Simon Crean (Hotham, Australian Labor Party, Minister for Trade) Share this | Hansard source

by leave—It gives me great pleasure today to table the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) and accompanying national interest analysis. The AANZFTA agreement represents a historic milestone for Australian trade policy—coming as it does with the world in the grip of the global economic crisis. I signed the agreement on behalf of the Australian government on 27 February in Hua Hin, Thailand, along with ministers from the 10 member countries of ASEAN and New Zealand.

The FTA represents the culmination of diplomatic initiatives and efforts dating back to the Hawke-Keating Labor governments in the early 1990s to strengthen economic ties with ASEAN. The AANZFTA negotiations originated at a conference in Melbourne in November 1993, to explore the prospects for a link between the ASEAN Free Trade Area (AFTA) and the Australia-New Zealand Closer Economic Relations (CER) Trade Agreement. That original suggestion for AANZFTA came four years after the first formal meeting of the Asia-Pacific Economic Cooperation. APEC of course was championed by the Hawke-Keating Labor government and the first meeting of APEC economies took place here in Canberra in November 1989.

The tabling of this agreement is a demonstration of federal Labor’s commitment and drive to liberalising trade in the Asian region. AANZFTA will provide a strong platform and legal framework for our economic engagement with the region for years to come. I think all Australians should be proud of this agreement. In the midst of the global downturn, Australia and New Zealand and 10 nations from South-East Asia have sent a powerful message to the rest of the world. That message is this:

• The ASEAN region remains committed to pursuing free trade.
• We are determined to pursue trade liberalisation as a way to boost exports and job opportunities.
• We acknowledge that keeping trade flows open represents the best chance of a quick exit from this global economic storm.

This agreement has come off the back of the stalled World Trade Organisation Doha Development Round talks. It shows that progress in trade can be made if the political will is there. The Rudd Labor government has shown the will to progress Australia’s interests despite these global challenges. I want to highlight briefly to parliament some of these achievements.

This is the largest free trade agreement Australia has ever signed and will reduce or eliminate tariffs across a region that is home to 600 million people and a region with a combined GDP of A$3.2 trillion. It will bind current low tariffs and over time eliminate tariffs on between 90 and 100 per cent of tariff lines, covering 96 per cent of Australian exports to the region.

Australia’s two-way trade with ASEAN countries is worth $80 billion a year and there are now new opportunities for Australian exporters. This means greater job opportunities here in Australia. Australia’s trade with ASEAN, as a bloc, exceeds our trade with Japan, China or the United States.

AANZFTA is the most comprehensive FTA that ASEAN has concluded. It is more comprehensive and deeper than ASEAN’s other FTAs with China, Japan and Korea.

Importantly, AANZFTA is also the first free trade agreement Australia has signed since the onset of the global financial crisis.

Last week there were new signs of just how pessimistic the economic future has become when International Monetary Fund managing director Dominique Strauss-Kahn warned of a looming ‘Great Recession’. We can expect global economic growth to keep falling and the number of unemployed people to keep increasing—and Australia cannot escape this. In this climate, we can expect there will be growing calls for new protectionist measures even though it is a misguided bid to try and prop up national economies and preserve local jobs. The Australian government argues strongly and consistently this is the wrong message. Going down the protectionist route does not save jobs. Quite the contrary, it sacrifices jobs.

Trade is the great stimulator of the world economy and what the world needs now more than anything is growth. History has shown us that since 1950 world trade has grown three times faster than world output. That is one of the key reasons why the Australian government has protested so strongly against the United States congress passing the Buy American provisions as part of its stimulus package and why we have protested so strongly against the European Union’s decision to re-introduce dairy export subsidies. Trade flows have suffered significantly in the global financial crisis, but trade is not the cause of the problem. Trade can be a big part of the solution.

There is new emerging evidence of the crucial role trade can play in stimulating global economic activity. The Organisation for Economic Cooperation and Development has revealed research suggesting that a 10 per cent increase in trade is associated with a four per cent rise in per capita income. This is new evidence showing that boosting trade will boost income. It means that with historic agreements like AANZFTA, new opportunities will open up for people across the region which will ultimately increase living standards, both in Australia and in ASEAN countries.

The link between rising trade and rising income will be part of a major OECD analysis to be formally launched next month in Paris with the title ‘International Trade: Free, Fair and Open?’ This analysis will reinforce the message that trade liberalisation can stimulate world growth and raise living standards, around the globe. The detailed analysis finds:

• Full tariff liberalisation in agriculture and industrial goods but not services would improve global welfare by US$100 billion.
• Scrapping all tariffs on merchandise trade and reducing trade costs by one per cent of the value of worldwide trade would boost global welfare by more than US$170 billion a year—in some areas adding the equivalent of two per cent of GDP.

This is something we must aim for. The ‘International Trade: Free, Fair and Open?’ report also provides a powerful argument against reverting to protectionism. It finds:

• The more countries try to ‘protect’ themselves by isolating their economies both exports and imports decline, and more jobs are lost.
• That protectionist measures such as raising tariff barriers restrict availability of products and services and reduce domestic demand.

This OECD analysis shows that a sweeping agreement such as this AANZFTA agreement can be a major contributor to boosting economic activity and assisting the region.

AANZFTA represents a great opportunity for Australian companies and businesses. According to Austrade, there are around 18,500 Australian exporters already doing business in ASEAN countries. I have asked Austrade in the light of this agreement to develop and roll out a commercial strategy to take advantage of the market openings created by this agreement. There are new opportunities across many sectors, including exports of agricultural products, industrial goods and services.

The National Farmers Federation has recognised what has been achieved for agriculture with this agreement. The NFF President wrote to me today saying the FTA would be positive for the agriculture sector, become increasingly important over time, and prevent the ASEAN region sliding into protectionism. Australian farmers are now being guaranteed access to developing South-East Asian markets, many of which have a growing appetite for high quality Australian produce.

This is the second great benefit to the Australian economy from AANZFTA. What this agreement does is guarantee market access for Australian exporters into South-East Asian markets. When this agreement comes into force, which will be 1 January 2010 at the latest, the existing tariff rates will be locked in. This is a big win for Australian exporters and delivers new certainty. Before this agreement, Australian exporters selling into ASEAN had a threat hanging over them that their products would suddenly be hit with a major tariff increase to the maximum permitted under World Trade Organisation rules. With this agreement, however, Australian producers now know they cannot be locked out overnight with a major tariff rise.

Reduction and elimination of tariffs, plus the guarantee of market access into South-East Asia, are the two big benefits to Australian exporters from this agreement. AANZFTA will create greater certainty for Australian investors in the region, with access to international arbitration extended to the whole region if there are disputes.

The full detail of the advantages offered by this agreement, sector by sector, is available on the Department of Foreign Affairs and Trade website. I urge Australian exporters and those looking to become exporters to go to that website, look at the new opportunities and, most importantly, work with Austrade to export more into the region.

The Australian government is highly satisfied with this agreement but I also make this point: the work in the region in terms of further liberalising markets there is not over. Negotiations on breaking down barriers for Australian exporters into the region do not stop for this government with this FTA.

Negotiating with so many countries with varying offensive and defensive interests has not been easy. All of the 10 with whom we have negotiated are at different stages of economic development and at times it was like playing a game of 10-dimensional chess dealing with countries at their different stages of development and trying to find the basis on which we could secure our collective agreement.

The federal Labor government is committed to pursuing the most ambitious trade agenda possible which will drive world trade but will also boost the Australian economy and create local jobs. That is why negotiations on breaking down barriers for Australian exports into the region do not stop with this FTA. We consider this as part of a larger plan—a platform for progressively advancing Australia’s interests.

We are extending the platform, for example, with the announcement recently of the entry of the pursuit of a free trade agreement with Indonesia, having previously announced an FTA approach with Malaysia. With Thailand, of course, we have an existing agreement negotiated by the previous government and which has a trigger mechanism for review. In my discussions in Thailand two weeks ago Cambodia and Vietnam have already indicated their preparedness to negotiate further with us, to develop a strategy further with us for strengthening the trade relationships with them.

The shadow minister at the table talked the other day about the concerns about the automotive sector in this agreement. When it comes to this sector, the Rudd Labor government are absolutely committed to not just preserving local jobs but securing an industry base that positions us to take advantage of the new direction of automotive manufacture that will be dependent on vehicles that are more fuel-efficient and impose less of a carbon footprint. That is why we have unveiled a car industry assistance package worth in excess of $6.2 billion over a number of years designed to help exporters—especially through the Green Car Initiative—and to assist Australian companies become part of the global supply chain for the automotive industry.

Negotiations in this sector of the agreement were particularly tough. In fact, they could have brought the agreement undone. We did fight for the best interests of the local Australian car industry. Reflecting offers they put forward, Australia will undertake a slower phase-out with those countries that did not come to the same liberalising end result as a number of other countries. So vehicle manufacture in Indonesia, Malaysia and Thailand compared with automotive tariff reduction with other ASEAN nations needs to be looked at by those who would seek to criticise.

We look forward to progress in this sector, particularly with Indonesia and Malaysia, in upcoming bilateral negotiations. We have already put both of those countries on notice that we will be pursuing further trade liberalisation in this sector with them.

AANZFTA will enhance Australia’s participation in the region’s evolving economic architecture. As ministers of member countries noted, it will serve as a catalyst for enhanced and accelerated regional integration throughout the Asia-Pacific region. The AANZFTA treaty text expresses confidence that the FTA ‘will serve as an important building block towards regional economic integration’. From an Australian perspective, though, this is much more than a symbolic achievement. This is a treaty that furthers our integration with the Asia-Pacific, a region with which our nation’s economic future and our security are closely tied up. As such, AANZFTA represents a tangible and highly practical demonstration of this government’s commitment to deepen Australia’s engagement with the Asia-Pacific region.

Like any agreement there are sensitivities on a range of products including in agriculture. But overall there have been great gains for Australian producers—including, I might add, in the crucial commodity sector of sugar. For our trade in sugar with Malaysia, which is a major market for Australian sugar, we successfully negotiated that Malaysia will bind its sugar tariff at zero from AANZFTA’s entry into force. In addition, Vietnam will start reducing its 30 per cent tariff when the agreement starts. Four other ASEAN countries will bind their sugar tariffs at zero from the start of the agreement or reduce them to zero or very low levels over time.

This is a significant advance for the Australian sugar industry. I note that this should be contrasted with what the previous government were able to get out of their free trade agreement with the United States—not a series of developing countries, where there are particular sensitivities and we know them, but a developed country—when they negotiated it back in 2005. Under that agreement with just one country—developed, as I say—the coalition could not even get sugar in. They gave up completely with a sugar carve-out with the FTA with the United States.

I do acknowledge that on AANZFTA the previous government did some important work. I pointed out before that in Melbourne, when we were last in office, back in 1993, we were part of the exercise that initiated this agreement. It took the previous government some 11 years to commence formal negotiations. They did not commence until 2004. You will recall that I said that the initiation of this process occurred back in 1993. I think that is not because they did not have the desire to do this; they just do not have the same commitment and drive and political will as we have demonstrated in the times that we have been in office to really pursue these agreements to an effective conclusion. What they have not given us is the engagement or the leadership to keep pushing trade liberalisation rather than just paying their support to that cause.

I think that the Howard government failed to drive Australia’s interests with ASEAN countries. This was symptomatic of the Howard government’s neglect of our interests in the Asia-Pacific region and what I believe is our very strong need to engage with key institutions within our region. The previous government managed a process, rather than being a driver of ambitious goals and delivering real outcomes. They let the negotiations with ASEAN languish for some considerable time, just as they failed to deliver meaningful progress towards the Bogor goals that we drove with the establishment of APEC and on which this agreement involves some considerable advance on the objectives and the deadlines that those Bogor declarations proposed. They did not require an objective of liberalisation in developing economies until 2020. This agreement involves trade liberalisation in all of the countries well in advance of that 2020 objective.

My point in all of this is that it was a previous Labor government that created the environment for AANZFTA back with the establishment of APEC and back with the position that we talked about in 1994. That was one book-end to this relationship. I think we should see the agreement signed a couple of weeks ago as something of another bookend in this exercise, but we want to keep adding the volumes in between as we continue to push for liberalisation. I make that point because the previous government presided over nearly 12 years of lost opportunity in world trade liberalisation. I think that they did fail to deliver real and meaningful outcomes in many of the areas where the basis was laid for them to really take up the mantle that was the follow-up to the Uruguay Round and that was the foundation built upon with APEC. These were all the building blocks established by a previous Labor government, because we did understand the importance of Asia as a region to our economic future.

AANZFTA is also an extension of TAFTA, the Thailand-Australia Free Trade Agreement. I do acknowledge that the previous government did obtain important gains in the Thai agreement, but AANZFTA takes those gains to a regional level and builds on them. What we have achieved, in addition to what was negotiated by the previous government, with the major markets of Indonesia and Malaysia in trade liberalisation, in many respects, goes beyond what was achieved in TAFTA.

I give you these examples. Within three years of AANZFTA’s entry into force, Indonesia will have tariff-free treatment of 73 per cent of tariff lines, Malaysia will be on 84 per cent and the Philippines on 80 per cent. This compares to just 55 per cent of tariff lines with tariff-free treatment in Thailand, three years after TAFTA’s entry into force. The Rudd government will address the Thailand agreement in the mid-term review, given our more ambitious approach to trade agreements. AANZFTA is a significant advancement of TAFTA  and while there are still some inconsistencies and issues remaining in AANZFTA we are working to address them.

Last month I had the pleasure of launching a new publication measuring for the first time in broad terms Australia’s engagement with Asia. Using seven criteria, the Asialink Index found that since 1990 our engagement with the rest of the world has increased three-fold. Over the same period, Australia’s engagement with Asia increased four-fold. And the intensity of our engagement with ASEAN is underpinned by the fact that, with ASEAN, it grew five-fold since 1990.

I have no doubt that in future historians will look back and see the ASEAN-Australia-New Zealand Free Trade Agreement as a key marker in accelerating our integration into the region. If we have been able to achieve $80 billion in two-way trade without the agreement, imagine the potential for growth with this agreement.

And while there are many gloomy outlooks, particularly about the economic future of a North Asian giant like Japan, there is still growth in the region. Developing Asia is the fastest-growing group of nations, with the IMF predicting growth of more than four per cent for this group in 2009.

The Australian government is committed to deeper engagement with the Asia-Pacific region. This has been and will continue to be one of the principal drivers of our nation’s prosperity. Trade and measures to facilitate trade, like AANZFTA, are vital elements in our regional recovery road map. Through our commitment to a more liberal international trading system, including FTAs in our region, we are determined to harness the power of trade.

I ask leave of the House to move a motion to enable the Leader of the Nationals to speak for 27 minutes.

Leave granted.

I move:

That so much of the standing and sessional orders be suspended as would prevent Mr Truss (Leader of the Nationals) speaking for a period not exceeding 27 minutes.

Question agreed to.

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