The day after a U.S. Presidential election usually has all eyes on America, but some news from Down Under: Australia and the United Arab Emirates signed the Comprehensive Economic Partnership Agreement (CEPA) Wednesday, marking Australia’s first free trade agreement with a Middle Eastern nation.
This agreement aims to eliminate tariffs on over 99% of Australian exports to the UAE, including key agricultural products such as meat, dairy, grains, oilseeds, chickpeas, lentils, nuts, horticulture, and honey. The deal is expected to generate an additional $50 million annually for Australian farmers.
The trade deal is anticipated to boost bilateral trade, which was valued at $9.9 billion in 2023, and enhance two-way investment, which stood at $20.6 billion.
This development is significant for Australian agriculture, as it opens new markets and reduces trade barriers, providing a substantial boost to the sector. The agreement also includes provisions for sustainable agriculture and food systems, recognizing agriculture’s essential role in ensuring food security and driving climate resilience.
The signing of the CEPA represents a strategic move to strengthen economic ties between Australia and the UAE, offering new avenues for trade and investment in the Middle East.
The UAE is a significant importer of agricultural products, and the removal of tariffs on Australian goods may make them more price-competitive. This could challenge U.S. agricultural exports to the UAE, as American products might become relatively more expensive.
With Australian products gaining a competitive edge due to tariff eliminations, U.S. farmers may face difficulties maintaining or expanding their market share in the UAE. This is particularly relevant for commodities where both countries compete, such as beef, lamb, and certain grains.
If Australian exports to the UAE increase significantly, Australia might reduce its supply to other markets, potentially opening opportunities for U.S. farmers elsewhere. However, this depends on global demand and supply dynamics, which can be unpredictable.
