Senate debates

Wednesday, 31 October 2012


Treaties Committee; Report

5:13 pm

Photo of Bridget McKenzieBridget McKenzie (Victoria, National Party) Share this | | Hansard source

I present the 130th report of the Joint Standing Committee on Treaties on a treaty tabled on 14 August 2012, and I move:

That the Senate take note of the report.

Today I present the 130th report of the Joint Standing Committee on Treaties, which contains the committee's view on the Australia-Malaysia free trade agreement, which was tabled on 14 August 2012. I take this opportunity to thank committee members for the debate and discussion that ensued after our inquiry and the secretariat for their support of our work. The agreement is Australia's latest bilateral free trade agreement with a member of ASEAN. Australia has previously made bilateral free trade agreements with Thailand and Singapore and, like those agreements, this treaty has been made to build upon the ASEAN-Australia-New Zealand Free Trade Area Agreement which entered into force in 2010. According to the Department of Foreign Affairs and Trade, the agreement will deliver benefits to Australian producers, exporters, consumers and investors and provide a platform for trade and investment liberalisation between Australia and Malaysia in the future. The department was especially pleased with the progress made towards reducing Malaysian non-tariff barriers, particularly in relation to rice and milk. Australian milk exporters will be able to access additional Malaysian quotas, including for higher value products, on MAFTA's entry into force. Australian rice exporters will have open access to the Malaysian market from 2023 with the complete elimination of tariffs by 2026.

Other participants in the inquiry raised some issues of concern with the agreement including how this agreement will interact with others applying to trade between Australia and Malaysia; the method of demonstrating the country of origin of traded products; and the inclusion of environmental and labour standards in free trade agreements. This last issue is one close to the hearts of a number of members of the committee. This agreement contains two legally-binding side letters that form part of the agreement on labour standards and the environment. Nevertheless, the committee reiterates its previous recommendation that labour and environmental standards be included in FTAs rather than in side letters. A particular concern of mine is the role that free trade might play in increasing access to markets such as rice and milk which I mentioned earlier. Other members of the committee were concerned about the role free trade might play in job losses in manufacturing and this was highlighted by some of the submissions to our inquiry.

In August the respected US foreign policy think tank, the Council on Foreign Relations, published an article containing commentary on the role that free trade has played in job losses in manufacturing, at least in the United States, during the past decade. In terms of the agreement under consideration here, the Federal Chamber of Automotive Industries believes the non-tariff barriers and local content rules that are in place in Malaysia make it unlikely that Australian-built vehicles will be exported to Malaysia. Conversely, the chamber believes the agreement will facilitate a significant increase in Malaysian vehicle imports to Australia. In response, the department argued that studies showed the importance of free trade and complementary policies—particularly macroeconomic policy, a positive business environment, a flexible labour market, high quality education and skills training systems, and adequate safety nets—in supporting inclusive growth and job creation.

Treaty negotiations are a set of trade-offs between both parties and it is important to the people in my home state of Victoria—in regional Australia but also more broadly in the Australian community—that our negotiators provide balanced outcomes when agreements are reached rather than making compromises, for the sake of reaching an agreement, without meaningful compromises being made by the other party. But I think we all recognise that compromise is the key theme of any negotiation. When I look at the outcome of the negotiations in relation to rice—one of the highlights of this agreement—I can see that the Malaysians will not need to take any action for another 10 years. It is quite a way away before our rice growers can get their product into Malaysian markets tariff-free but, thanks to this free trade agreement, that option exists for us more quickly than it would have occurred under the existing treaty trade agreements with ASEAN nations.

I note the potential for immediate increases in Malaysia car imports. Given this, the committee has made three recommendations in this report, two of which go to the issues I have just mentioned. The committee has in the past recommended that an independent analysis of the potential benefits and disadvantages be prepared prior to engaging in the negotiation of a free trade agreement. The committee recognises that the government has, in recent years, released statements prior to the commencement of FTA negotiations; but the committee still believes such agreements require detailed independent analysis. Accordingly, the committee has again recommended that an independent analysis of the potential benefits and disadvantages be prepared prior to engaging in the negotiation of the FTA.

In the past the committee has also recommended that the Department of Foreign Affairs and Trade undertake and publish a review of the operation of free trade agreements to ensure that their intended outcomes and consequences actually come into force. In relation to the Australia-Chile Free Trade Agreement, the committee recommended that the review take place after two years of operation and address specific concerns raised in relation to that agreement—if I remember rightly, they were specifically around horticulture issues with grapes in Sunraysia. In response, the government argued that the agreement required a review that would be presented to the relevant minister, at whose discretion it could be published. The committee is not satisfied with this approach. It does not, for example, specifically address the issues of concern expressed in the report nor is there any commitment to be transparent about the outcome. The committee strongly believes that the government needs to be responsive to the concerns around, and transparent about the actual results of, free trade agreements. Recognising the abundant evidence that free trade agreements are as beneficial as both sides of this parliament attest, it would be useful if we had some data around quantifying those benefits. Notwithstanding this, the committee concluded that the MAFTA should be supported with binding action. On behalf of the committee I commend the report to the Senate and to seek leave to continue my remarks later.

Leave granted; debate adjourned.