Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Hansard source

These customs and customs tariff amendment bills implement the Japan-Australia Economic Partnership Agreement, and we are also debating the amendment moved by my colleague the member for Sydney. We have had some very distinguished visitors to this chamber and to our country in the past 12 months or so, some of them associated with the G20 that has just finished, but it is important to recall the visit of Japanese Prime Minister Abe to this chamber earlier on during this parliament because he did bring a very welcome message to Australia about the deepening of economic and defence ties between our two democracies. There were some light moments in that speech, as there were in some of the other speeches given by esteemed leaders in this place, but that fundamental message about closer economic ties was a message our whole nation could appreciate. That is what we are talking about in the context of this agreement. As my colleague said, we have a number of reservations but we do support the agreement that the government has struck with the Japanese.

The agreement is the second of the three significant trade negotiations that Australia concluded this year, the others being with Korea and China. Colleagues on both sides of the House have mentioned those agreements and it was appropriate that the member for Lyons mentioned the work of the trade minister. Whether you agree with every aspect of every agreement, they are hard work for the people associated with them. I want to pay tribute in particular to the DFAT officials, the PM&C officials and the Treasury officials—Australian patriots who work on these agreements over a long period, certainly longer than the life of any of the last couple of governments. They do put in long hours to bring these agreements to fruition, so I want to pay tribute to them. I also want to pay tribute to the six years of work done by my esteemed predecessor in Rankin, Dr Craig Emerson, along with Simon Crean and also Richard Marles for the role that they played in these agreements.

Throughout the life of at least the last three Labor governments we championed freer trade, because that is consistent with Labor principles and it is consistent with our approach to growing the economy and creating jobs here in Australia. We do appreciate that average Australian families are major beneficiaries of freer trade because of cheaper consumer goods and greater access to a diversity of products from right around the world. Free trade also helps us to develop stronger international ties culturally and economically, which makes for a far more dynamic and resilient economy. In that context, a trade agreement with Japan is an important stepping stone for Australia.

Honourable members are aware of some of the statistics about the trade relationship. Let me just touch very briefly on some of those. Japan is already Australia's second-largest agricultural export market, worth about $4 billion last year. It is also our second-largest market for non-agricultural goods—something like $42 billion worth in 2013. Our trade surplus with Japan was a bit over $28 billion in 2013, which is second only to our trade surplus with China. Exporters have historically faced, and currently face, higher tariffs into Japan, with agricultural tariffs of up to 219 per cent currently being levied. As it stands, Japan is a big market for Australia. There are some really good foundations of that relationship, but we hope and expect to see this agreement build on that economic relationship to the benefit of Australians.

When it is implemented, Australia will become the first major agricultural exporter to enter into a bilateral agreement with Japan. This gives Australia what the aficionados call 'first mover advantage' over our competitors. It means Australia will be able to develop a whole lot of relationships and have greater presence with Japanese consumers before some of our global competitors can. It also means Australian exporters will have access to preferential tariff arrangements that our competitors in New Zealand, Canada, the US and the EU will not necessarily have. On top of that, the inclusion of a most favoured nation provision means that we will maintain that first mover advantage even as other nations enter into agreements with Japan. Any tariff cuts that Japan gives our competitors in the future will automatically flow through to Australia as well.

It is worth touching on some of those tariff advantages that Australia will enjoy as a result of the Japan-Australia Economic Partnership Agreement. More than 97 per cent of our exports to Japan will enter duty free or will receive preferential access when the agreement is fully implemented. It entirely eliminates tariffs on all of our current minerals, energy and manufacturing exports. Given that LNG, coal and iron ore are currently Australia's top three exports to Japan, this will be a big benefit to the resources industry. In the services sector the agreement guarantees Australian service providers outcomes equal to or better than the best commitments Japan has made in any of its other agreements. There are a range of ways that that will be important. Japan will maintain levels of access for Australian legal service providers, financial service providers and telecommunications companies, and Japanese students will also become eligible for certain government scholarships to study at a university in Australia, which is also very important.

In the investment space, the decision to raise the Foreign Investment Review Board screening threshold for non-sensitive sectors should be interpreted by Japan as a sign that Australia is keen for Japanese investment here. In agriculture, as my colleague said, we do think it would have been possible to secure a more comprehensive and inclusive agreement. Despite all of the other benefits I have mentioned, it is the case in some areas—acknowledged by the member from the opposite side of the House—that there have been some exclusions from the deal. We acknowledge some good aspects, including the abolition of tariffs on milk products, wine, seafoods, lamb, beer, wool, honey and cotton. We also acknowledge that Australia will become the only nation with a preferential tariff on beef, which will be a good head start for the Australian beef industry. Tariffs on beef and pork will be reduced, but they will still be in place even in 18 years time, which is not an ideal outcome.

The agreement does not contain tariff reductions, as others have mentioned, for processed or high-polarity raw sugar, which makes trade with Japan more difficult for the sugar sector. As a result of these weaknesses, the agreement has been criticised by a number of industry groups, which we should note in this place, including the NFF, the canegrowers associations, the Australian dairy industry, the Ricegrowers' Association of Australia and Australian Pork. As part of the amendment moved by the Deputy Leader of the Opposition, we have called on the government to work harder to seek further market access gains, especially in those agricultural areas.

As well as sharing the agricultural sector's, or part of the sector's, concerns with the market access outcomes in parts of the agreement, the opposition also has concerns around labour market testing requirements under the Japan-Australia agreement. We do believe that Australians should have the opportunity to fill job vacancies where they have the capacity that is required to do the job. This is a really important point, even for those of us who support the agreement. This is a crucial point worth noting. We are concerned about the government's decision to deny itself the capacity to impose labour market testing on contractual service providers from Japan under the 457 visa program. Section 457 visas allow foreign residents to work temporarily in Australia. In most cases, there is a requirement for labour market testing to demonstrate those local skills shortages, as is appropriate.

This agreement provides that Australia will permit Japanese nationals to perform certain categories of work temporarily in Australia without any requirement for labour market testing to assess whether the work can be performed by Australian residents first. These categories include the traditional business visitors, intracorporate transferees and investors, as well as the contractual service suppliers. We believe, on this side of the House, that the government should retain labour market testing or comparable safeguards on temporary migration, and that is another reason why we have moved our amendment.

One of the major issues identified in the very good JSCOT committee report on the Japan-Australia Economic Partnership Agreement was non-tariff barriers. A common view held by businesses who currently trade with Japan is that the market is complicated and difficult to work in, with unique trading arrangements. A recent study for the Export Council of Australia, undertaken by Austrade, Efic and the University of Sydney, found that the key barriers to doing business in Japan were licences and standards, local culture and a complex regulatory framework. For example, Japan's sanitary and phytosanitary protocols are exceptionally high, even by Australia's very stringent standards.

Apple and Pear Australia reported that despite the tariff reductions on Australian apples, only nine per cent of apples grown in Australia are able to be exported to Japan. In particular, all apples grown on the Australian mainland are prohibited, making tariff reductions meaningless for many of those growers. As it stands, only Tasmanian apples may be exported to Japan. These, we feel, are overly stringent non-tariff barriers. They can make gains from trade very difficult for affected industries.

The agricultural sector is not the only one to have to deal with a difficult regulatory framework in Japan. The Financial Services Council have also indicated the need to simplify regulations, including their desire for a licensing mutual recognition arrangement. Action to address non-tariff barriers to trade between Japan and Australia was one of the key recommendations put forward by the JSCOT when they examined this treaty. The government needs to do as much as it can, even more than it is currently, to resolve the non-tariff barriers to trade between Australia and our trading partners, including Japan.

I have argued in this place previously that we need to evaluate trade agreements on balance and not on the basis of one very specific part of an agreement or another. In trade, as in business, as in all fields of life, not every deal is a perfect deal, which means that Labor is always committed to closely scrutinising the outcome of all of the Abbott government's trade negotiations. As policymakers and as parliamentarians we do have a responsibility to be hard headed and to seek an agreement which is, on balance, in the best interests of Australians, whether that be our businesses, our workers or both.

Despite our concerns about labour market testing and a less than ideal outcome in the agreement for parts of the agricultural sector, Labor will be supporting the Japan-Australia Economic Partnership Agreement. In doing so, we acknowledge that bilateral FTAs will never be the ideal way to go about trade liberalisation, for those of us who believe in trade globalisation, and I think that was a point made very well by colleagues on both sides of the House in that important JSCOT report. The best progress is multilateral and an approach that addresses both the tariff and non-tariff barriers to trade. But, in an environment where multilateral momentum has stalled, bilateral and regional FTAs do play an important role as 'stepping stones to multilateral agreements', as my colleague Senator Wong has described them.

The Japanese academic Takashi Terada has described this as the 'domino approach' to regional integration in a piece for East Asia Forum, which is a tremendous source of information and commentary on these matters. He and other trade academics are excited by the prospect that the trade deal signed between Japan and Australia will lead other countries to feel an incentive to strike deals and agreements with the two countries. So, really, the writing is on the wall for the US and others to obtain similar benefits as a result of negotiations for any proposed Trans-Pacific Partnership Agreement. This means that one of the most profound effects of the JAEPA could be, in an ideal world, the regional and multilateral progress we see as a result.

Labor is supporting the agreement and the bills before the House today. We have noted our concerns about labour market testing and the non-tariff barriers to trade. But, on balance, we will be supporting the deal for three key reasons. The first is that the agreement will likely create economic growth and jobs for Australians; the second is that it will give Australian exporters first-mover advantage over our competitors; and the third is that it will ideally lead the way for further regional and multilateral trade progress into the future.

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