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

by leave—I am very pleased to convey to the House the news that I have this morning concluded negotiations with Chile on the Australia-Chile Free Trade Agreement. This morning I spoke by telephone to my Chilean counterpart, Minister of Foreign Affairs, Alejandro Foxley. As a result of those conversations, we finalised the remaining elements of the deal. This agreement will be formalised when Minister Foxley visits Australia in July to sign the agreement.

As the first trade agreement to be concluded by the Rudd government, this is a very strong result. This is the most comprehensive free trade agreement ever negotiated by Australia. Unlike the former government, we have delivered an FTA which meets all of our objectives and, importantly, delivers for all sectors of the economy. On goods, at the end of the implementation period or in 2015, the agreement will cover all existing trade—100 per cent of it. Tariffs covering 97 per cent of trade will be eliminated from day one of the agreement, which I expect to be 1 January next year. This is a first-class outcome on goods.

Sugar is the most sensitive sector for Chile, just as it was for the United States. However, unlike the Howard government, which wanted an FTA with the US at any cost, we made it clear that we would not accept the exclusion of sugar in this agreement with Chile. Members opposite should need no reminding that they abandoned our sugar industry, from New South Wales right up the east coast to Queensland, just to cut a deal with the US at any price.

I was not prepared to abandon Australian agriculture as the National Party did and, unlike the Liberal Party, I was not prepared to cut a deal at any price. It will be great comfort to Australian exporters to know that we have delivered for them on dairy tariffs, all meat and wine tariffs and all goods tariffs identified by Australian industry as priorities. The previous government talked big about FTAs but what did they actually deliver?

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Change, Environment and Urban Water) Share this | Link to this | Hansard source

Mr Hunt interjecting

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

The member opposite says they delivered big. They did not. In the US FTA they agreed to an 18-year phase-in for the reduction of tariffs on beef—18 years—and 18 years to agree to the full phase-in of dairy quota increases. There are no 18-year phase-ins under this deal. On the contrary, this is a World Trade Organisation-plus agreement, an FTA that truly enhances what can be achieved in the multilateral and regional fora.

On services and investment the outcomes that we have achieved go beyond the commitments both Chile and Australia have locked into at the WTO. This is WTO-plus in the real meaning of the word. It also includes a commitment by both parties to lock in any future liberalisation achieved on services and investment. This is by two means: a ratchet mechanism, which locks in any liberalisation achieved within Chile on services and investment, and a most favoured nation clause, which extends to Australia any liberalisation Chile grants to any new free trade agreement partner.

This high-quality outcome is consistent with what Labor has been saying about bilateral FTAs for some considerable time. Contrary to what the opposition has argued, we are not against bilateral FTAs. Rather, consistent with our national interests, we have recalibrated our trade policy towards multilateralism because that is where the biggest gains will arise. But this has never been about ignoring FTAs or underplaying their role. This FTA shows that Labor is about quality bilateral FTAs that reinforce and support our efforts in the multilateral arena. This is the Rudd government’s first FTA and it does just that. It is not just rhetoric. We have translated our policy into action.

Since coming into office, we have pushed hard to secure the high-quality outcome that we now have. We received an array of FTAs at different stages of development. This was the one that we focused most on because we believed that there was a real opportunity with the right political will to get an outcome that we have been advocating and the previous government could not deliver.

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Change, Environment and Urban Water) Share this | Link to this | Hansard source

Sign here, Simon.

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

I invite the honourable member to listen rather than just chortle on. The last FTA of this quality with an agricultural producing country was the CER agreement also concluded by the Labor government in 1983—25 years ago. This is the sort of FTA that will be applauded in Geneva and rightly so; it is truly WTO-plus. It introduces a high-quality FTA, importantly into the APEC region, and it will be open, through its accession clause, to other APEC members to join.

I look forward to bringing this agreement to the attention of my APEC counterparts when I travel to Peru later this week for the APEC meeting of trade ministers. This agreement establishes a model for other bilateral and regional trade and economic integration efforts among APEC members. In doing so, it sends a signal to our APEC partners, reinforcing our efforts to revitalise regional economic integration in the APEC region.

In addition to working closely with Peru, I am working closely with the next three hosts of APEC: Singapore, Japan and the US—all countries that have been original members and strong supporters of APEC in the past. We want to garner that support again, strengthen it, build on it and develop a forward agenda in the region. That is another mechanism for the WTO-plus strategy—WTO at the multilateral level, the regional agenda and then quality FTAs. This is one of the building blocks of our strategy.

This agreement also builds on a rapidly growing relationship with Chile. Two-way trade between Chile and Australia has increased in the last 12 months from $675 million to $856 million and, importantly, the investment relationship is very substantial. Australia is the fourth largest investor into Chile, with investments worth around US$3 billion. Chile is Australia’s third largest trading partner in Latin America. Chile buys our coal, civil engineering equipment, specialised machinery and vehicles. Chile buys Australian services exports in a range of sectors. It is an investment base for over 70 Australian or Australian affiliated companies, mainly mining technology, services, gas distribution and power generation.

This agreement will be a key component of the broader strategic relationship this government wants to build with Chile. It will also provide a framework for an expansion of our engagement with Latin America. Importantly, this agreement will strengthen a trade policy alliance between Chile and Australia that is grounded in a belief in the value of free trade for economic development and prosperity. That alliance has been very effective in promoting our respective trade reform agendas internationally. Chile is an active and supportive member of the Cairns Group coalition, which Australia chairs. It is a coalition which is continuing its campaign to end discrimination against agriculture in the world trading system. We are both strong contributors to the multilateral trading system.

Within the Cairns Group and beyond, Australia and Chile are working together very closely to contribute to efforts to bring the Doha Development Agenda to a successful conclusion. Australia and Chile are leading efforts at the WTO to secure a high ambition outcome across the board on market access and subsidies through the Doha Round. We are committed to a Doha agreement that produces real and effective reforms to global markets. As I have said a number of times, Australia is committed to a successful outcome to the round this year, and FTAs such as this will help to continue to build the momentum towards ambitious global trade liberalisation.

The government will be working towards the entry into force of this agreement by 1 January 2009. We want exporters to enjoy duty-free access from that date for the vast majority of trade opportunities in goods. Sectors that will benefit include energy, coal, LNG, renewable energy, agriculture, dairy, meat, bovine and bovine genetics production and production technologies, and food and beverages, including wine. On services and investment, the FTA will offer Australian businesses new opportunities across the board, including in mining and energy, technology and services, engineering and consulting services, franchising, education and training services, information technology, tourism and infrastructure.

These opportunities will be locked in from the entry into force of the agreement. And, on government procurement, the agreement provides greater certainty for Australians looking to participate in the Chilean government procurements market. The agreement will provide access to a non-discriminatory regime which puts Australian suppliers’ goods and services on an equal footing with competitors from other countries. Through the provision on intellectual property, our IP rights holders can be assured that their rights can be protected and enforced in Chile. I expect the text of the agreement to be introduced into the House within the next few weeks for review by the Joint Standing Committee on Treaties, and I will be writing to my federal ministerial counterparts and to the states and territories to convey to them the text of the agreement.

This agreement is an important contribution to Australia’s trade and economic future. It delivers on Labor’s policy to negotiate truly liberalising FTAs that enhance and build on our multilateral and regional objectives. It abolishes tariffs on all existing goods trade and it delivers an outcome on services and investment over and above that achieved in the WTO. It is an agreement of which we can be proud, and I look forward to working with the Chilean government to bring it into force and to encouraging Australian businesses to take full advantage of the opportunities it will provide.

I ask leave of the House to move a motion to enable the member for Groom to speak for 14 minutes.

Leave granted.

I move:

That so much of the standing and sessional orders be suspended as would prevent the member for Groom speaking for a period not exceeding 14 minutes.

Question agreed to.

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Trade) Share this | Link to this | Hansard source

Well, what a remarkable flip-flop we have heard here today—the Minister for Trade on his feet, lauding the benefits of a bilateral free trade agreement. What a profound moment this is, and I congratulate the member for Hotham for at last seeing the light, albeit six months late. It is a conversion on the road to Damascus, some might say. Of course, the Minister for Trade is right; this is a significant development for the Australian export industry. But let us remember that this free trade agreement is one that the minister did not negotiate the hard yards on. The hard yards were travelled by the member for Wide Bay and shadow minister for transport.

Free trade agreements do deliver sweeping benefits to Australian exporters and investors, and that is why the coalition government was serious about negotiating new opportunities for Australian exporters in the form of new free trade agreements. That is exactly why the coalition began the negotiation process with Australia’s third largest trading partner in Latin America. It is exactly why the previous government put in the hard work and took the process so far and so seriously. As the Minister for Industry, Tourism and Resources I visited Chile in 2005, meeting with business and industry representatives. It was at that point that this free trade agreement was again raised with me. I understand it had been first raised with the previous Minister for Trade, Mr Vaile, the member for Lyne, because this market was one that the previous government took so seriously and recognised as fertile ground to provide new opportunities for Australian exporters.

One does have to wonder what the lightning bolt moment was that convinced the now Minister for Trade to get on board, because for the past six months, and stretching back even further than that to his time in opposition, the member for Hotham has been spinning a very different story. It was not long ago that the minister was dismissing free trade agreements as the poor cousin to multilateral agreements. During the member for Hotham’s tenure, the minister has been crying foul over the previous government’s broad-reaching and pragmatic approach to trade.

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

Mr Crean interjecting

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Trade) Share this | Link to this | Hansard source

Mr Deputy Speaker, I did not interject during the member for Hotham’s address, and I would appreciate reciprocal action.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

I am sure the Minister for Trade will give the member for Groom clear air to continue his remarks.

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Trade) Share this | Link to this | Hansard source

It was just last year when the member for Hotham proclaimed:

Bilateral trade deals are a very poor second cousin to multilateral or regional agreements. Bilateral agreements can lead to trade diversions rather than trade creation ...

Well, if this FTA is not trade creation, I do not know what is. Now, along with his eleventh-hour conversion to bilateral agreements, the Minister for Trade is acknowledging the weakness in his own argument and conceding, albeit on the sly, that free trade agreements are complementary, not contradictory, to multilateral agreements and can actually go further and offer greater benefits for Australian exporters. Let me repeat that in the member for Hotham’s own words: can go further and offer greater benefits for Australian exporters than multilateral agreements.

Not content to accept that the coalition had adopted a robust trade policy—it immersed itself in negotiation at both a multilateral and a bilateral agreement level—the Minister for Trade has instead been selling short the extensive opportunities for free trade agreements for Australian businesses. Today I congratulate the Minister for Trade on his about-face and his new-found willingness to accept the value of following the path laid out by his predecessors. For the truth is the minister stands here today to announce the fruits of a coalition policy and coalition initiated negotiations. It was the previous government that agreed to begin discussions on a bilateral free trade agreement with Chile. It was the previous government that put in the hard work to see that goal realised.

The record shows that the Australian Labor Party has never fully negotiated a bilateral free trade agreement. And today that record remains intact, despite what the member for Hotham may want us to believe or wishes so desperately to believe himself. And really, Mr Deputy Speaker Scott, perhaps exporters will be prepared to overlook this act of policy swiping from the Labor government. Perhaps they will not begrudge the efforts of the floundering minister, who seemingly has no policy direction and no ideas about where to take this multibillion-dollar export industry. The minister may choose to stand in this place and take credit for the hard work and decisions taken by previous governments, but at least it is some good news for Australian exporters and investors. For the first time since the Rudd Labor government was elected, exporters have some good and solid news. All they had been offered before were empty words and, yes, more reviews and more reports. The member for Hotham needs to understand that rhetoric, reviews—

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

Mr Crean interjecting

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Trade) Share this | Link to this | Hansard source

Well, you cut them short on that, didn’t you? The member for Hotham gives me the opportunity to raise an issue where he travelled Australia promising exporters that he would increase the EMDG Scheme to $200 million, but only in one year. He forgot to tell the exporters that it would only be for one year. All he was able to negotiate, for all of his efforts when he went to see the Treasurer, was an extra $50 million for next year and $50 million extra for the following year but not for the two years after that. More rhetoric, no delivery. And even though exporters will be glad today to see new opportunities open up, they must be forgiven for being a little more hesitant about what the future will hold for them.

This government can only ride on the coat-tails of the previous government for so long. And so far the signs of what else the Labor government has to offer are quite disheartening. The only contribution that this government has made to forging ahead with a new FTA opportunity has been to slash the negotiation budgets for agreements with China and Japan and send mixed messages on exactly where Australia stands when it comes to bilateral agreements.

Labor has ever been trumpeting its plan to fold Invest Australia into Austrade, showing a complete lack of understanding about its role in generating increased investment and jobs in Australia. As the minister for Invest Australia in the previous government, I can only say what a fantastic job they did. All of that is gone and 100 people have lost their jobs. Time is ticking away and the patience of Australian exporters and businesses is running thin. Soon this government will have to offer more than perennial reviews and fudged policies and trying to trumpet the work that was done for them by others.