Monday, 3 June 2013
Foreign Affairs, Defence and Trade Joint Committee; Report
On behalf of the Joint Standing Committee on Foreign Affairs, Defence and Trade I present the trade subcommittee's report, entitled Australia's trade and investment relationship with Japan and the Republic of Korea. The committee welcomed the opportunity to examine Australia's relationship with two of our most important trading partners. I will first turn to Japan.
The importance of the Australia-Japan relationship should not be obscured by the rise of other countries. Japan was Australia's number one trading partner for over 40 years, and today remains second only to China. In that time Japan has made a significant contribution to Australia's prosperity, originating with its investment in the resources and energy sector in the 1960s.
Today Japan is Australia's third-largest source of foreign investment, totalling $123.4 billion in 2011. It is also Australia's second-largest market for food and agricultural products, with safe, high-quality food and reliable supply from Australia making a significant contribution to Japan's food security. On the other side of the ledger Japan is Australia's third-largest source of imports, with products such as cars and manufactured goods in high demand by Australian consumers.
Today Japan is moving toward trade liberalisation and agricultural reform, including negotiating a free-trade agreement with Australia. This agreement is a significant milestone: Japan's first with one of its top six trading partners, and first with a major developed economy.
The committee strongly supports the FTA, or free-trade agreement, negotiations. The services sector is one area expected to benefit from the FTA. Education and tourism are two of Australia's most important services exports. The committee supports efforts to attract more visitors and international students to Australia. The committee heard that Australia's particular expertise in financial services is being increasingly recognised in Japan, a country with the world's second-largest pool of investable wealth. Both countries' expertise is also being capitalised upon in investment projects, and in particular through joint ventures in third countries.
The committee has recommended that the government showcase the marketing of Meat and Livestock Australia in its export facilitation activities. In the committee's view, approaches like that of MLA's 'Aussie Beef' promotion can reduce competition between individual Australian brands, improve customer awareness and tap into Japanese perceptions of Australian food as safe, high-quality products.
I turn now to the Republic of Korea. Korea is Australia's fourth-largest trading partner, and a country with which Australia shares a longstanding and complementary relationship. After the Korean War, Australian exports of raw materials supported Korea's industrial development from the 1960s onwards. Indeed, energy, minerals and metals exports continue to be the bedrock of the ongoing relationship.
The committee heard about significant growth in Korean investment to secure Korea's ongoing energy needs. Korean companies are taking increasingly large stakes in a number of Australian resources projects. With 70 per cent of its food needs met from imports, Australia also has an important role to play in Korea's food security—providing safe, high-quality food to our fifth-largest agricultural export market. In turn, Australia continues to demand Korea's consumer products, including cars, electronics and refined fuels.
Korea's active free-trade agreement schedule, including negotiations with Australia, occupied a central role in our inquiry. With Korea's FTAs in force with the United States and European Union, the committee was concerned about the implications of ongoing delays in concluding our own agreement. Considerable attention has been given to the implications for Australia's beef exports to Korea, our third-largest beef export market, as well as other outstanding issues, such as investor-state dispute settlement. I thank the trade subcommittee, and particularly my deputy chair, the honourable member for Maranoa—can I get an extension, Speaker?
I want to give her an extension of time; she is saying something nice about me.
In accordance with standing order 39(f) the report was made a parliamentary paper.
I rise with pleasure to support the tabling of our report from the Joint Standing Committee on Foreign Affairs, Defence and Trade on the trade and investment relationship with Japan and Korea. I say to the chair, the member for Page, that I think one of the great things we had on the committee was that we all looked in all our hearings to get the right outcome without looking at politics. It was about what is the right thing for Australia. There was wonderful camaraderie throughout what had been a very long process. It underpins the importance that the committee places on our trade relationship with two very important trading partners, Japan and Korea.
Japan has been our No. 1 export destination for almost 40 years and it will remain a very important country to Australia. Whilst we do not have a free trade agreement with it yet, I am hopeful that negotiations continue, even in the lead-up to this federal election. It must continue because it is important to both countries. I am concerned that perhaps it may get lost in the Trans-Pacific Partnership negotiations that are occurring between other countries in that partnership, but I want to put Australia's interests and Japan's interests ahead of those others. From Australia's point of view, Japan is a very significant investor in Australia—I think our third largest investor. That remains important to us and also to Japan. In relation to the beef industry, it has long been our No. 1 or No. 2 destination for Australian beef. Coming from the electorate that I do and coming from Queensland, whose second largest export commodity is beef, I say that we must continue to make sure that we do all we can to negotiate an agreement that is complementary to our beef industry. One of the things I found and I am sure the committee found while we were in Japan was the importance they place on our food, be it beef or other products, and our clean, green image. That is a trading asset that we have and that we must always protect.
I also thank the embassy staff in Japan and the consuls-general that we met as we took evidence across Japan. I want to thank those companies and their very senior people who attended those hearings for the very comprehensive evidence they gave us. I want to touch on a program called the JET program, those students from Australia who go to Japan and live in a community. They are an inspiration to me and I thought: what a wonderful way to continue to build that relationship that goes beyond the high levels that we were exposed to. Those students were an inspiration to us and also great ambassadors in a wonderful program taking Australian students into Japanese communities with their language skills to broaden the Japanese speaking skills for those Australians who also to take English language skills into Japan.
On Korea, I have been very impressed by Korea's growth. As a former veterans' affairs minister I have observed Korea's growth over a long time since the Korean War. After the Korean War it was MacArthur who said that Korea will always need foreign aid. In 60 years they have transformed that economy from an economy that was an aid recipient to an aid donor, which underpins how that country has grown and become such an important part of the trading scene globally.
I want to touch very quickly in the limited time that I have—because I know I will not be given additional time—on the chair talking about the investor-state dispute in relation to the Korean free-trade negotiations. It is, I think, one of those elements holding up the finalisation of that agreement. I note the government's position, which is stated in the report, and I just want to say for the benefit of the Hansard that the committee also notes some important words from the Deputy Leader of the Opposition, the shadow minister for trade, the Hon. Julie Bishop. These are the important words that I want to reflect on in these few moments left: 'The coalition would, as a matter of course, put ISDS clauses on the negotiating table and then negotiate the …'— (Time expired)