Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Hansard source

I am happy to respond to the statement by the Minister for Trade and welcome the announcement that the next stage of negotiations for a free trade agreement between Australia and Korea has begun. I hope that these negotiations will lead to a high-quality and comprehensive free trade agreement between Australia and Korea. The minister was right to refer to the fact that Korea is perhaps the most significant of our trading partners with which we do not have a free trade agreement or FTA negotiations—although, of course, a lot more work needs to be undertaken in relation to our negotiations with China before there is anything resembling a satisfactory trade agreement between our No. 1 trading partner and Australia. There is a lot more work to be done, but it is important that we are talking with Korea, and the minister’s announcement today fills that gap.

There is a high degree of bipartisanship in relation to trade issues, and I think that helps to smooth the passing of the baton from one government to another when it happens—although I do note that there was no recognition made in the minister’s statement about the role of the previous government in getting these discussions to this point. In fact, most of the supporting documents that have been provided tend to suggest that history only began upon the election of the Rudd Labor government. So, in the interests of completeness, let me acknowledge that perhaps the first important step that was made in relation to the negotiation for a free trade agreement between Australia and South Korea occurred when President Roh visited Australia in 2006 and, with Prime Minister Howard, announced that we would commence a non-government joint study to look at the possibility of a free trade agreement. I made a number of announcements on that day about the details of those negotiations. A Melbourne based trade consultancy, ITS Global, was chosen to conduct the FTA feasibility study, and a year later it concluded that there would be significant gains to both countries if we were able to negotiate such an agreement.

As the Minister for Trade said, an agreement could carry enormous potential gains for Australian exporters and the wider community—perhaps an increase of as much as $23 billion in our GDP by 2020. In particular, it is important to note that Korea is our sixth largest trading partner and our third largest export market. Because of those factors, it is important that we have a mature and well-developed trade relationship underpinned by an appropriate FTA.

These negotiations became particularly urgent following the completion of negotiations for a Korea-US free trade agreement in 2007. The Centre for International Economics found in a study prepared for the National Farmers Federation that, if ratified, the US-Korea FTA could cost Australian agriculture $1.2 billion of output by 2030, with our beef industry the hardest hit. The US-Korea free trade agreement would provide the potential for favoured access to US products into Korea, and for Australia not to have some kind of equal access would inevitably have significant implications for our exports. Of course, we now know that not as much progress has been made with the US-Korea free trade agreement as might have been expected at the time that it was announced. Indeed, President Obama has made a number of very negative comments about the future of that agreement. That surprises me, I have to say, because I thought it provided a pretty good deal for the Americans and provided quite a number of leads as to what we might be looking for in an agreement between Australia and Korea. Whilst the agreement between the US and Korea is, at best, in a state of limbo in the US political processes at present, it is important that we play catch-up and that we get to a position where we might be able to negotiate and sign an agreement with Korea, hopefully in a similar time frame to that which might be achieved by the United States.

The minister has rightly spoken about the potential benefits, and I will not repeat his words. But I think it is important that we talk about the way these negotiations should be conducted. Firstly, it is absolutely important that everything be on the table at the beginning. The previous government insisted, in the negotiations with China and Japan and in other agreements, that nothing be pushed aside before the discussions began. This was a sensitive issue with Korea, and I note that there has been no particular assurance in the minister’s statement that everything will in fact be on the table at the beginning of these negotiations. Of particular interest is the question of agriculture. Agriculture is a sensitive issue, and the minister rightly attested to the fact that there are sensitivities on both sides, but it would be completely unacceptable to Australia if these negotiations were to begin with a significant sector of our exports excluded from the discussions. Whether that were done officially or just by way of a nod on the side, it would be an unacceptable beginning. There will be some difficult issues to be addressed, but an outcome that did not address some of the barriers to agricultural exports into Korea would be an unsatisfactory one.

I notice that in the documents tabled by the minister, which refer to some of the views expressed about an Australia-Korea free trade agreement, there is the statement:

Several submissions contributed by some peak industry organisations suggested that an FTA would be useful in addressing Korea’s high tariffs on beef, pig meat, dairy products, sugar, horticultural products, wine, seafood, wheat and barley.

I think that basically summarises everything that can be said on the importance of dealing with these sorts of issues in this context.

When in opposition, the minister and the Labor Party criticised the coalition for pursuing bilateral trade agreements while at the same time pursuing global reform in discussions such as the Doha Round. I am pleased to see that, now in office, they have recognised that it is possible to do both at the same time. The progress on Doha seems to get slower and slower, and I think that increases our capacity to deliver some trade advances through bilateral agreements. Therefore we have, in opposition, been supportive of initiatives to continue and conclude negotiations such as those with Chile and as part of the ASEAN-Australia-New Zealand FTA and to commence negotiations with Korea. These bilateral agreements can be advances and building blocks toward developing wider multilateral trade outcomes. I think it is fair to say that the ASEAN-Australia-New Zealand FTA probably would not have been possible had there not been such a large number of bilaterals upon which it could be built.

The minister made a number of comments about the ASEAN free trade agreement and I also will make a number of comments. I know it is always easier to be in opposition than it is to be in government when you are negotiating these agreements, but I am reminded of the Minister for Trade’s constant criticism of the free trade agreements negotiated by the previous government when he was shadow spokeman for trade. His comments were often quite vociferous. Now that he has actually signed his own trade agreements, he has opened himself up for criticism on the same score. The ASEAN-Australia-New Zealand Free Trade Agreement obviously does provide some considerable advances, but it is a long way short of the standards that the Minister for Trade, when he was in opposition, set for the previous government.

Under the agreement that has been signed by the government, by 2010 Australia will have moved 96.4 per cent of its tariff rates to zero—up from 46.7 per cent. That is way beyond what is being asked of any other country. Even New Zealand only gets to 84.7 per cent by 2010. Three countries will have moved five per cent or less to zero by 2010. There are a whole range of products that simply have been excluded from tariff concessions by a number of our partners in this agreement. Malaysia, Indonesia and the Philippines have excluded rice. Indonesia and Malaysia have excluded wine. Vietnam has excluded 41 items under the minerals section. With regard to motor vehicles—this was, of course, the big sticking point—and TCF, significant barriers remain in place. When we get to some of the other key areas, the outcome has been particularly disappointing. Access for exports of mandarines to Indonesia was one of the highest priorities identified by the horticulture sector, and that has been the case for several years. What has happened in relation to mandarines as a result of this deal? Absolutely nothing will happen until 2025 or potentially 2028, when the tariff on mandarines into Indonesia will be lowered from 25 per cent to 18.75 per cent. So nothing at all happens until 2025, maybe 2028, and then there will be only a 6¼ per cent reduction in the tariff. That is a very disappointing outcome.

I now turn to one of the minister’s favourite areas for comment when he was the shadow minister: sugar. I will quote to the minister, who is in the chamber, his comments in March 2005, when he condemned the coalition for the fact that there were no sugar concessions in the Australia-US Free Trade Agreement. ‘We can’t allow that sort of thing to happen,’ he said, four years ago. In May, when he signed the Australia-Chile Free Trade Agreement, he said: ‘Unlike the previous government, we are not selling out Australian agriculture to pursue an FTA at any cost. The last government was prepared to exclude sugar from the Australia-US FTA and to agree to long phase-ins for access improvements in beef and dairy.’ Well, that is exactly what we have in the ASEAN-Australia-New Zealand Free Trade Agreement.

Several countries have made no concessions whatsoever in relation to sugar. Others have delayed what they are proposing to do for decades—huge phase-ins or, in some cases, absolutely no phase-in at all. This is not an unimportant sugar market. We sell a third of our sugar to these areas and there will be no relaxation in the tariff barriers on sugar. I have some sympathy with the minister—I know how hard it is—but I repeat to him his own words on this occasion and say that he has failed his own test about what should have been achieved in relation to this issue.

I also comment about the rules of origin in the ASEAN-Australian-New Zealand Free Trade Agreement, which break new ground. Exporters are actually going to be able to choose which test they want to apply in relation to rules of origin—they can choose a regional value content or a change of tariff classification content. I think this is the first time that this kind of choice has been available.

That, of course, would be great for the ASEAN countries, but it would not be so good for Australia, because it will mean that goods will only have had to have passed through those countries and had a minor transformation to change their tariff, if that is the easiest test, or to pass the value test, if that is the easiest test, and the goods will be treated as though they come from that country even though the majority of the input may have come from another place. This is a significant relaxation in the arrangements, which is not likely to advantage Australian industry.

I also comment about other double standards in this agreement. All Australian tariffs on agriculture—the whole lot of them—are to be reduced to zero immediately. Immediately! This is unilateral disarmament. No other country apart from Singapore is doing that—Singapore is already doing it, but there is no agriculture there anyhow.

But, when it comes to some of the government’s pet industries like TCF and cars and the like, we have a tit-for-tat arrangement—you give up a bit; we give up a bit. In a decade’s time—and in some countries, never—there will be some reductions in tariff in those ranges of manufactured goods. So we have a double standard in relation to the treatment of agricultural products with the treatment of manufactured goods. When you come to some of the other areas where changes are being made, the papers acknowledge that this new agreement actually delivers slower progress than what was actually achieved under the Australia-Thailand Free Trade Agreement for our arrangements with Thailand. Under the old Australia-Thai agreement, we got faster tariff reductions in some areas than we do under this new agreement in our dealings with Thailand.

Whilst I believe that it is worthwhile doing agreements of this nature, I think it is important to keep them in balance. Naturally, when the government announce a new agreement, they highlight the successes and the achievements, but I point out that there are also a lot of disappointments in this agreement. In the agricultural sector, particularly, there will be alarm at how little progress has been made in some of the key areas that were so important to that sector.

I want to make a final point—and I would not have raised this had it not been for the fact that the minister for agriculture made some very provocative comments today about the import of bananas from the Philippines. I remind the minister for agriculture that, when the Philippines lodged an application to import bananas, it was naturally dealt with under the processes that were put in place, and the previous government never allowed bananas into this country. The science always said no. Now, curiously in the middle of negotiations for a new free trade agreement between ASEAN, Australia and New Zealand, the science has changed and suddenly it is okay to allow bananas in from the Philippines.

There is a whiff of odour about the way in which all of this has happened. I know there are conditions attached, but the reality is that the minister is completely wrong to suggest that somehow or other the previous government put in place mechanisms that were going to allow bananas into the country. In all our time—eight years—that the application was toing and froing between Australia and the Philippines, we never allowed bananas into this country under any conditions. This government, in the midst of new negotiations for a free trade agreement with ASEAN, has decided to allow Philippines bananas into this country. I am staggered by the decision; I find it quite incredible and I hope that they are not playing loose with Australia’s prized diseased-free status. But they do really need to explain to banana farmers, and in fact to all Australians, why what was too great a risk in the past is now suddenly acceptable. This is causing serious concern in banana growing areas of Australia.

The final area that the minister referred to was the Doha Round. Obviously there is widespread disappointment at the lack of progress that is being made with the Doha Round. The talks broke up late last year, and they are obviously in deep trouble. They broke up in disarray and with a fair degree of ill will. I am disappointed that there could not be a good outcome, but I have been disturbed about the developments in the Doha Round for quite some time, because the loss of ambition has meant that there is so little left on the table that people will be starting to wonder if this deal is even worth doing. I noticed that this question was put to Pascal Lamy—when he was in Australia during the last few days—very eloquently, I thought, by one of the delegates at the outlook conference, when he said that all that was left on the table was a ‘lamb chop’. Mr Lamy’s response to that was: ‘Oh no, there’s much more than that. What it will do is stop backsliding.’ Those were virtually the comments of the minister as well—that, if we do not have Doha Round, the tariffs and the barriers might get even worse.

We have reached the stage now where there are very few advances left in the Doha Round, but there is the need to avoid slippage. I have heard the bit about the $150 billion worth of tariffs that might go, but that is water—they are empty tariffs; they are not applied tariffs. They are not tariffs that are actually being applied at the present time. I acknowledge that there is potential in some cases for those tariffs to be applied in the future, but they are not here at the present time. Unfortunately, there is little left on the table in relation to the Doha Round and that is very, very disappointing indeed.

There is a rise in protectionism—led in particular by the Europeans, with their dairy, and also by the US—and that is disturbing. We all need to fight against the rise of protectionism, even in difficult times. In fact, world recovery will slow, not speed up, if there is more protectionism. We need to remind certain Australian industries of that fact as well. We should not do trade deals that are bad deals just for the sake of getting our name on a piece of paper if they will not actually deliver better outcomes for Australia and our trading partners. I welcome the Australia-Korea free trade agreement discussions. I hope they will remain ambitious and comprehensive, and that they will deliver an outcome that will benefit Australian industry and Australian consumers as rapidly as possible.

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