Michael Keenan (Stirling, Liberal Party, Shadow Minister for Justice, Customs and Border Protection) Share this | Hansard source

It is my pleasure to rise to talk on the Customs Amendment (Malaysia-Australia Free Trade Agreement Implementation and Other Measures) Bill 2012 and the Customs Tariff Amendment (Malaysia-Australia Free Trade Agreement Implementation) Bill 2012. I want to note at the outset that I am a very strong supporter of free trade. I think that whenever we have the chance to conclude an agreement with one of our friends or neighbours it is cause for this parliament to celebrate and endorse, because it provides not only plenty of opportunities both for our businesses and our services but also reciprocity for the services and businesses of the country with which we are pursuing the agreement. My enthusiasm for free trade is shared by all of my coalition colleagues. We are pleased about the more liberal access to each other's goods that the Australia free trade agreement will facilitate.

In terms of two-way goods and services, Malaysia is Australia's third largest trading partner in ASEAN and our 10th largest trading partner overall. The Australia-Malaysia economic relationship is a very significant one both for us and for the Malaysians as well.

According to the Department of Foreign Affairs and Trade, in 2010-12 total merchandise trade between Australia and Malaysian was worth $14.2 billion, with Australian exports of $5 billion and imports of $9.1 billion.

This agreement comes at a time when total two-way services trade in 2011-12 was $3 billion, with Australian exports of $1.6 billion and imports of $1.3 billion. The agreement builds on the ASEAN-Australia-New Zealand Free Trade Agreement and allows for significant gains for services and investment through access to increased foreign ownership in key service sectors where Australia has proven capability.

Australia's relationship with Malaysia has been long and productive. Initially, it dates back to the 19th century, when Malays participated in the pearling industry in Australia's northern waters. Australians fought alongside Malays in the 1941-42 Malayan campaign in World War II and assisted the newly independent Malaysia in the 1960s during the period of confrontation with Indonesia. Australia was also involved during the time of Malayan independence from Great Britain in 1957. Former Governor-General of Australia Sir William McKell helped draft the Malaysian constitution, and subsequently Australia also proudly sponsored Malaysia to join the United Nations.

Malaysian troops in more modern times have served alongside Australian Defence Force personnel in East Timor. Since that time, Australia and Malaysia have enjoyed an enduring and developing trading relationship, which I will speak about in some detail later on. Consultations regarding the free trade agreement with Malaysia have been underway since May 2005, when former Howard government trade minister Mark Vaile commenced negotiations with our Malaysian counterparts.

A division having been called in the House of Representatives—

Sitting suspended from 17:01 to 17:19

In future, I should probably note where I am up to when we are interrupted by a division! So if I am repeating myself, Madam Deputy Speaker D'Ath, please feel free to intervene.

I think I was just saying that as a coalition we are proud of the conclusion of this agreement with Malaysia because the negotiations for it were started under the previous, Howard government. Indeed, it was the then Minister for Trade, Mark Vaile, who commenced these negotiations, in May 2005. The agreement was concluded by this government on 22 May, when it was signed in Kuala Lumpur, with the aim that the agreement would enter into force on 1 January next year.

Australia's major merchandise exports to Malaysia include crude petroleum, copper, coal and aluminium. Australia is also one of the major providers of educational services to Malaysia. Malaysia is a major exporter of crude petroleum to Australia, as well as monitors, projectors, televisions, computers and telecommunications equipment and parts. Under this agreement, both countries will cut tariffs on a wide range of goods as well as make administration for trade simpler by addressing other barriers to trade. Australia will eliminate all tariffs on goods from Malaysia from day one. Malaysia will not go quite as far—they will eliminate tariffs on 97.6 per cent of goods imported from Australia from day one and that will rise to 99 per cent of goods imported from Australia from 2017.

Many prominent Australian industries are set to benefit from this new trade arrangement with Malaysia, including the Australian dairy industry. I know this will interest the member for Forrest. The Australian dairy industry's current exports to Malaysia are valued at $260 million per year. A liberalised licensing arrangement will allow larger volumes of milk to be exported and, for the first time, the opportunity to export high-value drinking milk in retail packs. As I said, I know the member for Forrest, with Western Australia's close proximity to Malaysia, will be interested in exploring the opportunities that are available to her constituents from this free trade agreement. In Dairy Australia's annual report for 2011-12 it was stated that as dairy products increasingly become part of the consumer's diet in Malaysia demand will only grow stronger, and Australia is well placed to meet this growing need.

The Australian automotive industry will also see an elimination of all tariffs from large cars and nearly all tariffs on automotive parts imported from Malaysia, with the elimination of all tariffs on small cars from 2016. Malaysia will immediately exempt Australian cars from its global limit on imports. The Australian wine industry will receive a guarantee of the best tariff treatment from Malaysia under the new agreement. Mr Steve Guy from Wine Australia said there were 136 individual Australian wine exporters to that market last year, which sends the message that maybe the small wine producers in Australia can find a niche in Malaysia. Given the proximity of Malaysia to Australia, and the overall preference for more expensive red wines, it makes it an attractive market for smaller producers strengthened further by this agreement.

The agricultural industry believes this agreement is a step in the right direction. Currently, Malaysia is Australia's fourth-largest sugar market and fifth-largest wheat export market. National Farmers Federation Vice President Duncan Fraser said the Malaysian market is worth about $1 billion in Australian agricultural exports and that these commodities can be boosted through the free trade agreement. Notably, there will be open access arrangements from 2023 for the rice industry, with all tariffs to be eliminated by 2026. This is a significant development for the Australian rice industry, which has traditionally struggled to get a foothold in Asian markets.

Other industries that stand to benefit include plastics, processed foods, chemicals and a wide range of manufactured products where all tariffs will be eliminated immediately. Also, tariffs on 96.4 per cent of steel and iron exports to Malaysia will be eliminated by 2016, then 99 per cent by 2017 and 100 per cent by 2020.

To complete the domestic implementation of the agreement in Australia, it requires the amendments to the Customs Act 1901 and the Customs Tariff Act 1995, the Customs Regulation Act 1926 and the enactment of a new customs regulation for the product-specific rules that are annex 2 of the agreement. On that note I now turn to the content of the two bills.

The Customs Amendment (Malaysia-Australia Free Trade Agreement Implementation and Other Measures) Bill 2012 amends the Customs Act 1901 to outline the rules contained in the Malaysia-Australia Free Trade Agreement. These rules are essential for determining whether imported goods from Malaysia are eligible for preferential rates of customs duty in accordance with the agreement.

These new rules are similar to other FTA arrangements and include definitions about when goods can be considered wholly obtained or produced, when goods are produced entirely from originating materials, and when goods are produced from non-originating materials only or from non-originating materials and originating materials. It includes a definition about what counts as a consignment and when goods are either accessories, spare parts, tools, or instructional or other informational materials imported with goods.

The Customs Tariff Amendment (Malaysia-Australia Free Trade Agreement Implementation) Bill 2012 amends the Customs Tariff Act 1995 by providing free rates of customs duty for goods that are Malaysian originating goods in accordance with the new division 1H of part VIII of the Customs Act, by amending schedule 4 of the Customs Act to maintain customs duty rates for certain Malaysian originating goods in accordance with the applicable concessional item, and by inserting a new schedule 9 in the Customs Tariff Act to maintain excise equivalent rates of duty on certain alcohol, tobacco and petroleum products. These rates are equivalent to the rates of excise duty payable on the aforementioned goods when locally manufactured.

The bilateral trade relationship between Australia and Malaysia has reached a significant cornerstone with the signing of this FTA. The agreement will help to diversify the trading relationship by opening up access to markets on both sides. This agreement will strengthen economic links between our two countries, and consumers in both countries will reap the benefits of liberalisation as prices go up and choices go up. The coalition welcomes the opportunity to renew our bilateral relationship with Malaysia. We therefore support the passage of these bills, and we look forward to them enhancing what is an already very strong economic relationship. We are pleased to see it come to fruition in the implementation of these bills, which will see the FTA implemented from 1 January next year.

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