Andrew Robb (Goldstein, Liberal Party, Minister for Trade and Investment) Share this | Hansard source

I rise to conclude the debate on the Customs Tariff Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014, and thank the House for the opportunity. The bill contains amendments to the Customs Tariff Act 1955 that will implement Australia's tariff commitments set out in the Japan-Australia Economic Partnership Agreement. These amendments are complementary to those contained in the Customs Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014.

In summing up, I would firstly like to thank all those who have contributed to this debate. It is a most significant agreement that we have reached with the Japanese government and the Japanese people. It will lay the groundwork to take our relationship, which has been a very strong one, to another level altogether. You could see the sense of interest in Japan in the concluding weeks of this agreement and the enthusiasm with which Prime Minister Abe, his senior colleagues, the most senior business leaders within Japan and the many others throughout their community received this agreement. This does indicate that the relationship which has been forged since 1957, when the original commercial agreement was signed, is now going to be taken to a new level altogether.

Of course, Japan is Australia's second-most important trading partner, taking nearly $50 billion of Australian exports of goods and services in 2012-13. They supplied imports of goods and services worth $21 billion in the same year, and Australia has a trade surplus of $28 billion with Japan. They are also our third-largest source of foreign direct investment, with over $126 billion invested in Australia. So, as is often seen in history when there is a strong trading relationship, you end up with a strong and mutually beneficial investment relationship, and that has been the case with Japan. This agreement not only goes to trade but also to investment. There is a very strong investment chapter to try to ensure that the ease of doing business in Australia is maximised and that the encouragement for doing business in Australia is maximised. It is most appropriate that our two countries have reached this agreement.

Negotiations on JAEPA commenced in 2007, the year in which we celebrated the 50th anniversary of the signing of the first Japan-Australia commerce agreement. JAEPA takes our relationship, as I said, to a new level. It demonstrates that Australia can continue to forge deeper relations with our old friends, while accommodating the arrival of new friends. As other speakers have mentioned this afternoon, we have just concluded the free trade agreement with China, which is in a similar vein to Japan's. It is a very comprehensive and very protection-eliminating document. Again, it goes very strongly into service areas, as does the Japanese agreement.

The big growth for Australia in the future will be in the services area. In exports, of course, resources and energy will continue to be a feature for hundreds of years for Australia, and similarly agriculture and agribusiness will be a mainstay of our trade for centuries. We are the most knowledge based economy in the region, along with Japan, and our services are much in demand. Currently, 80 per cent of our GDP is services, yet the services sector contributes only 15 per cent of our exports. In many cases the failure of growth in the services sector has occurred because of the many barriers erected by many of the countries in the region, which prevent the ease of doing services business in those economies: services like legal work, engineering work, architectural work, project management services, auctioneering services, perhaps, anything to do with town planning services, education, health and ageing. In all of these areas we have world-class expertise, and our capacity to contribute so much in the region around us is starting to be realised by these countries.

Our long-term relationship with Japan and with Korea has led to two free trade agreements which were finalised earlier this year. Both of those countries have allowed a significant opening up of services arrangements between our two countries. The China agreement—the third in the trifecta—is a remarkable document for the opportunities Australian services have in that market, which no-one else has. It is the leading edge and there are literally dozens and dozens of opportunities that have been granted to us by the Chinese government that they have not given to anyone else at this stage.

After seven years of negotiations, JAEPA is the most liberalising agreement Japan has ever concluded. It goes a lot further towards freer trade, especially in agricultural products, than Japan would be prepared to give in the WTO. The big feature of the Japanese agreement is that not only it is strong on services, but that for the first time the five untouchable areas in trade agreements were confronted; and, outside of rice, we saw movement in all of them and some significant movement, especially in beef and sheep meats. It is really an agreement which will take our relationship and our opportunities in the agricultural space to a whole new level. In fact former US Assistant Secretary of State for East Asia, Kurt Campbell, described the agreement as 'a massive victory for Australia', and he observed that Europe and the United States had been trying to get this kind of agreement from Japan for 30 years.

Most speakers have detailed the huge benefits that we will have in things like frozen beef with a sliding scale of cuts in tariffs and with a very big up-front cut. If the agreement enters into force before April next year—as I am certain it will—we will get a cut and then we will get another one after 1 April. There will be a 10 per cent total reduction in tariff in the first four months of this agreement, and that will be an advantage over the US market of 10 per cent—and they are our biggest competitor in the Japanese market for beef. That 10 per cent advantage will increase up to 19 per cent in subsequent years. In a similar way we have seen opportunities with the guaranteed safety net that says any improvements bilaterally negotiated for access by the US with Japan will be automatically applied to Australia. So with the Trans-Pacific Partnership Agreement, if the United States finds itself with any advances on what we have achieved, then we will automatically receive those same advantages. We have also negotiated removal of the 50 per cent global snapback tariff being applied to Australia when volumes exceed a trigger level. In other words, if they feel the increase in imports is getting too high too fast, there will be a trigger which discourages other imports, and that trigger will not apply to Australian agricultural products. Dairy producers receive a tariff-free quota of 20,000 tonnes for cheese, which is in addition to the current 28,000 tonnes under the WTO.

There is a whole raft of other benefits—tariffs on most seafoods, fruit, vegetables, nuts, honey and wine will all be eliminated in between one and 10 years—most of them are front-end loaded. Australian wine was worth $42 million in exports to Japan last year, but it has been losing market share to Chile since Chile signed an FTA with Japan. JAEPA allows us to level the playing field with Chile and gain immediate advantage over key competitors, such as France, Italy, Spain and the US. Outside of agriculture the agreement provides an immediate elimination of all remaining tariffs on minerals and bulk resources. This includes immediate elimination of the 3.2 per cent tariff on our $89 million worth of coking coal exports and the 7.9 per cent tariff on our $74 million petroleum and oils exports to Japan.

In services JAEPA will also allow Australian financial services companies to provide investment and portfolio management services to Japanese customers. This is significant, as Japan has the second largest pool of pension funds globally after the US. Japan has also agreed to expedite registration procedures for Australian lawyers and has committed to allowing Australian lawyers to form professional legal corporations in Japan. A raft of different qualifications and professions where mutual recognition is either going to be allowed or considered after a review process.

We will form a committee to review this agreement on a continuing basis so that everyone can see that this is a dynamic document. This is a living document. This is a document that will move with the times. It is a 21st century trade and investment agreement and one that will make our relationship stronger than it has ever been before. So it is something to celebrate.

I notice that there is an amendment from those opposite. I make the comment that the three requirements that the opposition are looking for are unnecessary. They are looking for an inclusion to not agree to any investor state dispute settlement provisions in this agreement. But it is not in there. We are just about to have it enter into force. Secondly it says, 'to enact policies to ensure that Australian workers benefit from jobs growth'. That is the whole point of this agreement, to create more jobs. That is what we are doing in seeking to clean up the economic mess that we inherited; to make the best advantage of the three agreements. Much of our objective is to stop the recklessly high levels of spending built into previous governments' programs and replace that debt-fuelled government spending with private sector activity.

These three agreements—and this one in particular from Japan—will further increase the opportunities for investment from these countries, but also for trade, which will build growth here and will build profits. It will give confidence to more investors locally. It will slow the growth of government spending and replace it with private sector activity in our local economy, which is fundamental to our long-term sustainable growth objectives.

I do not see a need to support the amendments. The final element that the opposition wanted was to utilise the review mechanisms in the Japan-Australia Economic Partnership Agreement, to seek further market access gains, especially in agriculture. That is a sound sentiment, but we put that review in so that we could further achieve gains in agriculture. So I think it is unnecessary.

Mr Acting Deputy Speaker, thank you for this opportunity to summarise some significant contributions that we have had in this debate. It is a very important occasion for Australia to sign off and enter into force this landmark agreement which will help set up, along with the other two agreements, the foundations for strong trade and investment between Australia and our three big partners in the region. It will build jobs and prosperity for many decades to come.

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