House debates

Thursday, 12 December 2013

Ministerial Statements

Australia-Korea Free Trade Agreement

11:41 am

Photo of Andrew RobbAndrew Robb (Goldstein, Liberal Party, Minister for Trade and Investment) Share this | | Hansard source

by leave—I am pleased to report to the House that the recent successful conclusion of the free trade agreement between Australia and the Republic of Korea will both restore our country's competitive position and open a raft of new growth opportunities for our country. Korea represents both our third largest goods export market and our fourth largest trading partner. I had the privilege of substantially concluding negotiations last week with my Korean counterpart, trade minister Yun, on the sidelines of the successful World Trade Organisation ministerial conference in Bali.

Negotiations on the agreement commenced back in 2009, and as a government we were fully aware of the imperative of finalising them as soon as possible. Every day of delay was another day Australia was at a competitive disadvantage against the likes of the United States, the European Union and ASEAN countries. These major competitors are all enjoying preferential market access on account of the free trade agreements they already have secured with Korea. The playing field will be levelled through the finalisation of this free trade agreement.

I can assure the House that this is a world-class agreement: it is both comprehensive and of a very high quality. It will result in the elimination of over 99 per cent of the tariffs that our exporters currently face across key areas, including agriculture, resources, energy and manufactured goods. We have also negotiated significant new market openings in services and investment in areas such as financial, accounting and legal services as well as telecommunications, education, audiovisual production, engineering, health, aged care and environmental services.

This is a very strong and liberating agreement for agriculture. For instance: tariffs of 304 per cent will be eliminated on chipping potatoes; the 40 per cent tariff on beef will be eliminated over 15 years, not 18 years, because we pushed for the same deal as the United States enjoy; the 22½ per cent tariff on lamb and sheep meat will go; the tariff on dairy products ranging from 36 per cent to 176 per cent will be eliminated; the three per cent tariff on sugar, in a market currently worth nearly $500 million to Australia, will be eliminated as soon as the FTA comes into effect; tariffs on wheat, seafood items, wine, chocolate, beer, a range of horticulture, pharmaceuticals, canned fruit—and the list goes on—will all go; and tariffs of up to eight per cent on a range of resources products—including crude petroleum, natural gas and coal—will also be eliminated over time.

This is a very good agreement also for our manufacturers. While acknowledging the challenges faced by our car manufacturers, the FTA will result in the elimination of Korea's eight per cent tariff on our automotive parts and accessories.

Korea is Australia's third largest market for automotive components exports. It is our largest export market for gearboxes ($122 million last year) and second largest for car engines ($50 million, again, last year).

Independent modelling shows both the opportunities for our country of finalising this free trade agreement and also the costs associated if we had not. It shows that agricultural exports to Korea will be 73 per cent higher after 15 years and manufacturing by 53 per cent as a result of this free trade agreement; and overall exports will be 25 per cent higher. It will provide an annual boost to our economy in the order of $650 million. Without this agreement, agricultural exports alone to Korea would have declined by 29 per cent by 2030 and overall exports would be five per cent lower.

The conclusion of negotiations has been warmly welcomed by a broad cross section of Australian industry. Some examples include:

The National Farmers Federation, Queensland Cattle Producers, the Business Council of Australia, the Cattle Council of Australia, Grain Growers, CPA Australia, ACCI, AiG, the Australian Food and Grocery Council, the Winemakers Federation of Australia, Queensland Sugar, Canegrowers, AusVeg, the Minerals Council of Australia, Australian Services Roundtable and the Law Council of Australia. This list goes on.

This agreement will include an investor-state dispute settlement provision. ISDS provisions are certainly nothing new. In fact, they are already contained in four free trade agreements that we currently have with other countries and 21 other investment agreements that Australia is a party to. The previous government, for instance, included such provisions in two free trade agreements that it signed. They are designed to create confidence for investors, both Australian and Korean. Importantly, the provisions also provide key safeguards which preserve Australia's ability to govern in the public interest in areas such as public health and the environment.

I acknowledge the constructive work of my predecessor Craig Emerson. Unfortunately for Australia, this ISDS became a major stumbling block with Korea under the previous government on account of pressure exerted by elements of the union movement, which is ideologically opposed to free trade. This government has placed strong priority on backing our nation's strengths, the things we do as well as any and better than most.

Pursuing an ambitious free trade and investment agenda gives these strengths—agriculture, mining and resources, education, health, tourism and events management and the services that have developed around them, including high-level manufacturing—the best possible chance to thrive and grow. It is also an emphatic signal to the world that Australia is indeed open for business.

I present the following document: Australia-Korea Free Trade Agreement—Ministerial Statement, 12 December 2013, and seek leave to move a motion to allow the Deputy Leader of the Opposition to speak for a period not exceeding seven minutes.

Leave granted.

I move:

That so much of the standing and sessional orders be suspended as would prevent the Deputy Leader of the Opposition speaking in reply to the ministerial statement for a period not exceeding seven minutes.

Question agreed to.

11:48 am

Photo of Tanya PlibersekTanya Plibersek (Sydney, Australian Labor Party, Deputy Leader of the Opposition) Share this | | Hansard source

I thank the Minister for Trade for his statement and welcome progress in negotiations for a free trade agreement with the Republic of Korea as outlined by the minister. Labor has long recognised that reducing barriers to trade can boost economic growth, create more competitive industries and give consumers access to a wider range of goods and services at a lower price.

As noted by the minister, negotiations on a bilateral agreement with the Republic of Korea were initiated by the former Labor government in 2009. I thank him for his acknowledgement of the work of the former trade minister, Craig Emerson. Labor in government identified the opportunities and challenges of the Asian century, and the initiation of negotiations with Korea was a manifestation of our outward-looking policy framework.

The Republic of Korea is a great friend of Australia. I was very happy to meet with the ambassador this morning. Korea is Australia's third largest export market, and a free trade agreement presents significant opportunities for Australian exporters and for Australian workers. We unambiguously welcome the opportunities this agreement delivers for our exporters in both goods and services, including key agricultural sectors. We also note the challenges it presents for a number of our industry sectors, including textiles, clothing and footwear, steel, and the automotive sector. In light of the decision by Holden to cease its manufacturing operations in Australia by 2017, the impact of tariff reductions on our automotive sector will need to be carefully assessed.

The minister noted the government's decision to include an investor-state dispute settlement mechanism in the agreement. Labor has grave reservations about this decision. It is disappointing the minister did not outline the so-called safeguards in the proposed ISDS provisions of the Korean FTA. Instead of attacking the opposition and the union movement, the minister should recognise the genuine concern in this parliament and in the broader community about the impact of investor-state dispute settlement mechanisms. He should also acknowledge that debate on the desirability of investor-state dispute settlement provisions in bilateral trade agreements is also a feature of debate in Korea about the provisions in the free trade agreement. It is a feature of debate in Korean domestic politics, too.

If the minister genuinely believes that it is in the national interest to give foreign companies standing to take action against the Australian government, standing that is not available to Australian companies, he needs to explain why. If he genuinely believes it is in the national interest to constrain the ability of future governments to make laws for the benefit of Australians, he needs to explain why. Also, if he genuinely believes that it is beyond the wit of a government to negotiate bilateral trade agreements without an investor-state dispute settlement, he needs to explain why the Howard government managed such a negotiation with the United States and why the Labor government managed such a negotiation with Malaysia.

Notwithstanding the potential benefits of trade liberalisation, the outcome of any individual negotiation should be assessed against the national interest and our interests should never be traded away. For that reason, Labor urges the minister to release the full text of the negotiated agreement, including the investor-state dispute settlement mechanism, so that the parliament and the Australian community can assess its potential benefits and, if applicable, its detriments.

Labor responded to last week's announcement of the proposed free trade agreement with Korea by urging the government to release the full text of the agreement. The government, unfortunately, has rejected that request. Indeed, while the trade minister was away I also asked the foreign minister if she would release the full text of the agreement. She also refused. This week Labor successfully moved in the Senate a motion to order the release of the full free trade agreement before signing. The government has sought to resist this order. I urge the minister to reconsider his decision to deny Australians the opportunity to read the agreement for themselves.

Debate on trade should not be allowed to descend into the political tubthumping that we saw inside the government over the proposed foreign acquisition of GrainCorp. A mature debate can only occur if the minister is prepared to treat the parliament and the community with respect. Last Thursday the Prime Minister told the House that the minister had—and I quote:

… successfully concluded negotiations for a free trade agreement between Australia and the Republic of Korea.

Today the minister said that he had 'substantially' concluded negotiations. It is important the government explain what, if any, stumbling blocks remain, including whether they relate to negotiations over the form of the investor-state dispute settlement he has agreed to include in the agreement.

It is disappointing that the minister has outlined only in the broadest terms key facts about this free trade agreement, drawn from a fact sheet that had already been released by the department last week. I believe we deserve more than that on something as important as this to our future—a key trading agreement with a key trading partner. Labor recognises the importance of our trading relationships with the world. They underpin our economy and they underpin our current and future prosperity. Labor looks forward to examining the full terms of the proposed agreement and will assess it carefully to ensure it is genuinely in the national interest.