert in environmental law, suggested that “the wording in the clauses regarding non-regression and future levels of protection is rather weak” and the Article on climate change “far from ambitious”.125 The NFU considered that “the terms of the agreement do not create a level playing field in respect of environmental standards”.126

109.However, the RSPCA noted that the environmental chapter is stronger than the chapters on animal welfare or SPS, for example in including its own dispute settlement system and an Environment Working Group that can hear representations from civil society. It also noted that “the language on the conservation of marine ecosystems is particularly good”, and that there are clauses on the right to regulate. It noted that the approach drew heavily on that used within CPTPP, which “may not therefore reflect issues most of concern to UK stakeholders”.127

110.We note that there is a clear difference between the level of ambition in the New Zealand FTA, compared to the Australian one. For example, the New Zealand agreement has references to the elimination of fossil fuel subsidies, work towards carbon pricing and trade in environmental goods. On behalf of the Government, Lord Grimstone of Boscobel, Minister for Investment, explained that “our underlying position is to be very strong on climate”, but that each agreement reflects “each country’s view of the relative priority it attaches to aspects of climate”.128

111.Dr Emily Lydgate suggested that the UK could have driven a harder bargain and considered that the Government “really seemed to prioritise getting the trade agreement across the line over sticking to its guns on the climate issues”.129 A number of specific issues were raised by witnesses. Friends of the Earth noted that the reference in Article 22.5 to the Paris Agreement “does not reference limiting warming to 1.5 degrees, nor does it make taking actions which frustrate the Paris Agreement grounds to impose remedies under the FTA”.130 WWF stated it “sets a concerning precedent for future trade agreements, as future trade partners, including countries with low environmental standards for farming such as Brazil and the US, are likely to demand similar market access, increasing the cumulative impact liberalisation of agricultural trade without any environmental conditions”.131

112.The Government’s impact assessment states that greenhouse gas (GHG) emissions within UK-based production should remain largely unchanged, but as the Environmental Law Association notes, this does not take into account any potential increases in transport emissions nor UK-based consumption. The impact assessment does mention the risk of carbon leakage, in which the UK would import more GHG-intensive goods from Australia because of lower standards in Australia, but it does not go into detail. Additionally, the impact assessment does not consider the impacts of deforestation in Australia and how this relates to the UK’s international goals of environmental protection. We note that the Trade and Agriculture Commission concluded that “it cannot be excluded that in some cases [Australian] deforested land is used to produce agricultural products which will be imported in greater quantities into the UK, such as beef and cereal”.132 While it was reassuring to hear from the Australian High Commissioner that reforestation efforts have resulted in a net gain in forest growth over the last decade in Australia,133 the risk of further deforestation in favour of arable farming remains.

113.Following the election of a new Australian government under Anthony Albanese on 21 May, we wrote to Lord Grimstone of Boscobel, asking what consideration the Government had given to strengthening the environment chapter, given our understanding that the new administration may be open to a more ambitious approach towards the environment and climate.134 Lord Grimstone responded that there would be “ample opportunities for collaboration” and that “the agreement also establishes a Joint Committee”, which can “modify the FTA in certain instances”.135

114.There are elements of the Environment Chapter which we welcome. These include commitments on environmental protection, including controlling ozone-depleting substances, ship pollution and the regulation of marine wild capture fisheries. We also welcome that the provisions in the climate and environment chapter are subject to dispute resolution.

115.However, the disappointment from UK stakeholders about the Environment Chapter is something that the Government should take seriously. Considering that the UK granted Australia generous agricultural market access, it is regrettable that the Government did not press Australia for more ambitious commitments on climate change and that the temperature goals which are fundamental to the Paris Agreement were not explicitly referenced in the FTA. We call on the Government to establish a firm baseline for future agreements which goes beyond the Australia text.

116.We call on the Government to review the provisions related to environment and climate issues and to monitor their implementation. The change of government in Australia and the engagement of the electorate on environmental issues gives the Government an opportunity to revisit the Environment Chapter of the agreement. We hope that this will be taken up in the Joint Committee and ask the Government to keep us informed of developments.

117.Given Australia’s position on coal, it is regrettable that the agreement did not include any references to reducing or reviewing Australia’s reliance on coal. This contrasts with the trade agreement the UK signed with New Zealand.

118.The impact assessment states that the agreement should not significantly change the greenhouse gas (GHG) emissions within UK-based production, but some areas, such as transport-related emissions, have been left out of the calculations, and the potential for increases in carbon leakage is not discussed in detail.

119.The Government’s future impact assessments should cover in greater detail transport-related emissions, the potential for increases in carbon leakage, impacts on deforestation and biodiversity. Trade sustainability impact assessments produced for the European Parliament during trade negotiations are more detailed in this regard.

120.In the light of our net zero commitments, future FTAs should seek to achieve a net reduction in GHG emissions—which may be achieved by agreements on production methods and procurement.

120 Strategic Approach, p 12

121 Article 22.3(6), UK-Australia FTA

122 Written evidence from WWF (AUT0057)

123 Written evidence from Professional and Business Services Council (AUT0047)

124 Written evidence from National Sheep Association (AUT0041)

125 Written evidence from Dr Claudia Leonelli (AUT0044)

126 Written evidence from the National Farmers Union (England & Wales) (AUT0054)

127 Written evidence from RSPCA (AUT0035)

128 2 (Lord Grimstone of Boscobel)

129 Q 14 (Dr Emily Lydgate)

130 Written evidence from Friends of the Earth England, Wales and Northern Ireland (AUT0038)

131 Written evidence from WWF (AUT0057)

132 TAC report, p 66

133 Written evidence from the Australian High Commission (AUT0058)

134 Letter from Baroness Hayter to Lord Grimstone of Boscobel, 9 June 2022:

© Parliamentary copyright 2022