Wednesday, 22 August 2018
Customs Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018, Customs Tariff Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018; Second Reading
I rise to speak on the Customs Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018 and the Customs Tariff Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018.
These two bills are supported by Labor. Can I say at the start that these two bills amend the Customs Act 1901 and the Customs Tariff Act 1995 respectively and implement the Pacific Agreement on Closer Economic Relations Plus. This is known as PACER Plus. It's a comprehensive free trade agreement covering goods, services and investment.
Negotiations on PACER Plus commenced in 2009 under the former Labor government and negotiations concluded in Brisbane on 20 April 2017, with 14 members of the Pacific Islands Forum. They include, of course, Australia, the Cook Islands, Nauru, New Zealand, Samoa, the Solomon Islands, Tonga and other countries. The majority of these countries signed the agreement in Tonga on 14 June 2017, and Vanuatu signed it on 7 September 2017.
Labor will support the bills, as I said, because we support the agreement, including the good it does for our region and how it will support our neighbours in the Pacific. The amendments contained in the Customs Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill will enable goods that satisfy the new rules of origin to be imported into Australia with preferential rates of customs duty. These amendments implement the provisions of chapter 3 of PACER Plus and apply to all parties to the agreement.
There are complementary amendments being made, of course, to the Customs Tariff Amendment Bill, to give effect to the preferential rates of customs duty in accordance with the agreement, and the customs tariff bill provides free rates of customs duty. It inserts a new division—division 1GA—into the Customs Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018. When enacted, the new schedule will provide for excise equivalent rates of duty on certain alcohol, tobacco and fuel products in accordance with the agreement and amend certain concessional items in schedule 4 of the Customs Tariff Act to maintain customs duty rates in line with the applicable concessional items in accordance with the agreement.
The Department of Foreign Affairs, Defence and Trade website lists the schedule of commitments on tariffs for each country under PACER Plus in explicit detail. These apply to an immense number of products from the 14 member nations, including everything from unworked cultured pearls to potatoes. In return, Pacific Island countries have committed to liberalising their own tariffs. PACER Plus will provide more predictable and secure market access for Australian exporters. This will aid many sectors, including agriculture, industry, plastics, chemicals, metal, metal products, specialised machinery and mineral fuels, just to name a few. I note there are negligible financial impacts of both bills before the House, with the impact on the forward estimates rounded to zero.
Labor believes that commissioning economic modelling on trade agreements is just plain common sense. The Turnbull government has repeatedly refused to conduct independent economic analysis, despite public and industry support. Even the government controlled Joint Standing Committee on Treaties recommended independent economic analysis of all new free trade agreements. In assessing PACER Plus, in May 2018, JSCOT recommended:
… that the Government commission independent economic analysis of all trade agreements to improve the transparency and quality of their assessment.
In January 2018 the Australian Chamber of Commerce and Industry said:
It’s also important that the Government does something that the Parliament has recommended and that is subject the deal to a full and proper independent economic analysis so we can be absolutely sure about where the benefits lie.
Even the Treasurer's own Harper review in 2015 recommended the analysis stating:
Trade negotiations should be informed by an independent and transparent analysis of the costs and benefits to Australia of any proposed IP provisions.
The government is arrogant and out of touch. For example, the Prime Minister has repeatedly dismissed calls from the public, industry and his own party to implement Labor's policy. He should think again. Even the former Prime Minister, the member for Warringah, commissioned independent economic modelling in Australia's trade agreement with Korea.
In government, Labor will commission independent economic modelling on trade agreements. We will urge the current government to listen to the recommendations of JSCOT and industry alike. Australia must be a leader in the South Pacific and Labor strongly supports moves to engage more closely with our neighbours in the region. PACER Plus includes an aid component to help the development of the region. Australia is providing up to $4 million of official development assistance for Pacific Island countries to prepare to ratify and implement the agreement and $19 million once the agreement comes into force.
Australia's also committed an aid-for-trade funding target of 20 per cent of Pacific ODA to help address supply-side constraints and build Pacific Island countries' capacity to trade. Another pressing need in the Pacific is infrastructure development. Australia must assist its close neighbours in their development needs. Unfortunately, under the Abbott and Turnbull governments, we haven't and our leadership role has been eroded and compromised. The out-of-touch conservatives have waged savage cuts, repeatedly, across foreign aid—up to $12 billion to take it to the lowest in history, just 22 cents for every $100 of our national income. Pacific Island states have felt the impact of these cuts, leading them to seek other countries to help fill the infrastructure gap, and the gap generally.
Labor has committed that in government it will rebuild Australia's international development assistance beyond the government's current levels. We believe Australia needs to be proactive in the region, as it helps support security and stability amongst its Pacific neighbours. As I said earlier, Labor will support these bills because we support the Pacific Agreement on Closer Economic Relations Plus. I commend the work of the shadow minister for trade and the Labor members of JSCOT for their work and holding this out-of-touch government to account. I urge the Turnbull government to continue to engage with our Pacific neighbours, to build international aid and development and to ensure shared stability of the region. I commend the bills to the House.
I rise today to make a contribution to this debate on the Customs Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018. It represents the key legislative change required to give effect to new rules of origin for an agreement that we often refer to as PACER Plus, the Pacific Agreement on Closer Economic Relations Plus. PACER Plus is part of Australia's trade agenda. It is a development-focused trade agreement signed by Australia, New Zealand and nine Pacific Island countries and aimed at driving economic prosperity and raising living standards in our region.
The bill to which we refer today builds upon one of the most important networks of strategic and economic relationships that Australia has: our relationships with our closest neighbours, the nations and people of the South Pacific. Australia's 2017 foreign policy white paper highlighted that the stability and economic progress of the Pacific island countries are indeed of great importance to Australia. Our Pacific neighbours are almost exclusively relatively small nations, at least in terms of population and land area, especially when compared with the vast tracts of the great ocean that surrounds them. In fact, the world's entire landmass could fit within the Pacific basin alone.
For the most part, opportunities for Pacific island communities have been both rare and limited, facing, as they do, critical challenges of small markets, narrow production bases and limited infrastructure, with consequent high costs and structural impediments to business and to trade. Subsistence farming and a sprinkling of cash crops plus the sale of fishing rights, in some places tourism and, commonly, remittances from workers who spend time in one or another of the larger, more developed countries on the Pacific Rim are all mainstays of what, by our standards—indeed, by any standards—are small, remote economies with rather limited options. In almost every way, it is a remarkable set of circumstances that they have to deal with on a daily basis—a set of circumstances that we, together with our South Pacific neighbours, are now responding to, in part through the instrument of this bill.
Let's take a quick look at some of these island nations. The 270,000 or so people of Vanuatu, for example, are spread across an 83-island archipelago that's 1,000 kilometres long. Meanwhile, Samoa has a population of about 196,000 people and, compared to many of its neighbours, enjoys one of the healthiest export economies in the region. We imported around $31 million worth of goods from Tonga in 2017, but even there only about 22 per cent of their population are enjoying any form of employment. The relationship that these small Pacific nations have with larger countries of the Pacific Rim is enormously important to them and, indeed, important to Australia, along with New Zealand—and also, I must say, the United States—as crucial paths of that network of supportive relationships.
Notwithstanding the constraints such as limited economies of scale and the tyranny of distance being such, Australia's relationship with our South Pacific neighbours is strong, trusting and invariably warm, and to a great extent it is shared, with 76,000 Australians having Samoan heritage, for example. There are similar communities of Pacific Islander heritage right across the wider Australian community, including approximately 26,000 Australians with Tongan ancestry. Australia has become a strong education, employment and opportunity magnet for many countries across the South Pacific. These are people who seek to live more expansively, wishing to overcome some of the limitations of their own home economies and services, and who, in many cases, directly support wider families still living in isolated island communities. Increasingly, in recent decades, education has become a key part of that interaction, and it is becoming ever more important as an opportunity builder. The Australia Awards Pacific program, for example, is a subset of the larger Australia Awards program, and both are offering opportunities for scholarships, fellowships and short courses for Pacific islanders in formats that are specifically designed to both widen and deepen their national skills base. The Pacific element of the program even specifically requires graduates to return home for a minimum of two years after their studies to ensure a reliable, local benefit to their home economies.
Direct employment opportunities are also vitally important, especially for individuals and their families. The Seasonal Workers Program we run has provided 17,000 jobs across the Pacific islands and has been strongly endorsed by the World Bank for the positive impacts that it is having. It found that the average amount of cash taken home by seasonal workers since 2012, after about six months work, has been $9,000. This is clearly a big deal, and a significant source of income, for island communities, where per capita GDP is typically far less than that. It means a lot in relation to educational opportunities for young islanders, who often invest that capital to start small businesses and to develop local infrastructure, including housing.
The implementation of PACER Plus, made possible in part by the passing of this bill, will also deliver modest economic and commercial benefits to Australia commensurate with the size of participating Pacific islander country economies. In particular, Australian producers of goods, suppliers of services and investors will benefit from more liberal and secure market access in the Pacific. By promoting growth and development and strengthening reform processes in the Pacific, PACER Plus will expand commercial opportunities for Australian companies in the region.
Pacific island countries will have eliminated tariffs on the vast majority, 91.5 per cent, of their tariff lines covering the bulk, 88.5 per cent, of Australia's exports—a total value of $360 million based on 2016 data—when PACER Plus is fully implemented. PACER Plus will deliver early gains for Australian exporters. For example, Cook Islands, Samoa and Tonga will provide early tariff reductions or tariff-free access for a range of Australian exports, including beef, sheepmeat, poultry meat and dairy products. Over time, all Pacific island countries will provide more liberal market access to all major product groups over time.
Australia's largest services exports to the Pacific are tourism and travel services, transport services and financial services, including insurance. Pacific island countries that are signatories to this agreement have made commitments in each of these sectors, many for the first time. Australian service suppliers will benefit for the first time from commitments provided by non-WTO members, such as the Cook Islands, Kiribati, Nauru and Tuvalu. The most-favoured-nation, MFN, provisions in the agreement will help safeguard market access for Australian producers of goods, suppliers of services and investors in the event that Pacific island parties apply more favourable treatment for the producers, suppliers and investors of nonparties, such as under free trade agreements.
The measures the government is adopting in this bill and the related bill on the customs tariff amendment provide duty-free access according to new rules of origin, inserted into the Customs Act 1901, on imports from South Pacific nations who are parties to the Pacific Agreement on Closer Economic Relations Plus. This was tabled in this parliament on 29 November last year and has recently been recommended for ratification by the Joint Standing Committee on Treaties. This initiative not only reflects Australia's wider commitment to global free trade, and the aforementioned imperative of helping to drive opportunity and sustainability among our Pacific neighbours, but will also create additional growth opportunities for Australian businesses.
The mechanics of this bill are straightforward and will no doubt appropriately have bipartisan support. Under PACER Plus, signed by Australia, the Cook Islands, Kiribati, Nauru, New Zealand, Niue, Samoa, the Solomon Islands, Tonga, Tuvalu and Vanuatu, preferential tariff treatment is available based on declarations regarding the origin of goods based on information provided by the importer, the exporter, the producer or the authorised representative.
Further, the second bill, the Customs Tariff Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018, seeks to comprehensively update the Customs Tariff Act 1995 to ensure that only goods directly subject to excise equivalent customs duties are specified in the new schedule of preferential customs duty rates. This will ensure that imported goods originating from South Pacific countries that are parties to PACER Plus are treated consistently with equivalent goods produced in Australia.
Collectively, these measures will help to drive economic growth, jobs and opportunity not only by reducing tariffs but also by reducing the amount of red tape for importers of goods from PACER Plus signatory countries. That's why these bills are so important. It is for these reasons—supporting Australia's ongoing commitment to our Pacific neighbours, and to drive greater opportunity for Australian businesses that create jobs in this country—that I commend the bill to the House.
I'm glad for the opportunity to speak on these two bills, the Customs Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018 and the Customs Tariff Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018. They put in place some relatively minor changes that nevertheless facilitate the implementation of the Pacific Agreement on Closer Economic Relations, also known as PACER or PACER Plus. What I'm going to say is really about PACER Plus because that's the foundation on which these two bills are brought before us.
PACER Plus is a trade and investment agreement between Australia and New Zealand and a number of Pacific island nations. As the former speaker mentioned, those Pacific island nations are important to us. They're our regional neighbours, they're our brothers and sisters in the Pacific, and we have a special relationship with those nations. It's not a relationship that ought to be governed just by economic interests and certainly not by Australia's economic self-interest; it's a relationship that should always take into account the imbalance between Australia and those nations and our responsibility to the people who live in the Pacific and the small Pacific islands. We do have a historic and contemporary responsibility for their wellbeing. I'm not sure exactly how much the PACER Plus agreement has focused on that responsibility. I will outline some thoughts on that.
It's important to notice that, in addition to the standard focus on the tariff reduction within PACER Plus, it does include two less-than-treaty-status agreements on an implementing arrangement for development and economic cooperation and a labour mobility arrangement. It's the labour mobility arrangement that really represents the part of the whole package that the Pacific island nations have a strong interest in. I will come to that a bit later.
In relation to tariffs, PACER Plus will eliminate tariffs on 91.5 per cent of export lines from Australia and New Zealand—what become imports into Pacific island nations. That means that 88.5 per cent of Australian exports will be tariff free into those nations. That's a pretty significant change. On the tariff front, vis-a-vis the Pacific island nations, there's not much change. The Pacific island nations trade amongst themselves on a tariff-free basis, and we don't apply tariffs to their goods. On the tariff front, there's no doubt that this agreement is all about tariff reduction for Australia and certainly not for Pacific island nations.