Australia and the UAE Forge Stronger Bilateral Ties Through Landmark CEPA

The Comprehensive Economic Partnership Agreement (CEPA) between Australia and the United Arab Emirates (UAE) marks a new chapter in their dynamic bilateral relationship, which has long been fueled by mutual trade, investment, and shared economic goals

By Giulia Interesse

The Comprehensive Economic Partnership Agreement (CEPA) between Australia and the United Arab Emirates (UAE) marks a milestone in their evolving bilateral relationship, underpinned by robust trade, investment, and shared economic priorities. As Australia’s largest trade and investment partner in the Middle East, the UAE represents a vital market, with two-way trade reaching AU$9.9 billion (US$6.4 billion) and investment at AU$20.6 billion (US$13.43 billion) in 2023. Australian exports to the UAE include alumina, meat, and oil seeds, alongside a strong presence in the education sector attracting Emirati students.

Negotiations for the CEPA commenced on December 13, 2023, culminating in an agreement on September 17, 2024, and official signing on November 6, 2024. This bilateral free trade agreement aims to reduce trade barriers, enhance market access, and foster growth in key sectors such as renewable energy, infrastructure, advanced manufacturing, and digital trade. By aligning with sustainability goals, the CEPA also positions both nations to collaborate on achieving net-zero emissions by 2050.

Projected to triple bilateral trade by 2032, the CEPA offers a strategic framework to capitalize on complementary strengths in agriculture, education, and advanced manufacturing, while creating new opportunities for businesses in both countries. Following Australia’s domestic treaty-making process, which ensures stakeholder engagement, the CEPA underscores the commitment of both nations to a diversified and low-carbon global economy.

This article explores the historical context of Australia-UAE relations, delves into the benefits and objectives of the CEPA, and highlights the economic opportunities it presents for regional cooperation and global trade leadership.

Australia-UAE relations

Australia and the UAE enjoy a strong, multi-faceted relationship that spans trade, investment, defense, education, and people-to-people links. This connection has grown rapidly over recent years, reflecting both countries’ strategic interests and the complementary nature of their economies. Below is an overview of the key areas that define this important relationship.

Trade and investment

The UAE is Australia’s largest trade and investment partner in the Middle East, serving as a key gateway for Australian products and services into the Gulf region. According to the Australian Department of Foreign Affaris and Trade, as of 2023, the total value of goods and services exchanged between the two nations was around AU$9.43 billion (US$6.4 billion), while bilateral investment was valued at approximately AU$20.6 billion (US$13.43 billion). The UAE ranks as Australia’s 21st largest trading partner worldwide, with significant potential for growth across sectors such as agriculture, petroleum, education, and professional services.

Australian exports to the UAE include alumina, meat, oil seeds, and education services. Meanwhile, imports from the UAE are dominated by petroleum products and urea. In recent years, the services trade has expanded, encompassing construction, tourism, financial, and professional services, along with education. A number of Australian educational institutions have a presence in the UAE, including Wollongong University, Murdoch University, and Curtin University, which have all established campuses in Dubai and Sharjah.

UAE investments in Australia are extensive, covering sectors such as agribusiness, tourism, healthcare, and energy. The Abu Dhabi Investment Authority (ADIA), one of the world’s largest sovereign wealth funds, holds interests in Australian infrastructure, including ports, electricity networks, and motorway projects. In May 2024, the Mubadala Investment Company, another major UAE sovereign wealth fund, announced a significant joint investment of AU$6.4 billion (US$4.17 billion) in the Australian fertilizer industry, marking the largest investment ever made in this sector by a UAE entity.

Political and diplomatic engagement

Political relations between Australia and the UAE are friendly and growing, marked by regular high-level diplomatic visits and a history of collaboration in global organizations. The UAE’s hosting of the COP28 climate summit in 2023 and the 13th WTO Ministerial Conference (MC13) in 2024 further highlights its role on the world stage, with Australia actively participating in these events. In recent years, numerous high-level Australian officials, including the Deputy Prime Minister, Ministers for Trade, Defense, Climate Change, and Foreign Affairs, have visited the UAE, reflecting the depth of the bilateral relationship.

Australia is represented in the UAE by an embassy in Abu Dhabi and a Consulate-General in Dubai. The UAE has also served as a key partner for Australia in supporting stability and economic cooperation within the Gulf Cooperation Council (GCC) framework. Both countries share a commitment to advancing their common interests in the Middle East through collaboration in defense, aviation, and legal cooperation, with bilateral agreements supporting mutual legal assistance and extradition.

People-to-people exchanges

People-to-people ties between Australia and the UAE have strengthened significantly, driven in large part by direct air connectivity. Prior to the COVID-19 pandemic, more than 100 flights per week operated between the two countries through Emirates and Etihad Airways. Approximately 15,000 Australians live and work in the UAE, contributing to various sectors from finance and education to health and the arts.

The UAE has also extended support during times of crisis; for example, in 2020, following devastating bushfires in Australia, the UAE donated fire trucks and generators to aid affected communities, and the Burj Khalifa was illuminated with the message “#mateshelpmates” to show solidarity.

Overview of the Australia-UAE CEPA

The Australia-UAE CEPA represents a landmark trade pact aimed at enhancing cooperation across a diverse range of sectors. Signed with a commitment to sustainable growth, CEPA focuses on not only deepening economic ties between Australia and the UAE but also setting new standards in areas such as sustainable agriculture, digital trade, government procurement, and intellectual property.

Key aspects of the agreement include (but are not limited to):

• Sustainable agriculture and food systems: In a groundbreaking move, CEPA includes Australia’s first standalone chapter on sustainable agriculture within a trade agreement. This section acknowledges the role of agriculture in promoting food security, climate resilience, and emissions reductions. By recognizing that each country has unique agricultural and environmental conditions, CEPA emphasizes a flexible, science-based approach to sustainability that supports both trade and environmental goals.
• Animal welfare: CEPA includes strong commitments to animal welfare, fostering cooperation on issues like the treatment of farmed animals and enabling bilateral dialogue on welfare standards. This commitment affirms each country’s ability to regulate in line with its domestic priorities.
• Digital trade and innovation: With carefully designed digital trade rules, CEPA aims to unlock the full potential of the digital economy. Provisions like the acceptance of electronic signatures, e-payments, and cross-border data flows promote seamless digital transactions. A permanent prohibition on customs duties for electronic transmissions ensures smoother digital trade, while additional protections for business and consumer data aim to build trust and safeguard information.
• Access to UAE government procurement market: For the first time, CEPA provides Australian suppliers with guaranteed access to UAE’s government procurement market at the central government level. This new avenue offers competitive opportunities for Australian businesses, including SMEs and First Nations enterprises, in a growing UAE market.
• Intellectual property (IP) protection: CEPA strengthens IP protection to encourage creativity, trade, and investment. The agreement respects the public interest by ensuring that each government retains the right to regulate IP in areas like copyright, trademarks, and patents, with additional safeguards for Australia’s Pharmaceutical Benefits Scheme.
• Small and Medium-Sized Enterprises (SMEs): CEPA is designed to support SMEs, acknowledging the importance of businesses owned by women, youth, First Nations, and other underrepresented groups. The agreement simplifies trade by eliminating tariffs on over 99 percent of Australian exports, streamlining customs processes, and reducing red tape, all of which help SMEs expand their reach into the UAE market.
• Competition and consumer protections: CEPA commits to fostering a fair and competitive business environment, with provisions to prevent anti-competitive conduct and enhance consumer rights. By establishing clear rules and promoting independent investigations, both countries aim to create a marketplace that supports fair participation and consumer welfare.
• Transparency and anti-corruption measures: Reflecting shared values of accountability, CEPA includes provisions to combat corruption and ensure transparency. Both Australia and the UAE commit to effective enforcement of anti-corruption measures in line with international standards.

Key investment benefits under the Australia-UAE CEPA

The Australia-UAE CEPA brings a transformative approach to bilateral investment, promoting sustainable, high-quality two-way investments across sectors crucial to both nations’ economic growth and environmental goals. The investment framework, which includes a dedicated chapter within CEPA, a standalone Investment Agreement, and five Memoranda of Understanding (MOUs), fosters robust investment ties and sets clear priorities for collaboration. These include, among others:

• Enhanced investment protections and non-discrimination: The CEPA provides modern protections and non-discrimination assurances for investors, ensuring stability while preserving each government’s right to regulate in the public interest. Corporate social responsibility is also a focal point, encouraging meaningful engagement with First Nations people and local communities.
• Green and renewable energy: Both countries have committed to reducing carbon emissions, with targets of net zero by 2050. The CEPA prioritizes investment in green hydrogen, solar, wind, hydro energy, and sustainable aviation fuels. This framework supports the adoption of technologies that reduce production costs, improve energy transportation, enhance storage systems, and enable carbon capture solutions.
• Data centres and AI: The CEPA encourages joint investments in data infrastructure, focusing on green data centres and responsible artificial intelligence (AI). The agreement emphasizes safe AI development and deployment, integrating safety by design to support a forward-looking digital ecosystem.
• Minerals: The CEPA includes investment facilitation in mineral exploration, extraction, and processing, alongside sustainable governance practices. This sector-specific focus will drive responsible mineral development while creating educational and training opportunities for talent in the mineral value chain.
• Food and agriculture: Recognizing food security as a shared priority, the CEPA supports investments in agriculture to meet rising demands. Key areas include supply chain resilience, value-added product development, emissions reduction, and climate-smart farming technologies and practices.
• Infrastructure development: Investment in infrastructure is encouraged to boost productivity, drive economic growth, and support a resilient, low-carbon future. Projects in transport, social infrastructure, advanced technology, and sustainable tourism are priorities under CEPA’s framework, all aligned with both countries’ climate goals.

Looking ahead: Strategic impact of the Australia-UAE CEPA

The CEPA between Australia and the UAE represents a transformative step in strengthening bilateral ties, with far-reaching strategic implications for both nations. The deal is expected to significantly boost trade, with projections suggesting a tripling of trade by 2032, reaching a target of US$15 billion in non-oil trade, up from US$4.2 billion in 2023. This expansion is vital as both countries seek to diversify their economies, moving beyond traditional sectors such as oil and mining.

Australia stands to benefit from enhanced access to the UAE market, particularly in key export sectors like agriculture, pharmaceuticals, aluminum, and manufacturing, with the elimination of tariffs on over 99 percent of Australian goods. This not only reduces trade barriers but also strengthens economic growth by facilitating smoother exchanges and fostering deeper trade ties.

The agreement also provides significant momentum for investment flows between the two nations. With UAE investment already playing a crucial role in Australia’s infrastructure and housing markets, CEPA’s provisions are poised to unlock even more opportunities, particularly in green energy, renewable technologies, and advanced sectors like AI and data centers. The UAE’s substantial investments in Australian projects, such as the US$2.5 billion investment in housing and a US$4.2 billion fertilizer plant, illustrate the growing financial ties that the CEPA will likely accelerate. Additionally, Australia’s expertise in sectors like renewable energy and sustainable agriculture is expected to complement the UAE’s own ambitions to diversify and decarbonize its economy, making both countries key partners in advancing global sustainability efforts.

A particularly impactful dimension of the CEPA is the alignment between Australia and the UAE on shared environmental goals. With both nations committed to achieving net-zero emissions by 2050, the agreement facilitates collaboration on green technologies, including renewable fuels, green hydrogen, and carbon capture solutions. This shared commitment to sustainability not only addresses climate challenges but also positions both countries at the forefront of the global transition to cleaner energy sources. By enhancing cooperation in sectors such as renewable energy and sustainable agriculture, CEPA strengthens the economic and environmental resilience of both nations while contributing to global climate action.

Lastly, in a broader regional context, the UAE’s ambitious economic goals, including its target to grow non-oil trade to US$1 trillion by 2031, position Australia as a crucial partner in the Gulf region. The CEPA, as part of the UAE’s larger trade diversification efforts, strengthens Australia’s role in the Middle East, particularly as both countries look to build a more sustainable and diversified global economy.

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