John Cobb (Calare, National Party) Share this | Hansard source

I rise to speak on the Customs Amendment (Korea-Australia Free Trade Agreement Implementation) Bill 2014 and cognate bill. Exports are important to us because we are a country, particularly agriculturally, totally dependent on our ability to establish, maintain and develop trade relations with other countries.

There is a lot of talk, justifiably I believe, about the power of supermarkets in Australia. The best way for Australian agriculture to deal with supermarkets is to not need them. The way to not need them is to have good customers and good markets, and to export a good Australian product overseas.

I see this deal as extraordinarily important as one among others that we have to deal with and develop into maintaining a profitable Australian economy, particularly a profitable agricultural economy. This is undoubtedly—while it is not perfect, it will deliver great benefits to—

A division having been called in the House of Representatives

Sitting suspended from 10:33 to 10 : 47

To resume, we have a long history as a trading nation with an open, diverse and resilient economy. As I said earlier, two-thirds of what we grow, in agricultural terms and particularly in Calare, is exported to all parts of the world.

The Korea-Australia Free Trade Agreement does ,without doubt, add greater strength to our reputation and our ability to be one of the world's highest quality exporters—especially in key target areas such as Korea, our third largest export market and fourth largest trading partner. We must never forget that our greatest trading asset is our reputation for a very clean, green, high-quality product which is sought after around the world. Eighty-four per cent, initially, of our exports to Korea will enter duty-free after full implementation. In 15 years, the agreement will see no tariffs on 99.8 per cent of our exports. This helps level the playing field with some of the world's big exporters, including the US, and all exporters will benefit.

The beef industry is probably the best example of why the previous government should have concluded this before, when they had the opportunity. If they had not totally 'annoyed'—to be polite—the Korean government, I believe this would have happened. Beef is our biggest agricultural export to Korea; it was worth almost $800 million last year. Korea is our third biggest market for our beef. This agreement will see the elimination of Korea's 40 per cent tariff on beef over the next 15 years. Korea will eliminate its 80 per cent tariff on bovine offal as well over 15 years—and our exports of offal to Korea were worth nearly $70 million last year. Korea will also eliminate its 72 per cent tariff on processed beef over that same time frame.

KAFTA will provide a quick tariff elimination to most, but not all, of our horticulture exports to Korea. Cherries, for example, like beef, are a huge issue for people in Korea, be they on the land or be they not. Tariffs on cherries of 24 per cent; almonds and grapes—grapes come down to 21 per cent; asparagus. Any amount of horticulture really does well out of it—macadamia, citrus, tomato. This is going to be eliminated over five years. Tariffs on tomatoes—which have a 45 per cent tariff, and apricots the same—will be eliminated over the next seven years. Tariffs on our fruit—our mangoes, peaches, plums, peanuts—in their varying percentages, from 30 to nearly 64 per cent, will be eliminated over 10 years. Oranges, mandarins and kiwifruit will also have their tariffs eliminated.

Given Australian wine production has lifted so much over the last 20 years, the agreement with Korea—not due to Calare, which, I must say, does have some of the better wine in Australia. I am not one to skite but you are welcome to come and find out just how good it is! So this is really a big issue for Australia—not just my part of it but for the wine industry. Currently they face a 15 per cent tariff, and this includes sparkling wine, red wine and white wine, which will now enter Korea duty free.

I also expect the KAFTA to help revive the falling export dairy market. Dairy is another agricultural industry which is important to my part of the world but obviously huge to Victoria and Tasmania. They were worth nearly $90 million last year, which fell $20 million from 2011. The industry will benefit from immediate duty-free quotas for key parts of the dairy industry and the elimination of tariffs—up to nearly 90 per cent—on most other dairy products. Always, like with every other agricultural product in Australia, the dairy industry is dependent on the strength of its exports. Once again, I would love to see the dairy industry in New South Wales and Queensland, for example, become far more export orientated so they would be far less dependent upon our supermarkets.

Cheese, which is the main dairy export to Korea, will enjoy liberalised trade including an immediate duty-free quota of 4,600 tonnes—and that grows at three per cent per annum compound as though it was interest—and progressive elimination of the 36 per cent tariff over periods ranging from 13 years for cheddar cheese to 18 years for cream cheese, with all cheese tariffs eliminated over 20 years. Dairy and beef are actually two very sensitive issues in both Japan and Korea, so they have done a very good job here. The minister has done a very good job.

Infant formula and a range of other dairy products such as milk cream, ice cream and yoghurt: Korea is actually our biggest—

A division having been called in the House of Representatives—

Sitting suspended from 10:54 to 11:08

One of the other things which Australia has really picked up its game in is the export of lamb in recent times. In the case of Korea, they will eliminate their 22½ per cent tariff on all sheep and goat meat over 10 years; pork in five to 15. That is good news not just for Calare but for Australia.

The economic modelling of KAFTA undertaken by the Centre for International Economics estimates that goods liberalisation alone will be worth nearly $5 billion in additional income to Australia between 2015 and 2030. Exports to Korea over that time should be 25 per cent higher than they would have been otherwise without this free trade agreement—not just agriculture; mining and manufacturing exports will be far, far better off. And the job situation in Australia reflects that increase. Quite honestly, this agreement protects our competitive position in the Korean market. I think I mentioned beef earlier—how big that was. We looked as of January this year. Without this agreement, we were going to be some eight per cent worse off than the USA, who are our main competitors in the beef market with Korea.

To sum up the whole situation, I think KAFTA is a world-class agreement. It does provide new opportunities for Calare and Australia. It also confirms our standing as a reliable quality exporter. I want to talk about that for a second. I think that in the years after the war Australia was very protectionist, but the thing that we have learnt over the years is that it does tend to make you somewhat lazy. If you are protected against exports then you tend not to take up new technologies, not to spend the money on becoming more efficient, to increase productivity, quality—the lot. And Australia has learnt that. Also, we must never forget that we are a very export orientated country, as I said earlier. If we do not liberalise our own position, we are not going to get our products into other countries around the world.

We have learnt over the years that protectionism does have its bad side—as well as admittedly its good, to establish industries. There are things that are still missing in this agreement, like canola, rice, milk powders, apples and various other products, which it would have been really good to have in there. I think that, as Korea realise that they are dealing with the best quality products that can be got in the world, which they get from us, they will always know that we are as tough on the quality of our exports—tougher, I would say—as on what comes into Australia. They will know that they will always get a good quality product from us, that we are reliable suppliers and that we are very efficient suppliers. I think that, as they realise—as they must be somewhat aware now—what a good country we are to trade with and how their own industries will lift their game when they have to, we shall and we must get some agreement with them in the future about those products which so far we do not have.

I congratulate the minister on getting this agreement. It should have happened over the last six years, particularly for beef, but thank Heaven it has. Let us hope that, in the time to come, those issues that are not resolved will be and that we continue to be very good suppliers to and traders with the country of Korea.

See this speech in context