Monday, 17 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
The Customs Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018 amends the Customs Act 1901 to implement Australia's obligations under TPP-11. These amendments are complementary to those contained in the Customs Tariff Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018. I'd like to take this opportunity to speak to the two bills in front of us here today, because they are very much related. I'm pleased to have this opportunity to conclude the debate on this important agreement. The TPP-11 is one of the most comprehensive trade deals ever concluded. It will eliminate more than 98 per cent of tariffs in a trade zone spanning the Americas and Asia with a combined GDP of some $13.8 trillion. Australian farmers, manufacturers and services exporters will benefit from new market access opportunities in economies with nearly 500 million consumers. It will provide better access for farm exporters, including beef and sheep meat producers, dairy producers, cane growers and sugar millers as well as cereal and grain exporters. There will be new opportunities for our rice growers, cotton and wool growers, horticultural producers and our wine exporters.
Recent modelling undertaken by economists from the Brandeis International Business School and Johns Hopkins University shows Australia is forecast to see some $15.6 billion in net annual benefit to national income by 2030. This follows earlier modelling by the respected Peterson Institute for International Economics, which found that the TPP-11 would boost Australia's national income by 0.5 per cent and boost exports by four per cent. This sort of boost to our nation's income would mean more jobs, higher wages and greater investment in further areas of business and jobs growth.
Let me provide one example of how TPP-11 will give our farm exporters an advantage over some of our toughest competitors. Within two years, Australian beef exporters will face tariffs 13 percentage points lower than their United States competitors in the multibillion dollar Japanese market. That tariff advantage will continue to widen over subsequent years. Our manufacturers will benefit from the elimination of tariffs on industrial goods. Our services exporters will have access to liberalised and improved regulatory regimes for investment, notably in mining and resources, telecommunications and financial services.
The TPP-11 is truly a next-generation trade agreement. For the first time in a trade agreement, TPP-11 countries will guarantee the free flow of data across borders for services, suppliers and investors as part of their business activity. This movement of information, or data flow, is relevant to all kinds of Australian businesses—from a hotel which relies on an international online reservation system to a telecommunications company providing data management services to businesses across a number of the TPP-11 markets. It's important to note that TPP-11 governments have retained the ability to maintain and amend regulations related to data flows but have undertaken to do so in a way that does not create barriers to trade. The TPP-11 also creates Australia's first free trade agreements with Canada and Mexico, giving Australian exporters preferential access to two of the world's top 20 economies for the first time. In 2016-17, nearly one-quarter of Australia's total exports, worth roughly $88 billion, went to TPP-11 countries.
The forthcoming entry into force of the TPP-11 is a significant moment for open markets, free trade and the rules based international system, but it is important to note that the achievement of a final TPP-11 deal was far from guaranteed. When the United States withdrew from the original TPP in early 2017, the prospects of a groundbreaking deal were far from certain. For Australia and the TPP partners, it was a test of resolve and judgement. There was no guarantee of success. One option was retreat. There would have been no new and historic access to the Canadian market for our grains, refined sugar and beef exporters and no new access to the Mexican market for our pork, wheat, sugar, barley and horticulture producers or education services providers. There would have been no improved access to the Japanese market for our beef, wheat, barley and dairy exporters and no improved access for our wine producers in the Vietnamese, Canadian, Mexican and Malaysian markets.
Thankfully, the governments of our trading partners, led by Japan, together with Australia and New Zealand, pressed ahead. As a consequence, our global trading system is stronger today because of the TPP-11. We have created a beacon for nations that want to work within a rules based framework that is complementary to the global architecture provided by the World Trade Organization. We want the TPP-11 to grow in membership. We don't want the TPP-11 to be an exclusive, inward-looking bloc. We welcome the interest in TPP-11 shown already by nations within and outside the Asia-Pacific, including the Philippines, Indonesia, Thailand and even the UK as well as Colombia.
Given the significant contribution the TPP-11 will make to our trading future, it is important Australia and its TPP partners reap the benefits of the deal as soon as possible. The TPP-11 will enter into force 60 days after the six TPP-11 member countries complete all necessary ratification procedures. To date, three countries—Mexico, Japan and Singapore—have ratified the agreement, and a number of other countries, including New Zealand, Peru and Canada, have indicated that they will ratify in the coming months. In other words, if Australia and five other countries can complete ratification before the end of October, the TPP-11 will enter into force before 31 December this year. That means there will be two opportunities for tariff reduction, the first on entry into force and the second on 1 January 2019.
On the other hand, if the TPP-11 were to enter into force this year without Australia, our exporters would be placed at a significant competitive disadvantage. For example, New Zealand and Canada would have superior access to the Japanese beef and dairy markets, better access to the Japanese cheese market and better access to wine markets in Mexico. That's the consequence if Australia is not among the first six. We will be in a significantly competitively disadvantaged position, vis-a-vis key competitors of ours, if we are not in the first six.
The deal signed on 8 March 2018 is one that fundamentally serves Australia's national interest. Its scope and level of ambition cannot be underestimated. It will create new opportunities and greater certainty for our businesses and encourage job-creating foreign investment. It will make Australian exports more competitive, so our farmers can sell more produce, our professionals can provide more services and our manufacturers can make and sell more goods.
Our involvement in the negotiation of this deal means Australia played a key role in setting 21st century rules for commerce across the world's fastest growing region. This will enable us to tackle new trade and investment barriers as they arise, helping our businesses weather the increasingly challenging global trading environment. These bills will see the elimination of 98 per cent of tariffs from TPP-11 countries in a regional free trade zone that already accounts for over one-fifth of Australia's two-way trade. The TPP-11 tariff cuts will have a cost-saving impact on imported goods for Australian households and businesses and will deliver material gains for our exports.
Here in Australia, this agreement has undergone a level of scrutiny perhaps unprecedented by any other free trade agreement. It has been subject to five parliamentary committee inquiries. After the TPP-11 was tabled in the House of Representatives on 26 March this year, it was examined by the Joint Standing Committee on Treaties. On 22 August, the committee recommended that Australia take binding treaty action in respect of the TPP-11.
I urge the parliament to support the swift passage of the TPP-11 implementing legislation, because I want Australia to remain a leader among trading nations, a country that is not afraid to show our trading partners, in concrete actions, that we are committed to a future of liberalised trade and investment. This is what these TPP-11 implementing bills represent. Our early ratification of the TPP-11 demonstrates Australia's leadership in pursuing liberalised trade globally and embodies the government's strong commitment to maximising trading opportunities for Australian businesses both large and small. The TPP-11 outcome is a feature of an ambitious and confident trade policy, one that didn't turn back at the first hurdle. It is an audacious but pragmatic approach that, in my view, has been the hallmark of this government's trade and investment policy.
I will also comment on some of the contributions that I have heard. I want to acknowledge at the outset the excellent working relationship I had with the shadow trade minister. He and I were able to speak regularly on the importance of the TPP. I recognise and respect that Labor has a different approach in a number of limited areas. I note in particular that Labor says that if they are elected to government—and certainly those on this side of the House hope that does not occur—or if they are subsequently elected, they would renegotiate the TPP-11 with respect to ISDS and with respect to the labour market tasting waiver.
I note that neither of the bills before the House today deals with those aspects of the agreement. I recognise and applaud Labor's vision about ensuring Australia continues to maintain its position globally as being the champion of liberalised and freer trade. Labor's support on this is, of course, critical. But I note some of the comments that have been made by, for example, the member for Bendigo. I heard, frankly, outrageous claims that are completely without foundation in fact whatsoever—for example, the litany of examples of workers being exploited or not paid in accordance with Australian standards, or concerns about foreign workers being paid less or not meeting Australian standards. I note that that activity is illegal. There is nothing in this agreement whatsoever that in any way, shape or form would give comfort to those businesses acting in an illegal way. So, when I heard claims by the member for Bendigo about exploitation of foreign workers, ostensibly, either directly or indirectly linking it back to the TPP—those claims are false. That activity is illegal and remains illegal.
I note that this nation's economic growth—the jobs that employ millions of people, the wealth and prosperity of regional Australia—is entirely dependent on our ability to trade. If we are truly going to be a nation that generates wealth in regional parts of Australia, if we're going to help the cane exporters, if we're going to help the beef exporters and the sheepmeat exporters, the best way we can help them is to ensure that they have access to global markets. I think back to my childhood growing up in a regional community in Far North Queensland. The best way we can help those exporters is to make sure that we give them a competitive advantage over competitor nations like the United States, and that is precisely what the TPP-11 will do. It gives our beef exporters a significant competitive advantage over direct exports that come from the United States and competitor countries like that. It ensures that our ability to tap into markets like Japan is more enhanced than it has ever been in our nation's history. That's what drives wealth and prosperity in regional Australia.
I note as well that Labor's made comments about ISDS. I respect that Labor has a different position, but Labor on every occasion talks about how ISDS is bad for Australia. And they say that multinational corporations can sue the Australian government. Well, they cannot. We can exercise public policy with the full suite of tools available to the Australian government without fear of being sued. I'll tell you what Labor always forget. They forget that ISDS is critical for Australian businesses abroad. That's when we need ISDS—not for foreign companies in Australia but for Australian businesses internationally.
So, I welcome Labor's continuation of long-held practice. We work constructively on matters of foreign policy and trade policy, and I have great pleasure in commending these bills to the House.