House debates

Wednesday, 19 September 2018

Bills

Customs Amendment (Peru-Australia Free Trade Agreement Implementation) Bill 2018; Second Reading

9:45 am

Photo of Steven CioboSteven Ciobo (Moncrieff, Liberal Party, Minister for Defence Industry) Share this | Hansard source

I move:

That this bill be now read a second time.

The Customs Amendment (Peru-Australia Free Trade Agreement Implementation) Bill 2018 amends the Customs Act 1901 to implement Australia's obligations under chapter 3 of the free trade agreement between Australia and the Republic of Peru, known as PAFTA. Chapter 3 sets out the rules of origin criteria and other related documentation requirements for determining if goods exported from Peru are eligible for preferential tariff treatment in Australia under PAFTA.

Peru has been one of South America's fastest growing economies since 2000, with average annual GDP growth of over five per cent. It has a gross domestic product comparable to that of Vietnam, and a population in excess of 31 million people, providing a similar consumer base to that of Malaysia. Yet Australia's trade relationship with Peru is comparably far less than what it could be. Peru has high barriers to trade in goods and services, which, without an FTA, would continue to limit Australia's ability to export to its growing market.

Opening new markets for Australian producers and exporters is a core part of the coalition government's ambitious trade and economic agenda. Tapping into the fast-growing markets of Latin America will ensure our businesses have greater options to grow and diversify.

I launched PAFTA negotiations on 24 May 2017 and the then Prime Minister announced its conclusion on 10 November 2017. I had the honour of signing PAFTA with my Peruvian colleague, the Peruvian Minister for Foreign Trade and Tourism, Mr Eduardo Ferreyros, on 12 February 2018 in Canberra.

This is the third FTA that the coalition government has recently concluded and is in the process of implementing—as the members of this chamber would be aware, legislation to implement PACER Plus, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or TPP-11, is currently before parliament.

These deals demonstrate our commitment to open markets and strong economic reforms to promote jobs and growth in Australia. These deals respond to calls from our industries to break down tariffs and other barriers overseas. This government knows the benefits that open trade brings and knows the costs of sitting idle or walking down the protectionist path.

Australia and Peru are both signatories to TPP-11. PAFTA complements TPP-11 as it builds on and improves the significant gains provided under the TPP-11 with improved market access, accelerated reduction of customs duties and new tariff quota access for key agricultural exports. Exporters can choose which agreement best suits their needs.

Under PAFTA, Australia achieved unprecedented access to the Peruvian market, with new quotas for Australian sugar, dairy, rice and sorghum free from tariffs and from Peru's price band. This level of market access was not possible in a regional agreement, such as the TPP-11, given Peru's sensitivities with other parties.

The Peruvian market is not a level playing field for Australian exporters, especially as key competitors like the United States, Canada, and the European Union have already forged trade deals with Peru. Bringing PAFTA into force will level the playing field and provide an edge over other competitors.

Peru will also eliminate its relatively high tariffs, up to 29 per cent in some cases, on our key exports like dairy, beef, grain, sheepmeat, sugar, wine, pharmaceuticals, manufactured goods, medical devices, paper products, iron and steel.

This bill, along with the companion Customs Tariff Amendment (Peru-Australia Free Trade Agreement Implementation) Bill 2018, will see the elimination of nearly all customs duties on Peruvian-originating goods, the majority at the commencement of the agreement and the rest over the proceeding four years. These tariff cuts represent a real cost saving on imported goods for Australian households and businesses.

PAFTA isn't just about goods—it also opens up an array of new opportunities for Australian service providers, provides recognition of Australian degrees and creates opportunities for Australian education providers to establish campuses in Peru.

Mining equipment, technology and services, and oilfield service providers will benefit from improved temporary entry commitments. Guaranteed access will be afforded to a wide range of Australian services including lawyers, engineers, architects, accountants, urban planners, business people, telecommunication service providers, health service providers and hospitality and tourism service providers. Australian businesses will also be guaranteed the right to bid for a range of Peruvian government procurement contracts.

PAFTA provides improved investment opportunities for Australian businesses through the liberalisation of investment regimes in key Peruvian sectors such as mining and resources, telecommunications and financial services. The agreement will also promote foreign investment in Australia by liberalising the screening threshold at which private foreign investments in non-sensitive sectors are considered by the Foreign Investment Review Board.

Once it enters into force, and my intention is that this be before the end of the year, it will provide tangible benefits to Australian businesses and households through improved access to Peruvian markets, cheaper Peruvian imports, expanded opportunities for Australian service providers and improved investment opportunities for both Australian and Peruvian businesses.

This agreement reinforces the coalition government's commitment to growing Australia's strong economy through free and open trade, and providing new opportunities for businesses of all sizes.

I also thank the excellent work of the officials from the Department of Foreign Affairs and Trade, in particular Andrew, who was the chief negotiator on this deal. I thank my team, who worked very closely together with those officials, for the very timely way in which the Department of Foreign Affairs and Trade, as well as my office, were able to conclude this deal in a matter of only months. It does represent terrific opportunity and a new headland, for lack of a better term, into the Latin American market, and I'm confident that in time we will see that this is a deal that has helped to expand and broaden the trade and investment ties between Australia and Peru.

I commend the bill to the House.

Debate adjourned.

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