The appointment of former Foreign Secretary Liz Truss to the UK Prime Ministership once again draws attention to Australia’s trade opportunities in a world where geo-political tensions are creating new markets for our resource and agriculture commodities.
Overnight Prime Minister Albanese assured global markets that Australia would continue to be a reliable supplier of coal and gas supply to world markets, an important reassurance in light of the looming energy supply crunch in Europe and the UK as Russia shuts its gas pipeline down.
Since being elected in May, Albanese and Trade Minister Don Farrell have set a lightning pace connecting with international leaders in a new post-COVID geopolitical landscape. A key message has been that Australia is committed to climate change as a bridge to greater alignment with its international partners.
One of the most important meetings took place at the Elysee Palace in Paris where Prime Minister Albanese restoring relationships with France’s President Macron is seen as a key to unlocking new trade deals in the EU.
Similarly with China, for the first time in years, Australian ministers have sat down face to face with their Chinese counterparts. However, tensions over Taiwan and trade barriers imposed by China on Australian wine, seafood and agriculture are still obstacles to the restoration of that relationship.
New British PM Liz Truss has completed a remarkable political journey from a ‘Remain’ campaigner in the 2016 EU referendum to an ardent Brexit convert who has successfully cultivated support from the Conservatives’ right wing and those still loyal to Boris Johnson.
Some of her major policy announcements from her successful campaign for the UK Prime Ministership include creating new “low-tax and low-regulation zones” across the country to create hubs for innovation and enterprise and scrapping a planned rise in corporation tax.
However, her most urgent project in Government will be tackling the UK’s spiralling energy costs that have triggered possibly the biggest cost of living crisis in the UK since the 1970’s OPEC oil embargoes.
Truss has strong libertarian views on economics and trade and is well known to Australia from her role as International Trade Secretary and most recently as Foreign Secretary. She led negotiations on high-profile deals with Australia, New Zealand and Japan, as well as continuity agreements with countries the UK had pre-existing deals with through the EU.
She has presented a hard-line approach as Foreign Secretary, calling for a major re-think in the West’s approach to global aggressors following Russia’s invasion of Ukraine. She also vowed to deepen the AUKUS partnership and has spoken of the need to build alliances to counterbalance China.
For a number of the major economies of Europe, hydrogen is shaping as a major part of the long-term future of energy. Germany in particular will need in the long-term to import large quantities of hydrogen to cover shortfalls in Russian gas supply. With the weaponising of Russia’s gas supplies, Europe now faces crippling energy supply threats that will close down industries and smash household budgets. Australia is building relationships that could lead to the supply of hydrogen and green ammonia to German heavy industrials, particularly in the chemical sector. Australia’s abundant supply of wind and solar is seen as giving it a competitive advantage in the race to commercialise hydrogen.
Prime Minister Albanese recently said in a speech to an energy forum, “We will allocate up to A$3 billion in areas such clean energy component manufacturing, hydrogen electrolysers……we see enormous potential in hydrogen, and Australia has all the ingredients needed to become both a major hydrogen producer and a global exporter.”
Trade talks with the European Union are set to continue in October, with Australia’s stronger message on reducing emissions better aligning to a “sustainable development’’ chapter expected to be in the agreement.
Both Australia and the EU have publicly committed to finalising a trade deal by the first half of 2023.
The EU is demanding Australia remove its luxury car tax – that hurts EU car manufacturers – to secure a free trade agreement and is determined to prevent Australian producers from using key geographic food names like parmesan and prosecco.
For Australia, the trade deal will present new market access for Australia’s agricultural sector and industrial products as well as access for services exporters such as education, digital trade and financial and professional services.