Thursday, 13 September 2018
Customs Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018, Customs Tariff Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018; Second Reading
I too rise to speak on the Customs Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018 and the Customs Tariff Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018. These bills before the House are important steps in the implementation of Australia's obligations under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, commonly known as the TPP-11. This agreement between Australia and 10 of our most important trading partners in the Asia-Pacific region is one of the most comprehensive trade agreements ever negotiated. This agreement continues the Morrison government's successful economic agenda, which has delivered economic growth and prosperity, created new jobs and increased international trade and investment opportunities for our companies, large and small.
The coalition government's single-minded commitment to this economic agenda has already delivered real outcomes for Australian exporters in the form of the free trade agreements we have concluded with China, Japan and Korea. This commitment reflects the clear priority this government will continue to give to maintaining and strengthening an open, transparent and efficient international trade environment.
The TPP-11 makes our network of existing free trade agreements in the Asia-Pacific region even stronger, providing even greater access for our exporters to key markets such as Japan, Korea, ASEAN, New Zealand, Chile and Peru. It updates provisions to reflect the latest best practices in FTAs, and, probably more importantly, it brings the additional major markets of Canada and Mexico into our FTA network. Both of these countries are in the world's top 20 economies, and both have been impacted by changes in the attitude of the US in that North American area.
The countries covered by the TPP-11 have a combined GDP of $13.8 trillion and a population of close to 500 million consumers. These markets already take nearly one-quarter of all Australian exports. By eliminating more than 98 per cent of tariffs on our exports to this massive regional economy, the TPP-11 will open significant new opportunities for Australian businesses. This is why this agreement is incredibly important for rural and regional Australia, including the electorate of Parkes, which I represent. Agreements such as the TPP-11 are critical to communities throughout regional and rural Australia that are dependent on exports for their economic prosperity.
Some specific examples of the significant benefits for our agricultural exporters, including for farmers in my electorate of Parkes, are as follows. Australian beef exports in 2017 were $7.5 billion, with around one-third going to TPP-11 countries. TPP-11 outcomes include accelerated tariff reductions in our beef exports to Japan, Mexico and Canada. Elimination of Canadian tariffs on our beef, currently at 26.5 per cent, will be within five years. Elimination of Mexican tariffs on our beef, currently up to 25 per cent, will be within 10 years. This is an important step for our exports into that part of the world.
For lamb exporters—this is particularly important for the electorate I represent—there was $425 million in exports of lamb and mutton to the TPP-11 markets in 2017, which is 16 per cent of total sheep and meat exports. There will be the elimination of tariffs on sheepmeat exports to Mexico within eight years and immediate elimination of sheepmeat tariffs to all other TPP countries on entry into force.
For our wool producers there is the immediate elimination of all remaining tariffs on raw wool on entry into force, and rules of origin will drive greater demand within TPP-11 markets for high-quality yarns made from Australian wool.
For cereals and grains, already $1.6 billion goes to TPP markets. The TPP-11 outcomes will provide significant improvements in market access for our exports of cereals and grains to Japan, including new quotas for wheat, barley and malt; elimination of Mexican tariffs on wheat—currently at 67 per cent—within 10 years and on barley—currently at 115 per cent—within five years; and immediate elimination of all Canadian tariffs on cereals and grains. This is incredibly important as those two countries are now looking elsewhere to strengthen trading ties across the Pacific, and Australia is in a prime position to take advantage of this.
For our pork producers, who are doing it very tough at the moment—71 per cent of their exports already go to TPP-11 markets and were worth $88 million in 2017—there will be significant reductions in pork tariffs to Japan, elimination of all Malaysian pork tariffs within 15 years and immediate elimination of Mexico's pork tariffs.
For dairy there will be the elimination of Japanese tariffs on some cheese products and expanded quotas on all remaining cheeses; new Japanese quotas for butter and skim milk and new quotas on tariff reductions for ice cream, yoghurt, whole milk powder, condensed milk and infant formula; preferential access to the highly protected Canadian market; and new Mexican quotas for butter, cheese and milk and tariff elimination on yoghurt.
For sugar growers, there are opportunities for this sector, which is in a tough spot at the moment: immediate elimination of Japan's tariff on sugar; elimination of Canada's tariffs on refined sugar within five years; a guaranteed share of Mexico's quota for raw sugar; and immediate elimination of Vietnam's in-quota tariffs on sugar.
For cotton—another industry that's very important to the constituents whom I represent—there will be the elimination of all tariffs on Australian cotton exports, with most reductions occurring immediately. Our exporters will also benefit from new regional supply chains into the Japanese markets. For example, clothing produced in Vietnam from Australian cotton will benefit from preferential tariffs under the TPP-11, increasing demand for our raw cotton.
For rice growers, there will be new quota access for Australian rice and rice flour to Japan, with a new 6,000-tonne quota growing to 8,400 tonnes after 12 years, and, for wine, immediate elimination of Canada's wine tariffs and elimination of Malaysian, Vietnamese and Mexican wine tariffs over a period of some three to 15 years. And it goes on. For horticultural exporters there will be an extended out-of-season tariff on our orange exports to Japan, elimination of all Japanese tariffs on orange exports over seven years and elimination of Japan's tariffs on fruit juices over 10 years. I could go on to seafood and other issues.
I was recently in Thailand, Vietnam and Singapore for the RCEP negotiations and chatted with our neighbours in ASEAN. I've got to say that there is great excitement about the TPP-11. This will be the new gold standard of trade in the Pacific region, and other countries are very keen to take part and join the 11 countries that are already signatories to this. Indeed, in Bangkok about six years ago, I discussed this with my counterparts in the Thai government. They are looking to Australia to assist them through the process of being one of the first countries to be added to the TPP-11. Japan is also playing a major role in helping Thailand as well.
It's not just agricultural products; it provides opportunities across a broad range of manufactured goods, including iron, steel, aluminium, automotive parts, leather goods and paper products. For our service exporters, it delivers significant gains for exporters of education services. Incidentally, education services are now No. 3 in value of our exports for Australia.
From my discussions with our ASEAN neighbours, I think that they are really keen to tap into our education system as they are upskilling their own workforces and own populations to step up to that next level of production and to increase their own economies. They're looking to Australia's wonderful education system to help their economies out. There will be significant gains for our exporters of education services, including our universities, vocational education institutions, school sectors and private training providers.
There will be new opportunities for exports of Australian financial services, including banking, insurance and financial management. There will be improved access for professional services from firms across accounting, engineering, architecture, legal services and consulting, providing greater transparency and predictability for this important sector.
Incidentally, I met a representative of the music testers—I'm not sure what their title is in Melbourne—a couple of weeks ago. They are the people who provide testing for music students. They are looking at taking advantage of access to these other countries through the TPP-11. A lot of service industries that you might not think about are lining up. They are part of the small and medium exporters and they are the first who will take advantage of this. SMEs are critical to Australia's economic growth and prosperity, generating over $1.8 trillion in sales and employing over 7.4 million Australians.
The TPP-11 will make it easier for SMEs to establish new export markets and grow their businesses through tariff reductions; through improved access to regional value chains; and through common, transparent trade investment rules across the region, which reduce the time, cost and complexity of doing business in international markets.
There is a need for Australia to move quickly. Already three countries—Mexico, Japan and Singapore—have signed up. Within 60 days of six countries signing up, this trade deal comes into effect. It's very, very important for our exporters that Australia is one of those first six countries. It's very important that we are there on the ground floor when this starts. It's very important for our exporters to be right at the starting line.
I have noticed there are some concerns from the opposition around labour market testing. I believe that their concerns are unjustified. Where we have previously made such commitments in FTAs, there has not been an influx in workers from those countries. For example, we have not seen an influx of workers into Australia following the entry into force of Australia's FTAs with North Asian economies, such as Japan, Korea and China. It's also important to remember that we made temporary entry commitments in order to get better access for our service suppliers in return. This was an interest for Australia, so it's a two-way thing. It was part of a deal which will result in $15.6 billion in additional annual income by 2030, as per a report released by the Minerals Council of Australia last week.
With skills testing, the TPP-11 does not change the skill and experience requirements that need to be met by electricians and other foreign workers applying to work in Australia. It is important that this doesn't overrule the regulations in this country. Our regulations still have primary force. This means that workers from TPP-11 signatory countries, including electrical workers, remain subject to and must satisfy any skills assessment required by the visa process, which, for electricians and other trades, is administered by Trades Recognition Australia.
Workers from TPP-11 signatory countries also remain subject to and must satisfy licensing and registration processes required by state and territory governments. The Department of Foreign Affairs and Trade has confirmed the TPP-11 does not oblige Australia to recognise the education, experience obtained, requirements met or licences of certifications granted in the territory of another TPP-11 party or nonparty. The level of skills that is acceptable in Australia does remain. This does not weaken that.
The assessment of skills, qualifications and employment backgrounds for electricians applying under temporary work visas either under the FTA or otherwise is part of the visa assessment process undertaken by the Department of Home Affairs. The Department of Home Affairs has also confirmed that the present process for assessment of skills, qualifications and employment backgrounds for any foreign workers, including the specific occupations listed in your letter, will not change as a consequence of the TPP-11.
The ISDS mechanisms will provide valuable protections to Australian investments overseas and still safeguard the government's ability to regulate the public interest and pursue legitimate public welfare objectives. The TPP-11 contains explicit recognition of this right in addition to other safeguards. The TPP-11 also represents an opportunity for Australia to update a number of its investment arrangements with TPP-11 signatories through side letters with Peru, Mexico and Vietnam. Australia agreed to terminate decades-old bilateral investment agreements and replace them with modern standards by the TPP.
Finally, there is some concern about the US system of interested stakeholders. The US system of cleared advisers is longstanding and reflects the particular circumstances in the US. This process provides some stakeholders a greater level of access than others. Australia's practice has been to maintain an open, inclusive and flexible approach to consultation, ensuring all stakeholders, not just those with a vested interest, who want to continue can continue to do so.