Monday, 15 June 2015
Private Members' Business
That this House:
(b) Australia's three most recent FTAs negotiated and signed in 2014 with Japan, South Korea and China and the positive security, stability and economic prosperity which will result from each of these mutually constructive agreements;
(c) the Government's intention to continue to enhance current and future trade and investment opportunities for the long term advantage of all Australian citizens; and
(d) the significant personal contribution made by the Minister for Trade and Investment in securing FTAs with Japan, South Korea and China in 2014;
(2) acknowledges the following advantages of FTAs to Australia as being:
(a) removing potentially billions of dollars of tariff imposts for foreign produced consumer goods (including, clothes, shoes, car components, cars and electronics);
(b) enhancing capital flows into Australian agriculture, finance, tourism, infrastructure and mining as a result of streamlined approval procedures for foreign state owned investors;
(c) improving primary agriculture, particularly dairy, beef, lamb, wine and horticulture as a result of overseas tariffs being phased out over time;
(d) streamlining licensing and reducing restrictions on Australian services firms, including banks, insurance companies, financial fund managers, as well as law, architecture and engineering firms; and
(e) providing cheaper and more streamlined visa approval procedures, making it easier to undertake reciprocal travel, work and study in Australia and relevant trade partner nations; and
(3) notes the continuing importance of trade between nations and of Australian formal FTAs in supporting both global and regional stability, as well as Australian long term economic prosperity, all of which are emphasised by Australia's unique geopolitics.
I welcome this opportunity to highlight the trifecta of mutually beneficial free trade agreements concluded by the Abbott government. I also acknowledge the extraordinary effort, persistence, diplomacy and sheer hard work of our trade minister, Andrew Robb, who delivered what many said was not possible—three free trade deals with Japan, South Korea and China in the last year. Minister Robb deserves our thanks and the thanks of our country for so quickly enhancing our trade opportunities, which will underpin our future prosperity for decades.
These free trade deals mean new markets, new investments and more jobs across the entire economy. Opportunity is on our doorstep to grasp. As the world's attention and investment dollars increasingly focus on Asia as the key driver of global prosperity, Australia is perfectly positioned. When you consider that the middle class from India to Asia, which is currently around 500 million people, is projected to grow to 1.7 billion people in the next 15 years you get some sense of how the demand for clean, green, quality fresh products will grow exponentially over time. And we are well placed to benefit. We are sitting astride the Indian and Pacific oceans adjacent to that unfolding economic miracle—that tripling of people rising out of poverty and into the middle classes—and we are benefiting from the trade diversification across three continents because our free trade deals encompass agreements across North America, South America and Asia.
The free trade deals already concluded and those yet to come will certainly enhance our economic security. The advantages are both tactical and strategic. I have heard many of my colleagues discuss examples where the removal of tariffs has meant more exports and substantial increases in prices. In my own electorate of Bass the Treasurer visited just a few weeks ago and met a commercial fisherman called Karl Krause. Karl was able to tell the Treasurer that 18 months ago he was getting about $60 a kilo for his premium crayfish; now, after these three free trade deals, he gets around $100 a kilo—a substantial increase in price. And Karl told the Treasurer he was investing more in his business because higher demand and better returns incentivise that investment.
Last Thursday in Launceston I welcomed a Chinese delegation led by Chairman Wang Xing De. They were visiting Bellamy's Organic, which has made enormous inroads into the Chinese market with its premium infant formula and toddlers milk. It is fair to say that the Chinese delegation was enormously impressed by the opportunities for value-added food products that Tasmania offers, and many new ideas were sparked about other trade opportunities. Exports of cherries to China have lifted 114 per cent since these three free trade deals came into being, with Tasmania's Reid Fruits exports of cherries going from five tonnes to almost 200 tonnes under the new free trade deals.
Greater trade means enhanced capital flows into Australian agriculture, finance, tourism, infrastructure and mining. The government is also working to ensure that we streamline approval processes for that investment. A good example is our establishment of the Major Projects Approval Agency in Launceston in July last year. The Hodgman government on coming to power has co-located its coordinator-general in the same office. So what you get is working across both state and federal jurisdictions to make sure that we remove as much as possible any obstacles to investment.
In Tasmania we have also backed worthy projects that will help us produce more for growing regional markets. That includes investment in the second tranche of irrigation schemes in Tasmania—$60 million worth of new federal investment, $30 million worth of Tasmanian government investment and $30 million from private investment. That will deliver approximately 40,000 additional megalitres of water at 95 per cent reliability in the locations of those projects. The scheme will support viticulture, grazing, irrigated cropping and walnut enterprises, to name just a few. This investment will allow us to tap into improved export conditions for primary agricultural goods, including dairy, beef, lamb, wine and horticulture, as a result of overseas tariffs being phased out over time.
In conclusion I reiterate the continuing importance of trade between nations in general and under Australia's free trade agreements in particular. This important economic interaction underpins our security on so many levels and supports Australia's long-term economic prosperity.
It is clear that Labor has a very proud track record in reducing the barriers to trade. Indeed it was the Whitlam and then the Hawke-Keating governments that transformed the Australian economy and removed much of the barrier to trade. We are proudly a trading nation. Exports and imports account for around 40 per cent of Australia's GDP. That means that trade is inextricably tied up with Australian jobs. Western Australians understand this even more, because our exports and imports account for around 60 per cent of the gross state product in Western Australia. So we know that trade benefits working people. It contributes to economic growth and it provides benefits by improving productivity. It opens our community up for better paid and more rewarding and secure jobs, and it benefits working people by delivering lower prices and greater choice for the community. It also improves interdependency in the world, which of course increases security for all.
But being pro-trade does not mean that we cannot have a sophisticated conversation about what we can afford to trade away. In the three free trade agreements that have been approved to date there are areas that do cause us concern. The approval of the investor-state dispute resolution provisions are of grave concern to us. We recognise that we are giving investors in other countries greater rights than companies in Australia have to sue government for changes in policy. We are particularly concerned about the asymmetrical labour market provisions that we find in agreements, particularly in the Korean and the Japanese free trade agreements, where there is absolutely no labour market testing for companies wanting to bring people into Australia but the reverse is not the case. Both Japan and Korea retain the right to control the introduction of Australian workers through restrictions on labour market testing.
Also, while the term 'contractual service provider' is used in both the Korean and the Japanese agreements, its definition varies significantly depending on the country where the workers are from. Generally speaking when we go through that agreement we see very different sets of rights applying. We are very concerned about the impact the ISDS—the investor-state dispute resolution provisions—will have on the prices of medicines. Indeed the leaks coming out in relation to the TPP recently show that there will be a number of ways in which the TPP can threaten affordable prices of medicines in Australia and will limit our capacity to continue to deliver those benefits for our community. Food labelling is also clearly shown to be a problem in some of these provisions. It is quite possible that Australia could be sued if it introduced labelling of food for source and place of manufacture if a foreign company sees that its sales drop after that labelling is introduced.
Very interestingly, over the weekend the Republican-dominated US congress refused to fast-track the Trans-Pacific Partnership Agreement. They recognise that there are real challenges in these agreements that we must be very careful about. I am concerned that in this parliament we are seeing a dumbing-down of the debate. If we raise concerns about the detail, about the investor-state dispute provisions or about the free movement of people, we are deemed to be anti-trade. This is not how we need to run our country in the 21st century. We need to be capable of having a sophisticated and detailed debate rather than this boosterism that says you that you are pro-trade or you are anti-trade. We want to have trade. We want to open up those barriers. But we are not prepared to sacrifice the long-term interests of this country. (Time expired)
I am very pleased to support this motion recognising the importance of free trade, moved by my colleague the member for Bass. There is an old Dutch saying that an ounce of trade is worth a pound of work. This is a very apt saying, considering the history of trade in our region. The Dutch East India Company and its rival trading house the British East India Company were both established by charter in the early 1600s, by monarchs in their respective countries. The firms became formidable forces in the commodity and spice trade in the South-East Asian region, generating immense wealth for their nations. In fact, some of the earliest Europeans to land on the Australian continent were Dutch traders, such as Dirk Hartog, who navigated off course from their destination, of the Indonesian archipelago, with its markets and supply chains. Merchant trade is what led my family to settle in the then British colony of Singapore in the 1800s, with my great-great-grandfather Robert Goodenough and great-grandfather Arthur Hessman Goodenough being involved in the merchant shipping trade.
In the 21st century, international trade has undergone a renaissance, a renewal, with fresh opportunities for economic development between established and emerging economies across the globe. In 2013-14 the value of Australian exports accounted for $331 billion, whilst imports amounted to $338.6 billion. The emergence of free trade agreements, which are essentially international treaties that remove barriers to trade such as tariffs and quota restrictions, serves to facilitate stronger trade and commercial ties, contributing to increased economic integration between participating countries.
Australia currently has free trade agreements in force with New Zealand, Singapore, Thailand, the United States of America, Chile, the Association of Southeast Asian Nations (ASEAN), Malaysia, South Korea and Japan. The countries covered by these free trade agreements account for 42 per cent of Australia's total trade. Australia recently concluded free trade negotiations with China, in November 2014. China accounts for 23 per cent of Australia's total trade. May I take this opportunity to congratulate the Minister for Trade and Investment, the Hon. Andrew Robb, and his staff on successfully concluding negotiations for three major, complex free trade agreements within 18 months of taking office. This is testament to the minister's well-developed commercial acumen and negotiating skills. Australia is currently engaged in six other free trade negotiations—two bilateral FTA negotiations, with India and Indonesia, and four multilateral negotiations: the Trans-Pacific Partnership Agreement, the Gulf Cooperation Council, the Pacific Trade and Economic Agreement and the Regional Comprehensive Economic Partnership Agreement. The additional countries covered by these negotiations currently account for a further six per cent of Australia's total trade.
Free trade agreements create opportunities for Australian exporters and investors to expand their businesses into key overseas markets. For instance, in my electorate of Moore, which borders established agricultural areas and coastal fisheries, the recent free trade agreements have benefited intensive horticultural producers who export quality fruit and vegetables such as carrots, broccoli and tomatoes, as well as exporters of western rock lobsters and premium beef cattle, through tariff reductions, putting local producers on a level playing field with competitors from countries such as New Zealand. Access to global markets helps maintain and stimulate the competitiveness of Australian firms, by increasing domestic productivity and contributing to higher GDP growth by allowing Australian businesses access to cheaper inputs, introducing new technologies, fostering competition and innovation. This directly benefits Australian consumers through access to an increased range of goods and services at more competitive prices. Free trade agreements also address barriers which impede the flow of goods and services between nations, encourage investment and enhance international competition. (Time expired)
Thanks very much, Deputy Speaker, for the opportunity to speak on this private member's motion about trade, moved by the member for Bass. I am a big supporter of freer trade, and Labor has a proud history when it comes to trade liberalisation. All three of Australia's largest trade barrier cuts—in 1973, 1988 and 1991—were made under Labor governments. In 1973 Whitlam cut tariffs by 25 per cent. In 1988 and 1991 the big tariff cuts under Hawke and Keating are estimated to have put $4,000 into the pockets of average households. Under prime ministers Rudd and Gillard, we had the Asian century white paper and free trade agreements with Chile, Malaysia, ASEAN and New Zealand.
We are supportive of trade liberalisation where it boosts growth, creates jobs, forges competitive industries and gives consumers greater choice and lower prices. The best agreements are multilateral, whereas bilateral or regional agreements are second best but ideally a stepping stone to something more inclusive. I agree with Senator Wong, the shadow minister for trade, who said we need our trade policy to be outward facing, and not inward looking.
Japan, as other members have noted, is already Australia's second largest agricultural export market, and we have got these agreements with Japan and Korea signed in the last little while. We have not opposed those trade deals signed in the last 18 months, but we have raised some concern with parts of the agreements. A lot of the work was done by Labor ministers, including Simon Crean, Richard Marles and also my predecessor, the great Craig Emerson, and they did some very important work on the Japanese and Korean agreements.
The great Craig Emerson—I take that interjection. He is a wonderful man. As I and other speakers have said, Japan is already Australia's second largest agricultural export market, worth about $4 billion last year and also our second biggest market for non-agricultural goods—something like $42 billion in 2013. Korea is our third largest export market and our fourth largest trading partner, with two-way trade valued at $30.5 billion last financial year.
On this side of the House, our concerns with the Japan agreement were that it did not go far enough on sugar, and our concerns with the Korean agreement were that it had that ISDS investor-state clause, that Labor would not have agreed to in government. But our support for the two agreements with Korea and Japan goes to our support of free trade deals that are on balance good for Australian consumers and businesses.
Labor will take the same approach when it comes to the China agreement and other deals on the horizon. We are expecting the full details of the China deal to be released this week. It should have been released already, and we know it has been finished for some time. When we do come to examine it, Labor will determine on balance if it is in Australia's interests. We hold concerns about key agricultural goods being left out and that it will have an ISDS provision, and we are concerned, as other speakers have said, about the likely labour market arrangements as well. But we also recognise this is an historic opportunity to expand Australia's trade with China, something both sides of the House are interested in.
The National Australia Bank, for example, says that the agreement offers considerable potential for Australian agricultural and services firms and will level the playing field with other countries that already have an FTA with China. So when we consider the China deal in detail, we will factor in these advantages for Australian producers and consumers.
We also saw the Trans-Pacific Partnership make the news this weekend as the US Congress voted down the President's Trade Promotion Authority, as the member for Perth mentioned in her contribution. Two weeks ago, I participated in a forum hosted by the member for Canberra, with the member for Perth and 100 or more locals interested in the TPP. It was great to see the community so keen to understand the complex issues at play in that partnership.
Labor does have some real concerns about what we know about the partnership so far, especially when it comes to copyright restrictions, pharmaceuticals and investor-state settlement mechanisms. We do need a full and proper discussion of the merits of any agreement so that we can come to an on-balance assessment of the deal and decide whether it is in Australia's national interests. That is why the government should undertake some real economic modelling of the deal. We know from our briefings that this has not been carried out, and we call on the minister for trade to undertake detailed economic modelling of the TPP so we can get a better understanding of its merits.
Trade is attracting a great deal of interest not just in this parliament but around the community. That is a good thing if it helps us reach a considered position consistent with our beliefs and beneficial for our economy. We are supportive of some of the work done to reach agreements over the last 18 months, but we need to ensure that the China agreement and the TPP, and all trade agreements on the horizon, are in the national interest. If they are, and if they are good for jobs and consumers, we will support them.
I congratulate the member for Bass on this fantastic motion. Like his state of Tasmania, South Australia and Australia as a whole value our clean and green products, which are highly valued around the world. Whether it be in Asia or all over the world, clean and green is a great sign of Australian quality in our produce.
Abache, a company I visited just last week with the Minister for Industry and Science, are involved in organic healthcare products. They made mention of this clean and green fact when they had investment from India. They are going to be creating more jobs and expanding due to these opportunities. As we know, we are working on the Indian free trade agreement too.
But going back to the major three free trade agreements we have signed off on with our three largest export markets that account for 61 per cent of our export of goods, I want to explore three main sectors here in this motion today—primary production, services and jobs.
In terms of agriculture—something that is always so important for Australia, where we have a great competitive advantage around the world and are recognised for our expertise—the premium winegrowers of South Australia will benefit from these three agreements. Korea eliminated the 15 per cent tariff on Australian wine in December 2014. Under the China FTA, the tariffs on wine of between 14 and 20 per cent will be eliminated within four years. Tariffs will go on seafood, including abalone, rock lobster and southern bluefin tuna. It will also benefit our horticulture sector, with a range of horticultural products with tariffs ranging from eight to 24 per cent now entering Korea duty-free.
In Japan, there will be quicker tariff elimination on the vast majority of Australian horticulture products, including up to six per cent which has already been eliminated for almonds. Just on almonds, I want to congratulate Almondco, a great company in the Riverland of South Australian, and Brenton Woolston, the managing director. Almondco supply about 40 per cent of Australia's almond production, and their growth has been outstanding in recent years. I know they will be very happy with the free trade agreements in Asia.
In terms of services, and two important areas of education and tourism, there will be big winners from this agreement. South Australia's three universities will benefit, given that the $1.5 billion international education industry is Australia's third largest market. And the Chinese tourism market means that so many inbound tourists from China are constantly arriving on our shores, putting money into our economy and creating jobs—750,000 last financial year. It has been forecast that about 40 per cent of inbound expenditure in tourism growth to 2022-23 will be sourced from China.
In terms of jobs, I want to reflect on a couple of family businesses that have made mention of the opportunities in China just in recent weeks. Yesterday I heard great news from Gaganis, a fine local family business. They will employ another 50 people and grow their head office in Adelaide. Significantly, Gaganis's expansion plans include exporting Australian produce to China, such as flour, lentils, beans and nuts. This family business, located in the seat of Hindmarsh, has set up partnerships with Chinese locals in Shanghai and Guangzhou. Randall Tomich of Tomich Wines, another impressive South Australian family business, has secured a distribution agreement with China's biggest hypermarket chain, RT-Mart, which is set to deliver more than $500 million in annual sales and promote Australian brands.
These deals are not arrived at overnight. Energy and resources is another important sector in South Australia, and there will be significant opportunities from removing tariffs or locking in zero tariffs on resources exports, including iron ore and copper. These two exports account for around half of South Australia's total export value. Let us hear what those in the business sectors and industry and community stakeholders say. Business SA has said about the Korean FTA:
David Basham, from Dairy SA, said about the China FTA:
… it will certainly improve our long-term position and it should also help processors.
The Wine Industry Association of South Australia says the opportunities with the FTAs are enormous, saying:
The recent trade deals with China, Japan and South Korea … offer good reason for renewed optimism in our industry.
The Chief Executive of Universities Australia, Belinda Robinson said the China FTA 'will further broaden and deepen an already close relationship on higher education and research between our two countries.' I congratulate Trade Minister Andrew Robb and his team on the fantastic work they have done with these three free trade agreements and look forward to further work on India as we seek to improve our engagement with Asia and broaden our economic opportunities.
I am glad to have the opportunity to discuss the issue of Australia's involvement in free trade agreements. While the government has made a lot of noise and claimed a lot of credit when it comes to settling free trade agreements, there has not been the same interest in allowing proper transparency and consideration of those agreements. The aura of obscurity and secrecy around these deals has been considerable, matching the government's approach in other areas like asylum seeker policy. This motion specifically identifies the free-trade agreements the government has struck with Japan, South Korea and China—claiming blithely, and without reference to detail, any cost-benefit analysis or independent assessment, that these 'mutually constructive agreements' will result in 'stability and economic prosperity'.
In fact the agreements are not balanced and reciprocal; their independently assessed economic benefit is marginal, confined to small gains in agricultural market access, while giving much away. The Korea FTA contains an extraordinary anomaly in relation to employment provisions that opens the door to virtually any Korean workers in Australia but makes it almost impossible for Australians wanting to work in Korea. In the China FTA, the government appears to have made unprecedented concessions on the use of temporary migrant labour. A memorandum of understanding separate from the text of the trade agreement gives Chinese investors in projects valued over $150 million additional rights to bring in temporary migrant workers without undertaking labour market testing, allowing Chinese firms to by-pass laws requiring advertising to first see if suitably qualified local workers are available to do the work. Union and industry groups are concerned about the impact on local employment and the potential for exploitation of workers who will be tied to one employer and may not have English language skills or health and safety training.
The agreements with Korea and China also contain investor-state dispute settlement provisions, which allow multinational companies to sue countries in international private tribunals for domestic laws or administrative frameworks that impact upon their profits; for instance health, environmental and labour regulations, food labelling or quality and safety standards. This is why the former Labor government was not prepared to sign an agreement with Korea, while the current government clearly did. The fact is you can reach any agreement if you are prepared to agree to anything, including giving away your country's rights to govern itself.
Australians enjoy a life-expectancy that is very close to the best in the world—and a large contributor to that has been our ability to seriously reduce tobacco use. Yet right now the Philip Morris tobacco company is using an ISDS clause in an obscure Hong Kong-Australia investment agreement to sue the Australian government in relation to our plain-packaging reforms, despite the laws having been upheld in our own High Court. Uruguay is also being sued by Philip Morris for its anti-tobacco measures, a move that could bankrupt that country. A US mining company has sued Canada for a fracking moratorium. A Swedish company is suing Germany because it decided to phase out nuclear power after the Fukushima disaster. The French Veolia corporation is suing the Egyptian government for having the temerity to raise the minimum wage. This is free-market corporatisation gone mad. This is nowhere more evident than in the Trans-Pacific Partnership agreement currently under secret negotiation, which, with its far-reaching ISDS provisions, will put Australian sovereignty and self-determination at risk. Only last week we learned, through Wikileaks, that the TPP will include provisions in the ironically-named 'Healthcare Transparency Annex' that will enable multinational pharmaceutical companies to challenge and bypass national healthcare legislation that seeks to properly regulate access and price arrangements for the greater public good.
I think we all know that this government is desperate to find a topic of economic management under which it can claim some kind of achievement—and so far it is the entry into various free trade agreements that seems to occupy that role. Unfortunately, this only works to the extent that the detail and substantive effect of those agreements remain hidden from public view.