UAE and Australia deal in sight with trade almost $10bn

David Gray/Reuters

• Cepa agreement on the cards
• Non-oil trade worth $4.5bn
• UAE invested $12.6bn in 2022

The Aussie accent is a familiar one in Dubai, with about 16,000 Australians calling the emirate their home and trade links between Australia and the UAE creeping back to pre-Covid levels.

Bilateral non-oil trade between Australia and the UAE was worth $4.5 billion in 2022, up 28 percent compared with 2021 and almost double the total in 2020. Talks are underway on a free trade agreement that officials hope will be signed by the end of this year.

More than 300 Australian businesses operate in the UAE, covering sectors such as construction, finance, education and healthcare. Total trade, including oil, exceeds $9 billion, still below the pre-Covid mark of $10 billion.

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The UAE is already a key market for Australian goods and services exports including aluminium oxide, meat and oil seeds. There are also strong links in education, with three Australian universities having campuses in the country.

Australia and the UAE started negotiations for a free trade agreement in 2005, which developed into negotiations for an Australia-GCC deal in 2007. The talks stalled in 2009.

Wam

They resumed in December with Don Farrell, Australia’s minister for trade and tourism, saying he is hopeful that signatures will be added to the Comprehensive Economic Partnership Agreement (Cepa) later this year.

“A Cepa could open new avenues for bilateral investment,” said Dr Jelena Janjusevic, associate professor of finance at Heriot-Watt University Dubai.

“By securing a free trade agreement with the UAE, Australia would not only consolidate its economic ties with one of the world’s fastest-growing and dynamic regions but also position Australian businesses to more effectively tap into the broader Middle East and African markets,” she said.

• Western Australia looks to Gulf for green deals
• UAE and Australia to hold Cepa talks
• ADQ buys stake in Australian investment company

However, the Australian Council of Trade Unions says it is “deeply concerned” about the deal, owing to labour and human rights issues, while the Australian Fair Trade Investment Network has urged the government to halt talks.

Dr Thani bin Ahmed Al Zeyoudi, UAE minister of state for foreign trade, described Australia as a “natural partner” and said the Cepa would bring opportunities in logistics, food security, tourism, renewable energy and mining.

In 2022, UAE investment in Australia was estimated at $12.6 billion, according to Australian Bureau of Statistics data. 

“With 77 flights a week between UAE and Australia, and additional connections being added in the last quarter of 2023, the UAE continues to be the preferred global trading hub,” said Bryony Hilless, Australian consul general, Middle East, Africa and Pakistan.

“An emerging opportunity is around the green economy,” she said. “Innovative technologies from Australia are providing solutions to create cleaner, greener and more sustainable businesses that can lead to economic transformation.”

Heriot-Watt University

Janjusevic said: “Renewable energy presents significant opportunities given the UAE’s ambitious energy targets. The UAE aims to become a global hub for clean energy and technology, where Australian companies can play a crucial role with their expertise in solar and wind technology.”

Mubadala Investment Company this month announced an investment in Perdaman’s $4.2 billion Western Australia Urea project, one of the largest urea fertiliser facilities in the world.

The UAE is Western Australia’s 15th-largest trading partner, with $2.2 billion of goods traded in 2022-23. Fresh produce exports have benefitted from air freight availability, with regular direct flights linking the UAE with Perth.

“Leveraging Western Australia's robust economic relationship with the UAE as Australia's largest trade and investment partner in the Middle East, this collaboration is poised to enhance economic prospects for both regions,” said Vijay Valecha, chief investment officer, Century Financial.

Western Australia hosts the bulk of the country’s fossil fuel activities and has more than half of the world’s known reserves of lithium and almost 40 percent of the global supply of iron ore.