GRAINGER, Ms Jo, Assistant Secretary, Plant Industries, Infrastructure and Workforce Branch, Agricultural Policy Division, Department of Agriculture and Water Resources

McINNES, Mr Dougal, Assistant Secretary, Europe Trade, United Kingdom and Ireland Branch, Europe and Latin America Division, Department of Foreign Affairs and Trade

PINTO, Mr Nigel, Director, Food, Wine and Taxation, Agricultural Policy Division, Department of Agriculture and Water Resources

[12:40]

Agreement on Trade in Wine between the Government of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland

CHAIR: I welcome the representatives of the Department of Agriculture and Water Resources to give evidence today. Although the committee does not require you to give evidence under oath, I should advise you that the hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today will be recorded by Hansard and attracts parliamentary privilege.

I remind you that transcripts of today's proceedings may not be available in time to meet the deadline for questions on notice. Therefore, could you please keep track of any questions on notice as the hearing proceeds. I invite you to make a brief opening statement before we proceed to discussion.

Ms Grainger : Thank you for the opportunity to address the committee today on the Agreement on Trade in Wine between the Government of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland. The Australia-UK wine agreement was signed in London on 18 January this year. For decades, Australia's wine trade with the UK has been governed by the Agreement between Australia and the European Community on Trade in Wine. This Australia-EC wine agreement was signed on 24 January 1994 and started the process of phasing out the use by Australian winemakers of European Community geographical indications. This EC wine agreement was revised, and a new agreement was signed on 1 December 2008 and came into force in Australia on 1 September 2010. The revisions included a number of significant advantages for Australian wine producers and exporters; in particular, the acceptance of Australian winemaking techniques by the European Community. Whilst this Australia-European Community wine agreement continues to successfully facilitate the trade in wine between Australia and the EC, it obviously will no longer apply to our trade with the UK when the UK formally withdraws from the European Union or at the end of the proposed Brexit transition period, should one be agreed. This means that, obviously, the benefits the wine industry has gained under our existing agreement with the EU will no longer apply, and that's why we sought to start this new agreement with the UK.

As the committee is aware, the UK is a very important market for Australia. It's our third-largest export market by value and our largest by volume. In the 12 months to December 2018, Australia exported 246 million litres of wine to the UK, at a value of $389 million. It's obviously a very important hub, as well, for Australian exports into the European Union. Approximately 80 per cent of our exports go to the UK as bulk, or unpackaged, wine and then are bottled in the UK and distributed to further parts of Europe. The Australia-UK wine agreement ensures that the beneficial conditions for wine trade provided by our current agreement with the EU will continue for the UK post-Brexit. The wine agreement largely mirrors the rights and obligations provided for under our agreement with the EU. There are again some technical changes similar to the MRA just to replicate this agreement in a bilateral context. Under our agreement with the UK, Australia and the UK will continue to accept each other's authorised winemaking techniques and simplified wine certification and, importantly, labelling arrangements. The agreement also provides for ongoing reciprocal recognition of each party's geographical indications and other terms in relation to wine. The timing of entry into force of our agreement with the UK is obviously subject to the final terms of Brexit. However, we have been working to ensure the agreement is ready to enter into force when it's required. This preparation has included some minor amendments to the Wine Australia Regulations 2018. They were necessary to ensure that Australia can give domestic effect to this new agreement. These amendments were considered and approved by the Federal Executive Council on 21 March 2019, and they will enter into force at the same time as the agreement enters into force. Thank you for your time. I'm happy to answer any questions.

Mrs MARINO: As someone with a defined interest, given that I have the Margaret River region in my patch, the MRA basically broadly says that the agreement largely mirrors the existing agreement. Are there actually any differences?

Ms Grainger : There are differences, but they're technical. They're terribly—

Mrs MARINO: Are they technically good?

Ms Grainger : Technical just to make it exactly the same. The technical things are in relation to, again, that complicated line that all references to EU law will be read as references to UK law. We've updated the designated representative bodies, reflecting some changes and new contact points, so it's really technical stuff. We've got a new entry-into-force requirement and we've got a modified process for giving each other notices. It's very technical. It doesn't change the substance of this agreement. We have a status quo outcome in terms of trade.

Mrs MARINO: In that vein, with the existing agreements that were in place and given what you've just said, have there been concerns by any in the industry about the existing agreement that they sought to either improve upon or add to or other in this current agreement?

Ms Grainger : It's fair to say the current agreement has been longstanding, so since 2008 and the earlier agreements since 1994. It's a well-understood facilitation of trade with the EU.

Mrs MARINO: It works?

Ms Grainger : It works very well.

Mrs MARINO: For all parties?

Ms Grainger : Could I say Australian industry would like some improvements? Of course they would. But, at this stage, the largest reason we went for a status quo outcome was that the UK is still a member of the EU and is only allowed to talk about treaties on the status quo. It's not actually allowed, at this point in time, to pursue something more ambitious. It was very important that this agreement get put into place so that we have a status quo outcome to ensure the continuation of trade. There are opportunities in the future, but, at this point in time, there really wasn't an opportunity.

Mrs MARINO: So just get this in place and then any other further improvements can be dealt with later. This is important to get in place right at this moment—am I interpreting you correctly?

Ms Grainger : Exactly. I think, if there is the opportunity for a UK-Australia free trade agreement, that's a point in time we would all look to work closely with industry to understand their agenda for the outcomes we could seek there.

Mrs MARINO: In the event of a no deal, how long will it take for an agreement to come into place?

Ms Grainger : We've signed the agreements, and it's in law. We've actually passed the regulatory change through the Federal Executive Council, so we're ready to come into effect. I'm not sure whether our counterparts in the UK have made their changes to legislation.

Mr Pinto : They don't need to, but, essentially, the agreement comes into effect the moment the UK is no longer a member of the EU.

Mrs MARINO: So there are no other potential delays or issues? It's going to be an automatic process where, after Brexit, the deal basically happens.

Mr McInnes : There is an exchange of letters that takes place at the officials level. It just formalises the new treaty.

Mrs MARINO: Thank you very much. For those of us around the room who represent the industry, we're looking not only to be able to take advantage of the existing arrangements but, I would suspect in time, to be able to improve on those, where it's quite possible. Thank you for those responses.

CHAIR: Are the letters written?

Mr McInnes : We have drafts, if required.

CHAIR: There's a lot of work that has gone into this whole exercise. I take it that this is happening in every country?

Ms Grainger : I'd say so, yes. We are in a unique position. Not many other countries have a wine agreement with the EU similar to ours. It gives us real benefits.

CHAIR: Have you identified any areas where we haven't moved?

Ms Grainger : We've kept status quo arrangements in terms of the facilitation and the trade outcomes we have now, which is very important. We didn't need to move as such. There was agreement between the parties—the UK and ourselves—to mirror that outcome.

CHAIR: There are no areas of our activity with the UK that we haven't addressed yet?

Ms Grainger : Not in the wine space.

CHAIR: Does the department of foreign affairs—

Mr McInnes : In other areas outside of the remit of this discussion, we have a nuclear cooperation agreement with the UK. We can provide details outside of—

CHAIR: That's under control? That's done?

Mr McInnes : Yes.

CHAIR: Well, congratulations. You've done a great job. Thank you for your attendance here today. If you have been asked to provide any additional information, would you please forward it to the secretary within seven working days. As I stated in my opening remarks, it is the witness's responsibility to meet this deadline in a timely manner. You will be sent a copy of the transcript of your evidence when it becomes available, and you will have an opportunity to request corrections to transcription errors.

Committee adjourned at 12:51