Sussan Ley (Farrer, Liberal Party, Shadow Minister for Justice and Customs) Share this | Link to this | Hansard source

I rise to speak on the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and the Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008. The coalition government began negotiations with Chile that have now been concluded with a comprehensive free trade agreement. The coalition government intended that the Australia-Chile Free Trade Agreement be an agreement between the governments of Australia and Chile that would remove most barriers to Australia’s export of goods and provide economic integration for markets through commitments in a range of areas, including trade in services, investment, government procurement, intellectual property, electronic commerce and competition policy. Whilst bilateral trade with Chile is modest, involving $856 million in 2007, Australia is the fourth-largest source of foreign investment in Chile, with investments amounting to US$3 billion in 2007.

The Australia-Chile Free Trade Agreement is expected to enter into force on 1 January 2009. In order for the agreement to take effect, both the Customs Act 1901 and the Customs Tariff Act 1995 need to be amended. The Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 contains the necessary amendments to the Customs Act. These amendments provide the rules for determining whether goods originate in Chile and establish powers to allow Customs to obtain manufacturing records from Australian producers and exporters. The amendments in this bill give effect to Australia’s obligations under chapter 4 of the Australia-Chile Free Trade Agreement. Chapter 4 outlines the rules for determining whether goods originate in Chile or Australia. The rules are integral for determining whether imported products from Chile are eligible for preferential customs duty rates under the agreement.

The Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 contains amendments to the Customs Tariff Act 1995 to implement part of the agreement by: providing duty-free access for certain products and preferential rates of customs duties for other goods that originate in Chile; phasing the preferential rates of customs duties for certain products to nought by 2015; and creating a new schedule 7 to the tariff to accommodate those phasing rates of duty. The bill aims to complement the amendments contained in the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008.

After Brazil, Chile is Australia’s second-largest merchandise export market in South America, with approximately 120 Australian companies actively trading with Chile. In commercial terms, Chile’s importance to Australia derives from our significant investment links. Over 50 Australian companies have registered offices and over $2 billion in direct investment in Chile, including activities by AGL, AMP, BHP, Hoyts and Orica. Major Australian exports to Chile in 2007 were coal, at $A94 million, civil engineering equipment at $21 million, specialised machinery at $7 million and transport vehicles at $6 million. The major Australian imports from Chile in 2007 were copper, $97 million; pulp and wastepaper, $57 million; non-ferrous base metal waste, $43 million; and pig iron $21 million.

The coalition supports the agreement, as I have said. Some of the benefits include the elimination of Chile’s tariffs on 91.9 per cent of lines covering 96.9 per cent of trade; a harmonised and simplified system of customs procedures; a commitment by Chile to maintain an open and non-discriminatory market for Australian service suppliers, including in education, professional services, mining and telecommunications services; non-discriminatory access to Chile’s government procurement market; the right of Australian investors to protect their investments through investor-state dispute settling procedures; and temporary access rights for business visitors to Chile.

This will be Australia’s fifth free trade pact and our first with a Latin American country. Australia has implemented four free trade agreements all of which were initiated by the coalition: the United States, Thailand, Singapore and New Zealand. The coalition government recognised that two-way trade between Australia and Chile is growing fast, up from $574 million in 2006 to $856 million in 2007. Australia is the fourth largest foreign investor in Chile with around $3 billion of direct investment. The coalition understood that a free trade agreement with Chile would offer Australian exporters opportunities across the board which will be particularly valuable in services and investment areas. Other areas will benefit, including energy, agriculture and food and beverages.

I will say a few words on the horticulture industry. Whilst the coalition supports free trade agreements, particularly this agreement, there have been some concerns that are worth noting regarding the horticulture industry. Horticulture Australia’s submission to the Joint Standing Committee on Treaties points out that because Chile and Australia are both in the southern hemisphere they share common seasons. This means that Chilean horticultural products can be imported to Australia at the same time as Australian horticultural products are on the market. Horticulture Australia anticipates that the price of the Chilean products will be less than the Australian products because of the cheaper labour costs in Chile. For example, Mr Peter McPherson from the Australian Blueberry Growers Association advised the Joint Standing Committee on Treaties that Chilean labour costs 40 per cent of Australia’s.

The treaties committee tabled a report on 16 October 2008 in which it recommended that the Department of Foreign Affairs and Trade undertake and publish a review of the operation of the Australia-Chile Free Trade Agreement no later than two years after its commencement in order to assess the ongoing relevance of concerns expressed about the agreement such as the maintenance of sanitary and phytosanitary measures, the impact on the horticulture industries, intellectual property, 457 visas and labour and environmental standards.

In conclusion, the coalition believes that free trade agreements are good for this country. They promote stronger trade and commercial ties between participating countries and they open up opportunities for our exporters and investors to expand into key markets. Free trade agreements help secure Australia’s competitiveness with key trading partners and they significantly enhance Australia’s broader economic, foreign policy and strategic interests. As mentioned previously, our position on these bills is that we support the Australia-Chile Free Trade Agreement as initiated by the coalition government and concluded by the present government and we support the necessary amendments in order to implement the agreement.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

The Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and cognate bill are very important pieces of legislation. On 30 July 2008 Australia and Chile signed the Australia-Chile Free Trade Agreement. The Australia-Chile FTA is expected to commence on 1 January 2009 and will provide Australia and Chile with, among other things, preferential access to each other’s goods. To give effect to the agreement, Customs will need to arrange for amendment of the Customs Act 1901 and the Customs Tariff Act 1995 and for the creation of regulations.

The Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill contains amendments to the Customs Act 1901 to introduce rules for determining whether goods originate in Chile and the requirement for Australian producers and exporters to keep and present to Customs records associated with the origin of the goods exported to Chile under the Australia-Chile Free Trade Agreement and to answer questions from Customs in relation to these goods.

The agreement was considered by the Joint Standing Committee on Treaties, and I fully support the report that was tabled in the House by the committee. We considered a number of issues when we looked at the agreement, and it was the feeling of the committee that the agreement should be supported. Some concern was expressed about horticultural matters—and I think the previous speaker referred to those concerns—but overall it was felt that the agreement would be quite beneficial to Australia. One concern was that the Australian market would be flooded with goods from Chile. It was felt that this was one area that needed to be watched very carefully. However, on the balance of trade and the benefits that would come to Australia, it was decided that it was well and truly worth while for Australia to enter into this agreement.

The free trade agreement is a comprehensive and wide-ranging agreement that provides for Australia and Chile to have much more liberal access to each other’s goods and services. The agreement reaffirms the close relationship between Australia and Chile. I see the member for Isaacs to my left; he has a very close relationship with Chile, given that his wife is Chilean. Earlier, he was espousing to me the virtues of Chile. The relationship between our two countries will flourish with this agreement. It will contribute to greater growth, prosperity and security in the region. It will be a great breakthrough for both countries.

In order to implement the agreement, two pieces of legislation require amending: the Customs Act 1901 and the Customs Tariff Act 1995. The Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill contains proposed amendments to the Customs Act 1901. These amendments provide rules for determining whether goods originate in Chile, and introduce powers to allow Customs to obtain manufacturing records from Australian exporters and producers. The amendments will give effect to Australia’s obligation under chapter 4 of the Australia-Chile FTA. Chapter 4 provides the rules for determining whether goods originate in Australia and whether goods originate in Chile. The rules are essential in determining whether goods imported from Chile are eligible for preferential customs rates under the agreement. I feel that this agreement, properly entered into with the right spirit from both countries, will really benefit both countries.

The bill will be complemented by the Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008. Goods will be considered to originate in Chile for the purpose of providing a preferential duty rate if they are wholly obtained or wholly produced in Chile or if they meet the product-specific rules of annex 4-C of the agreement. The product-specific rules use the ‘change in tariff classification’ concept, as used in previous Australian free trade agreements. Under the changes in tariff classification rules, as I said, origin will be conferred on a product where the tariff classification of the non-originating material—in this case, material from outside Chile and Australia used in the manufacture of the product—is different from the tariff classification of the goods. The rules are a means of demonstrating that there has been a substantial transformation of the non-originating material inputs, so it looks at the materials as well as the product. Customs will also have the power to obtain manufacturing records of Australian exporters and producers to verify that the goods that they export to Chile were produced in Australia.

Overall, I believe that there are safeguards in this legislation that will ensure that this agreement works and works well. I think that the treaties committee, as I mentioned, examined all aspects of this treaty, and I am very, very confident that the legislation will ensure that the agreement between our two countries operates and operates effectively.

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

The Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and the Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 will give effect to the Australia-Chile Free Trade Agreement, and so they are significant in the history of the relationship between our two countries. I was the Minister for Trade at the time that these negotiations commenced, and on 18 July 2007 I was very pleased to be announcing that Australia had decided to proceed with the free trade agreement negotiations with Chile. I said at the time:

These negotiations offer an excellent opportunity to develop a comprehensive and ambitious bilateral free trade agreement … which would eliminate barriers to trade in goods, improve conditions for services exports and investment, and offer meaningful commercial opportunities for Australian exporters.

The Government’s decision comes after consultations with Australian industry, states and territories and federal agencies, and bilateral officials’ meetings.

The trade between Australia and Chile is not huge, but it is our third largest trading partner in Latin America. The two-way trade in goods and services was valued at A$574 million in 2006 and A$856 million in 2007. Perhaps the most significant part of our relationship, however, has been in relation to investment in Chile. Australian companies have significant investments in Chile, valued at an estimated $3 billion.

The decision to undertake free trade discussions with Chile came after extensive early discussions. These discussions followed an announcement by the government on 8 December 2006 of in-principle support to commence a bilateral FTA negotiation process with Chile with a view to developing a comprehensive free trade agreement to strengthen and deepen the trade relationship. The initial stage of the FTA process was conducted in the first half of 2007 and involved officer-level bilateral meetings with Chile and consultations with domestic stakeholders. Preliminary meetings were held in Santiago in February and April 2007 to discuss the time frame for negotiations and the scope of the agreement and in particular to compare the detail of our respective FTAs with the United States. Consultations were held with Australian industry at about that time as well in many of our capital cities, and there were teleconferences held with businesses in Tasmania. In total, 76 stakeholders were consulted, and the then department received 13 written submissions. Domestic consultations at the time showed that there was considerable support from Australian businesses for an FTA with Chile, particularly from the mining and energy sectors, which participate in Chile’s strong minerals industry, particularly in copper and gold. The growing market for energy—coal, renewable energy and possibly LNG—was also of considerable interest.

It is important to note that Chile has trade agreements involving between 50 and 60 countries. They have more free trade agreements than any other country in the world. Australia has also had considerable experience in negotiating free trade agreements. We are one of only a handful of countries that have agreements with the United States. That meant that a lot of the fundamental framework discussions, which often take many years in negotiations with other countries, were essentially already done. It was a matter of checking notes and sharing our experiences in relation to our dealings with the United States, and it was therefore possible to take significant chapters from the agreements that we both had with countries like the United States to form the basis of this FTA. So the negotiations proceeded very quickly indeed and then finally came to fruition only about 12 months after they originally began. That was a remarkably short period for trade negotiations and agreements to take—in fact I suspect unprecedented in our discussions. As I said, both countries have existing FTAs. We both have well-developed legal systems. We have an understanding of the issues and therefore speedy negotiation was possible.

There has been a high level of support in Australia for this free trade agreement but it would be unfair not to acknowledge that there are industries that have had concerns. Those industries have been particularly in the horticulture and salmon sectors. I am not saying that there are not other industries that have had some concerns, but those two have been the groups which have been most vocal in expressing concern. The member for Mallee in his supplementary statement to the treaties committee report drew attention to some of those issues. He said:

Opposition to this Free Trade Agreement with Chile has a lot to do with its timing and its potential damage to the horticultural industries of regional Australia. This Australia-Chile agreement has been processed hastily and the interests of an important commodity sector ignored as a result.

The signing of an Australia FTA has the potential to force fast tracked negotiation for phytosanitary access for fresh Chilean horticultural produce into Australia (particularly table grapes).

He went on to emphasise that Horticulture Australia had expressed this concern in its submission where they said:

It is the firm expectation of the Australian Horticultural Industry that signing of the Australia-Chile FTA will bring considerable pressure for Australia and Chile to negotiate and substantially grant phytosanitary access for Chilean fresh horticultural produce in Australia. This view is supported by direct advice provided by the Chilean horticultural industry and traders.

I have to say that all through the negotiations there were reports coming from Chile that the horticulture industry in that country felt that the negotiation of an agreement of this nature would give them some priority access through the Australian biosecurity arrangements, that their products would gain a priority over others, and that we might make in Australia concessions in relation to our quarantine requirements arising from this agreement.

I hope that the minister in his summing up will place some emphasis on this concern. I believe that Australia gives the highest priority to science in determining its market access decisions. I hope that we will not make decisions that would put in danger the pest- and disease-free status that our domestic industries enjoy and that we would not endanger our natural wildlife or environment by risking the introduction of a disease. That has been a bipartisan position in relation to biosecurity issues. We may have disagreements sometimes about the science and the way in which it is developed, but I believe that both sides of politics have accepted this as a fundamental principle. It is an extraordinarily valuable asset to be disease and pest free and we must do whatever we can to preserve that. I would be very surprised if the minister, my successor in the trade portfolio, would have agreed to anything which would have in any way compromised Australia’s positions in that regard. If he has, I would be very angry with him.

I think it would be important for the record for him to state very clearly and give the assurance to the people in the horticulture sector that no special favours will be given to Chile and that no concessions will be made in relation to our pest- and disease-free status as a result of this agreement. We had an extensive chapter in the Australia-US Free Trade Agreement that dealt specifically with these issues. It put in place a consultation process but, very clearly, Australia was not prepared to make concessions to the US, nor were we prepared to make them in any of the other FTAs that we have made. I think it is important that those assurances be given again in our relationship with Chile.

The Australian horticulture industry has been concerned about the potential impact of imports from Chile on the Australian horticulture sector. Indeed, there is a reference in the honourable member for Mallee’s report about the number of jobs that there are in the Australian horticulture sector. The summer fruit industry—the peaches, plums and nectarines, a lot of which are grown in his electorate—employs about 10,000 workers, with 6,000 in the Swan Hill area alone. It has a $300 million gross value of product, so it is quite a significant industry. They are concerned about the potential for imports into Australia as a result of this FTA.

As a result of the FTA Australia is giving a commitment to reduce our tariffs, but it needs to be emphasised that there is little or no tariff barrier now for horticultural exports from Chile to Australia. For instance, the biggest single export in the horticultural sector from Chile to Australia is, in fact, frozen raspberries. In 2006 nearly $4½ million worth of frozen raspberries were exported to Australia. They were tariff free before this agreement was negotiated, so there will be no impact on the biggest single horticultural export to Australia—it will continue to be tariff free, as it has in the past. Other significant exports include products like dried grapes and dried prunes, and the tariff there is four per cent—again, quite a small level, and that is on a declining scale too. The currency movements over recent times would have a much greater impact on the competitiveness of those exports than the tariff. I think the concerns about the reductions in tariff have been somewhat overstated.

The salmon industry is another industry that has been concerned. We imported in that same year, 2006, about $2.2 million worth of salmon. Again, there is no tariff on Chilean salmon and there has not been for quite some time. This agreement will have no impact on the volume of salmon coming into Australia—it is already tariff free.

I think that some of these concerns may be a bit overstated. The primary concern, in addition to summer fruits, has been table grapes. We all know that Chile is a major supplier of table grapes and grows them quite well. There are a range of pest and disease issues but, subject to conditions, Chilean table grapes have had access to Australia since about 2005, and none have come. Even though Chile has had the access and there has been no tariff barrier, they have not chosen to export them to Australia. I think the main reason for that is the difficulty in actually transporting them from Chile to Australia. One of the things that we do not have much of is regular freight transport between Chile and Australia. Ships rarely ply the route; there are daily air services but there is limited hold capacity in an aircraft, and if you are going to airfreight grapes or something like that to Australia it will be very difficult to price them competitively. These natural barriers of distance are going to be the most significant deterrents to increased trade between Australia and Chile in that area of horticultural products.

Having said that, it is a fact that this is only the second free trade agreement that Australia has negotiated with a country that is not counterseasonal to Australia. Our other free trade agreements are with Northern Hemisphere countries and so fruit, vegetables and other products grown there are counterseasonal to what is grown in Australia. The only other free trade agreement that we have with a Southern Hemisphere country is with New Zealand. Of course there has been extensive trade, including in horticultural products, between Australia and New Zealand. That is part of the reason the Australian horticultural industry has some concern—the very time that Australian, particularly southern states, grapes and other products are in the market place is the time the Chilean producers will also be in the peak of their season and therefore be able to supply grapes perhaps at competitive prices.

There were concerns when US grapes were allowed into Australia—that that would devastate our local industry. But in practice that did not happen. In fact, the US grapes are arriving here at such a price that any Australian farmer would be happy to get that kind of return for their product. It is somewhat counterseasonal for the southern industry, but not for grapes grown in Western Australia or in Queensland; in those states there is some competition but it has not had a significant adverse effect on the local industry. So we need to be conscious and aware of the concerns of the horticulture sector and indeed other industries that are anxious about the level of competition. But in reality I am confident that Australian producers have the quality and the capacity in the industry to be able to produce and supply these products competitively.

The biggest threat to the Australian horticultural industry is not imports from Chile; it is the availability of water, from the Murray-Darling system in particular, to water the orchards and vineyards. The current buyback that is being instigated by the government is a genuine threat to our horticultural production capabilities in the future. The dryness in the river system at the present time is also a threat because even those people who have got allocations, particularly in Victoria, are getting only a very small proportion of their entitlement, and that is a very serious threat to the industry. Those are issues we ought to be addressing in Australia. I am deeply disturbed about the way in which the government is approaching the rehabilitation of the Murray-Darling Basin system. Instead of spending the allocated money on improving the infrastructure, both off-farm and on-farm, so that we in fact make more water that can then be used in the environment and through the whole of the system, the government is taking the lazy way out by simply buying up entitlements, even though there is no water to match them at the present time, and permanently putting out of production some of those keys areas. Those are the real threats to the industry in my view rather than this particular free trade agreement.

The final comment I would like to make is in relation to the strength of the relationship between Australia and Chile, particularly in an economic sense. Australian companies are really significant investors these days in Chile. We have been involved in a large number of very significant projects. BHP Billiton holds a 57.5 per cent stake in the world’s largest copper mine at Escondida, located in northern Chile, and that is a very substantial project. They have announced a tender to build a 340 megawatt coal-fired power plant—again real opportunities for Australian industry to be involved in this plant, its design and construction and eventually presumably the supply of coal. The Santa Barbara mine in which Admiralty Resources has a 50 per cent stake has commenced production of iron ore in Chile. The Australian company SMC Gold has had success with its Cinabrio mine north of Santiago and is at last returning a profit. Equatorial Mining Limited has a 39 per cent interest in the Chilean company Minera El Tesoro. Pacific Hydro has a 50 per cent stake in the joint venture constructing the 155 megawatt La Higuera plant in Chile. There are a number of other significant investments of that nature.

Our major exports to Chile include coal, civil engineering equipment, specialised machinery and optical instruments. Australian imports from Chile include copper, nonferrous base metal waste, pulp, wastepaper, pig iron and wood. The two-way trade favours Chile. They export more to us than we do them. There is also a two-way trade in services, which in 2007 was valued at over $300 million. Again, that is in Chile’s favour, but this agreement will, hopefully, open up new opportunities for Australian firms to supply to the Chilean government and other agencies and help boost the relationship in that regard.

Australia and Chile are firm friends. This agreement has been sought particularly by the Chileans for quite some time. The negotiations were smooth and have come to what I believe is a satisfactory outcome. As the minister who commenced the discussions I am very pleased to now speak in support of the necessary legislation to give effect to this agreement.

Mark Dreyfus (Isaacs, Australian Labor Party) Share this | Link to this | Hansard source

The Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and cognate bill give effect to the Australia-Chile Free Trade Agreement, negotiations for which were concluded on 27 May this year by the Minister for Trade and the Chilean Minister of Foreign Affairs. It was signed on 30 July by the Australian and Chilean foreign ministers. I had the pleasure of meeting the Chilean Foreign Minister, Alejandro Foxley, in July on the occasion of the signing and I was impressed by his deep interest in and knowledge of Australia and also by his pursuit on that visit to Australia of bilateral educational links between our two countries.

I would like to start by congratulating the Minister for Trade on his leadership in concluding these negotiations and for his leadership more generally in advancing Australia’s trade liberalisation agenda. This is the Rudd government’s first free trade agreement and it is a high-quality free trade agreement. As the Minister for Trade has said previously, the last free trade agreement of this quality with an agriculture producing country, as Chile of course is, was the closer economic relations agreement also concluded by a Labor government in 1983, 25 years ago. I have a deep interest in this bill as a proponent of trade liberalisation and, as the previous government speaker, the member for Shortland, mentioned, I am someone who has deep ties and indeed a deep affection for Chile.

This is an excellent free trade agreement. It takes us beyond our World Trade Organisation commitments. This is a bilateral free trade agreement that will support Australian efforts for further trade liberalisation at both a multilateral level through the Doha Round as well as at a regional level. It is consistent with the principles of multilateralism that will deliver further trade liberalisation.

As the Minister for Trade said at the time of the completion of negotiations, this first free trade agreement concluded by the Rudd Labor government is the most comprehensive free trade agreement Australia has ever negotiated. It will eliminate all tariffs on existing merchandise trade by 2015 and it will immediately eliminate tariffs on around 92 per cent of lines covering around 97 per cent of trade in each direction on the free trade agreement’s entry into force. It will lock both countries into a liberal services regime and liberal investment regime and will provide certainty for Australian investors in Chile. It ensures non-discriminatory access for Australian suppliers of goods and services, except financial services, to Chile’s government procurement market and it is fair to say that this free trade agreement will deliver new opportunities for trade and investment on the part of both Australian and Chilean companies, bringing benefits to consumers in both nations.

This agreement provides for both Australia and Chile to lock in future trade liberalisation measures by, firstly, a ratchet mechanism which locks in any liberalisation achieved within Chile on services and investment and, secondly, by a most favoured nation clause which extends to Australia any liberalisation Chile grants to any new free trade agreement partner. And Chile has already negotiated quite a number of free trade agreements with countries throughout the world and is actively working on free trade agreements, particularly in Asia.

Although current bilateral trade between Australia and Chile is modest in global terms, it is growing rapidly—up from $547 million in 2006 to $856 million in 2007. Perhaps more significantly, Australia is the fourth largest source of inward investment in Chile with around $3 billion of direct investment. Chile is Australia’s third largest merchandise trading partner in Latin America. Merchandise exports to Chile of A$200 million and services exports of A$120 million occurred in 2007.

The current economic relationship that Australia has with Chile is based primarily on mining, engineering, agribusiness and energy, but the services sector is increasingly important. There are over 70 Australian companies which have invested in Chile or are providing services, notably BHP Billiton, which operates in Chile the largest copper mine in the world, Escondida. Other Australian companies include AGL, which is involved with gas distribution, and Pacific Hydro in power generation. It is right to say that although Chile and Australia have many things in common, one thing that the two countries do not have in common is a water shortage. Chile has an abundance of water, which is used in particular for hydroelectric generation.

Particular service sectors that are likely to benefit from this free trade agreement include education, professional services, mining, engineering services, telecommunications and management consulting. The free trade agreement includes access for financial services suppliers to Chile’s pension funds system. Chile has been increasing its focus on the Asia-Pacific region, particularly through the APEC forum meetings. This free trade agreement has an accession clause which will enable other APEC members to join.

Over the last 50 years, world trade has grown three times faster than world output. This simple statistic is an ample sign of the increased interconnectedness in the increasingly globalised economy. While the focus of our economic activities will inevitably be on the economic powerhouses of China and India and on our longstanding trading partners in Europe, the United States and Japan, we must constantly seek new opportunities to engage with new markets in emerging economies. As well as strengthening the relationship between Australia and Chile directly, this free trade agreement will provide a bridge to Latin America for Australia and a bridge to Asia for Chile.

Australia has many shared values with Chile, most notably a democratic tradition. At this particular time Chile has a social democratic government which is deeply interested in the reform of public administration, the health system and the education system, and in that direct sense there are many similarities and matters in common between the present government of Australia and the government of Chile, presently led by Michelle Bachelet, who was elected in 2006.

It is worth mentioning that Chile has a long history of congressional democracy, sadly and notoriously interrupted in 1973 by a brutal military coup led by General Augusto Pinochet. In the weeks immediately following that coup in September 1973, many thousands of Chileans perished and many thousands of others were forced to flee the country. Australia has, in a sad way, been the beneficiary of the flight of many wonderful Chileans to this country seeking refuge from that brutal military regime. We now have a situation in Australia where there are some 23,000 Chilean-born Australians. They have made their lives in Australia and they are here to stay. Their children, in turn, perhaps see themselves as Chilean-Australians, being born here but nevertheless with many strong links back to the country from which their parents came.

Representative democracy was returned to Chile, happily, in 1989 with the re-establishment of a democratic government led by Christian Democrat Patricio Aylwin. There have been successive elections since 1989. Ricardo Lagos was elected president in March 2000 and the present President of Chile, Michelle Bachelet, was elected in March 2006. It is worth noting that Michelle Bachelet, the first woman president of Chile, has very strong links with Australia. She sought refuge from the military regime of General Augusto Pinochet by coming to Australia in 1975 and remained here into 1976. President Bachelet is a paediatrician and has, as you might gather from these few short details, a remarkable life story. She had to flee from a military regime, she managed to educate herself and acquire specialist qualifications as a paediatrician, she practised as a paediatrician for many years when she was able to return to Chile and she found time to become a mother. She managed all of that and eventually rose to the highest elected position in her own country, that of president.

There is a strong and vibrant Chilean community in Melbourne. In particular, there are a number of Chileans in my electorate in south-east Melbourne, including, as I mentioned previously, many second and third generation Chilean-Australians. It is worth noting that there has been an acceleration of visits between our two countries, particularly in this past decade. In this year alone, there have been a number of parliamentary and ministerial visits. This year Minister Garrett, the Minister for the Environment, Heritage and the Arts, has been to Santiago for talks on whaling. The Parliamentary Secretary for Early Childhood Education and Childcare, Maxine McKew, and the Parliamentary Secretary for Trade, John Murphy, have also visited Santiago this year. I have mentioned the visit by Minister of Foreign Affairs Alejandro Foxley to sign the agreement in July. If we go back to last year, the president herself, Michelle Bachelet, visited Australia during APEC in 2007. We have had visits from Chilean ministers for finance, agriculture, foreign affairs and mining and energy during 2006 and 2007. There was another presidential visit by former President Ricardo Lagos to Australia in 2005. Going back a year before that, Prime Minister Howard and the ministers for foreign affairs and trade in the former government visited Chile in November 2004. That same year, the then Minister of Defense, now President, Michelle Bachelet, also came to Australia. There have been parliamentary delegations from both countries returning visits.

The two countries are working on strengthening links not just through this free trade agreement. It is worth mentioning a memorandum of understanding, signed in July 2005, which established a work and holiday visa program between the two countries. Chile and Australia have also signed a bilateral social security agreement. And, as I mentioned at the start of this speech, there is work proceeding—work which was carried forward by the Chilean foreign minister when he came to Australia in July—pursuing bilateral education linkages. These linkages are intended to build on the announcement by the Chilean government in May of an expanded international scholarship program. Under this program, Chile will fund Chilean students in their thousands to study in the United States, Canada and Australia. Very many Chilean students are choosing Australia from among the countries that they can go to, apparently recognising the excellence of Australian universities. I know that the Chilean Ambassador to Australia, His Excellency Jose Balmaceda, has done great work in forging links with Australian universities to provide places for the students from Chile who are going to take up places in the international scholarship program announced by the Chilean government earlier this year.

I should perhaps declare a little more directly my interest, as mentioned by the member for Shortland, which is of course that my wife was born in Chile and lived there for the first 15 years of her life. I have visited Chile with her for two lengthy periods—the first in 1981, when my wife and I backpacked to the very far south of Chile and also to the far north. As most people would be aware, it is a very long country—7,000 kilometres of coast facing the South Pacific. It ranges from the hot north, with what is said to be the driest desert in the world, the Atacama Desert, down to the frozen south and Tierra del Fuego, if one goes to the bottom of the continent. The Chileans, of course, claim a Chilean Antarctic territory, which is something else that they have in common with our country, in that they have a deep and abiding interest in the protection of the Antarctic. On that visit, I spent time in the beautiful lakes district and on the historic island of Chiloe and walked in the spectacular Torres del Paine National Park in the far south, going as far south as the quaintly named town of Porvenir in Tierra del Fuego, but we did not get all the way south to the Antarctic territory.

In 1981, Chile was still ruled by the brutal and repressive military regime of Augusto Pinochet, with a curfew and tight military control. It was a relief to be able to return to Chile in 1995, this time with my wife and three children, for some five months and find that democracy had been well and truly restored. There was a very marked contrast, as you might expect, between the atmosphere of the country in 1981, at a time when political activity was effectively banned and many, many people had been detained by the military regime and remained in detention, and the environment of 1995, with a fully functioning congressional democracy. We lived in Santiago for those five months, visiting again the lakes district. My children went to school for a term in Santiago, and it enabled us to well and truly participate in the life of the country and gave me a much deeper understanding of just how much Australians and Chileans have in common. They have in common not only a commitment to democracy but a love of fine food, a love of fine wine and a love of sport. They are almost as mad sports followers in Santiago, Chile, as the people are in the city I come from, Melbourne—even down to having a football team that wears the same colours as the Collingwood football team and has a name that is very similar: Colo Colo.

The two countries have much to look forward to in terms of building on those shared links. There are shared links in trade, there will be I hope shared links in a cultural sense and I hope there will be shared links in education. Australia has found, over the past four decades or so, the education of students from Asian countries leading to permanent links with people who have been educated in Australia and have returned to their countries; so too I hope with Chile. I hope that thousands of students from Chile will come to Australian universities. Some of them may stay, as occurs with students from Asian countries, but many more of them will return home to Chile and it will be possible to build on those links.

The Labor Party has a longstanding commitment to trade liberalisation. The government is continuing discussions with the Gulf states and with China, Korea, Malaysia, Japan and India in relation to trade liberalisation. Most importantly, the Minister for Trade has continued to push for a successful conclusion to the Doha development round. As the minister has said:

If we have the right political will, I am convinced we can conclude a Doha package which would have major benefits for the world economy and for Australia’s future trade and prosperity.

I congratulate the Minister for Trade on the conclusion of this excellent free trade agreement and commend the bill to the chamber.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

I thank the member for his contribution, soured somewhat towards the end with a reference to the Collingwood Football Club! I now call on the member for Forrest.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and the Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008. The explanatory memorandum notes that Australia’s trading relationship with Chile is $856 million in Australian dollars, ranked as Australia’s 41st largest merchandise trading partner and our 28th largest services trading partner in 2007. Basically underpinned by a solid investment relationship, Australian companies have significant investments estimated at about $US3 billion in 2007, the fourth largest source of foreign investment in Chile. With a major presence in the mining sector, Australia’s top goods exports to Chile in 2007 were coal, civil engineering equipment, specialised machinery and transport vehicles. Australia’s main imports from Chile were copper, pulp, wastepaper, non-ferrous base metal waste and pig iron.

Australian business sees significant potential in the Latin American market and considers Chile, with its relatively stable and transparent commercial environment, to be the practical stepping stone into other markets in Latin America. In addition to Australia’s exporters of coal and possibly LNG in the future, Australia’s mining services companies see increasing opportunities in Chile’s buoyant mining industry. There is also increasing interest in Chile’s agriculture, entertainment and education sectors as well as in professional services, particularly engineering.

The coalition began negotiations with Chile in a formal sense in 2006 with a view to developing a comprehensive agreement. This process has now concluded with a comprehensive free trade agreement. It was the intention of the coalition government that the Australia-Chile Free Trade Agreement remove most barriers to Australia’s exports of goods and provide economic integration for markets. The Australia-Chile Free Trade Agreement is expected to enter into force on 1 January 2009. In order for the agreement to take effect, both the Customs Act 1901 and the Customs Tariff Act 1995 need to be amended. The Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 contains the necessary amendments to the Customs Act 1901. These amendments provide the rules for determining whether goods originate in Chile and establish powers to allow Customs to obtain manufacturing records from Australian producers and exporters. The amendments in this bill will give effect to Australia’s obligations under chapter 4 of the Australia-Chile Free Trade Agreement. Chapter 4 outlines the rules for determining whether goods originate in Chile or Australia. The rules are integral for determining whether imported products from Chile are eligible for preferential customs duty rates under the agreement.

The Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 contains amendments to the Customs Tariff Act 1995 to implement part of the agreement by providing duty-free access for certain products and preferential rates of customs duty for other goods that originate from Chile; phasing the preferential rates of customs duty for certain products to 0 by 2015; and creating a new schedule 7 to the tariff to accommodate those phasing rates of duty. The bill aims to complement the amendments contained in the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008.

After Brazil, Chile is Australia’s second largest merchandise export market in South America, with approximately 120 Australian companies actively trading with Chile. In commercial terms, Chile’s importance to Australia derives from our significant investment links. Over 50 Australian companies have registered offices with over $2 billion in direct investment in Chile, including activities by AGL, AMP, BHP, Hoyts and Orica. Major Australian exports to Chile in 2007 were coal, civil engineering equipment, specialised machinery and transport vehicles. The major imports from Chile in 2007 were copper, pulp and waste paper, non-ferrous base metal waste and pig iron.

The coalition supports the agreement, with some of the benefits to include the elimination of Chile’s tariffs on 91.9 per cent of lines covering 96.9 per cent of trade; a harmonised and simplified system of customs procedures; a commitment by Chile to maintain an open and non-discriminatory market for Australian service suppliers, including in education, professional services, mining and telecommunication services; non-discriminatory access to Chile’s government procurement market; the right of Australian investors to protect their investments through investor-state dispute settling procedures; and temporary access rights for business visitors to Chile.

This will be Australia’s fifth free trade pact and our first with a Latin American country. Australia has implemented four free trade agreements, initiated by the coalition: the Australia-United States Free Trade Agreement, the Thailand-Australia Free Trade Agreement, the Singapore-Australia Free Trade Agreement, and the Australia-New Zealand Closer Economic Relations Trade Agreement. The coalition government recognised that two-way trade between Australia and Chile is growing quickly—up from $574 million in 2006 to $856 million in 2007. Australia is the fourth-largest foreign investor in Chile, with around $3 billion of direct investment. The coalition understood that a free trade agreement with Chile would offer Australian exporters opportunities across the board which will be particularly valuable in services and investment areas, including: mining and energy; technology and services; engineering and consulting services; franchising; education and training; information technology; and tourism and infrastructure. Other areas that will benefit include: energy, including coal, LNG and renewables; agriculture, including dairy, meat, ovine and bovine genetics production and technologies; and food and beverages, including wine. Our Australian agricultural sector contributes significantly to our economy as one of the largest exporters of beef, mutton and lamb and as one of the world’s largest producers of wool. The dairy industry is a major exporter and one of our biggest agriculture producers.

While I support the free trade agreement, I understand the potential effects of the agreement on the horticulture industry. There have been some concerns that should be noted regarding the horticulture industry. Horticulture Australia’s submission to the Joint Standing Committee on Treaties pointed out that because Chile and Australia are both in the Southern Hemisphere, they share common seasons. This means that Chilean horticultural products can be imported to Australia at the same time as Australian horticultural products are on the market. The submission notes that Chile and Australia are global competitors in horticultural products and Chile is a major producer and global trader of table grapes, apples, avocados, kiwifruit, stone fruit, pears, berries and cherries. It also noted that Chile’s global horticultural exports in 2007 were valued at US$3.2 billion while Australia’s were valued at US$800 million.

Horticulture trade is defined in the submission as covering nursery, vegetables excepting legumes, fruit and nuts and further processed horticultural produce. Industries that could be affected are table grapes, apples, pears, summerfruit, cherries, strawberries, blueberries, avocados, prunes, dried grapes, citrus fruits and other fruits. Many of these are grown in my electorate, and I am very concerned about the effects on my producers, particularly on the new avocado venture by Advance Packing and Marketing Services, owned and run by growers in Manjimup and Pemberton. The new venture, which was badly impacted by the scrapping of the Regional Partnerships program, has in spite of this allowed nothing to stand in its way after years of planning and development. The growers have funded and built a $2 million packing shed totally dedicated to packing avocados for the 30 growers in the region.

The south-west now produces the majority of avocados in Western Australia, 20 years since the first commercial plantings commenced in the region. The crop this year will more than double to a million trays of avocados. Horticulture Australia’s submission stated that the avocado industry has a base of 1,100 growers, with a GVP of A$120 million, and considered that a significant share of the domestic market, potentially 25 per cent or more, could be lost to the Chileans. It was noted that Chilean avocados have a much lower cost of production than Australian avocados, and at certain times of year there are large spikes in production, which means growers have trouble moving into the US and Europe and could find a market in Australia.

Apples and pears are also grown in my electorate, mostly around the town of Donnybrook. Horticulture Australia’s submission noted that, because there is a base of 1,400 growers and a GVP of approximately $450 million, there would be a significant negative impact on price returns to Australian growers and it could result in the loss of up to 40 per cent of the domestic market. Chile, it said, is a substantial global producer, heavily geared to export markets, with the key advantages of cheap labour and water.

Horticulture Australia anticipates that the price of the Chilean products will be less than that of the Australian products because of the cheaper labour costs in Chile, and stated that labour comprises approximately 70 per cent of the total domestic cost of production in Australia. The submission also states that Australia’s imports of horticultural produce from Chile were valued at A$17 million in 2007, while Australia’s horticultural exports to Chile were minimal, at just A$300,000.

Australian Pork Ltd also expressed concerns about phytosanitary issues, stating in its submission that, in terms of food safety, the agreement should not negotiate on specific SPS measures or on trade-offs between market access and the application or lowering of SPS measures and standards. It also stated that DFAT should:

… recognise Australia’s unique health status as superior over those Chile has confirmed equivalence with its meat inspection systems with the US and Canada.

A submission to the Joint Standing Committee on Treaties from the Queensland government noted:

… the Queensland Government would not like to see any changes to Australia’s scientifically-based Import Risk Assessment processes as a means to provide additional access for fruit from Chile.

Clearly the Joint Standing Committee on Treaties acknowledged the concerns of the horticulture industry and other submissions. Their report 95, tabled on 16 October 2008, recommended that the Department of Foreign Affairs and Trade undertake and publish a review of the operation of the Australia-Chile Free Trade Agreement no later than two years after its commencement in order to assess the ongoing relevance of concerns expressed about the agreement, such as the maintenance of sanitary and phytosanitary measures, the impact on the horticulture industries, intellectual property, 457 visas, and labour and environmental standards. I will certainly be monitoring these issues during the two-year process. I have no doubt those in the horticulture industry will also be monitoring them, given their concerns with regard to biosecurity and phytosanitary issues and given the concerns expressed by horticulture leaders during the recent melamine problem in China. According to the Countryman of 9 October, media reports from China claimed that ‘excessive’ amounts of melamine had been found on Chinese lettuce, tomato, mushroom, watercress and potato. In the article, AUSVEG chairman David Anderson, consumer advocate Choice and Apple and Pear Australia manager Tony Russell called for more testing of Chinese produce. According to the article, Mr Anderson also said that ‘testing of imported produce should be increased at least to the level Australian growers are tested’.

Almost 53, 000 children had been taken to hospital after drinking milk thought to have been contaminated by the industrial chemical melamine. Melamine, normally used in making plastics, was first found in infant milk formula but has since been detected in a range of products with dairy ingredients, prompting a string of countries to ban or recall Chinese dairy imports. The Chinese scandal stems from the practice of adding melamine to watered-down milk to give a reading of higher protein levels. Food Standards Australia and New Zealand issued a media statement on 9 October, which stated:

At this stage we can find no evidence that fruit and vegetable imports are unsafe but it’s certainly something we’re looking at.

I, along with the rest of the coalition, believe it is important that the recommendations of the Joint Standing Committee on Treaties are taken very, very seriously and given due and major consideration when the free trade agreement is reviewed, given how critical agriculture and horticulture are to Australia. Our top agricultural exports in 2007 were beef, wine, wool, meat excluding beef, wheat, milk and cream. The Department of Agriculture, Fisheries and Forestry report Australian Food Statistics 2007 said Australian farmers produce almost 93 per cent of Australia’s domestic food supply—and, I would say, by majority, some of the highest quality food in the world. But we all seem to take the farmers and our access to this quality food for granted. We assume farmers will always be there and we assume they will keep producing high-quality food even when they are not making commercial returns for their efforts.

ABARE in 2007 stated that Australia also exports 61 per cent of total agricultural production. In terms of value, this represents around 80 per cent of the total gross value of Australian agricultural production. ABARE also said: ‘Despite the worst drought on record, Australia’s farm exports earned the country $27.6 billion in 2006-07. This represents 20 per cent of total commodity exports and 16.3 per cent of all Australian merchandise exports.’

Farmers are now facing a review of drought assistance measures by the Productivity Commission, having to seek independent advice to determine whether their business is viable in the long term before being considered for drought aid. The NFF states that Australia remains among the least subsidised farming nations on earth. According to the NFF, by comparison overseas farmers enjoy unbelievable levels of government assistance as a matter of course. For example, among our major trading partners, in Korea it is 63 per cent; Japan, 53 per cent; the European Union, 32 per cent, Canada, 23 per cent; and the United States, 11 per cent.

According to modelling by Econtech in their report titled Australia’s Farm-Dependent Economy Report 2005, Australian farms and their closely related sectors generate $103 billion a year in production. The Productivity Commission, in its research paper Trends in Australian Agriculture 2005, shows that over the last 30 recorded years Australian farms have consistently achieved average multifactor productivity growth of 2.8 per cent a year. According to the NFF website, no other industry, with the sole exception of telecommunications and information technology, comes close to this achievement. Australian farms drive $28 billion dollars a year in exports and support 1.6 million jobs across our cities and regions.

What is not well understood is that Australian farmers, according to the NFF, invest $237 million dollars a year in research and development. This is farmers actively pursuing innovative technological and environmental advances to be efficient, competitive and sustainable. Make no mistake, Australian farmers are some of the best in the world. They have had to be to survive, particularly when they compete in such highly subsidised international markets. But they often do not receive the respect they deserve. Recently an article in the Busselton Dunsborough Times quoted young dairy farmer Brynley Jenkins talking about the good and bad points of being a farmer. In part, he said: ‘In reality it’s one of the hardest businesses to run. The perception is the other way around.’

The NFF also acknowledges that farmers occupy and manage 61 per cent of Australia’s landmass, contributing over $3 billion of their own money to the environmental management of Australia’s natural resources and ecosystems. It says farmers are meeting growing community and consumer expectations about quality, choice and affordability while meeting Australia’s mounting food security needs.

But farmers are concerned that the fluctuation of the Australian dollar is impacting on their bottom lines in international markets—for instance, in Japan. In a recent issue of WA Business News, Margaret River Premium Meat Exports director John McLeod said:

It’s been quite difficult actually, in that trying to fix contracts with Japan for instance, we would normally be doing contracts for six-month periods …

We were in the process of negotiating the next six-month period when all this happened and the dollar started falling out of bed.

Therefore, the recommendations of the Joint Standing Committee on Treaties must be followed through and the Department of Foreign Affairs and Trade should publish a review of the operations of the Australia-Chile Free Trade Agreement. What will the process be if the concerns are upheld? How will this be covered in the legislation? What additional government resources have been allocated in the budget and forward estimates to cover the additional phytosanitary measures required to monitor the imported produce and what additional resources and scrutiny will be applied?

I support the free-trade agreement. It will promote stronger trade and commercial ties between participating countries and open up opportunities for Australian exporters and investors to expand their business into key markets. As mentioned previously, our position on these bills is that we support the free trade agreement. Whilst I strongly believe this, we need to adhere to the recommendations of the standing committee.

Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

Having chaired the Joint Standing Committee on Treaties inquiry into the Australia-Chile Free Trade Agreement, I am delighted to have the opportunity to speak to the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and cognate bill in a little more detail. In the course of the evidence we received it struck me that there are a number of features of the present trade negotiations arrangements which need to be discussed in some detail. I want to go through some of those. Firstly, I will go to the question of transparency. The parliamentary Joint Standing Committee on Treaties has recommended that the government, before commencing negotiations for any future trade agreement, should table in parliament a document setting out its priorities and objectives. The document should include independent assessments of the costs and benefits. Such assessments should consider the expected economic, regional, social, cultural, regulatory and environmental impacts.

I believe that such an arrangement would improve transparency in trade agreement negotiations and address the legitimate concern that people have that the community gets presented with faits accompli when it comes to trade agreements. Trade negotiations at present are a bit like a train going into a dark tunnel. We do not know what is going on in there, and when something magically emerges out the other side it is a bit late to change any aspects that we might disagree with.

I mentioned the question of labour rights and environmental standards. The Labor Party national platform says that there should be an obligation in all trade agreements to respect core labour standards. It further states that all major trade agreements into which Australia enters—bilateral or multilateral—should be assessed to ensure that they are consistent with the principles of sustainable development and environmental protection for all regions of Australia. We need to ensure that trade agreements respect this; otherwise environmental protections can be challenged and overturned by the World Trade Organisation. As an example, in 1996 the World Trade Organisation ruled against a provision in the United States Clean Air Act on the grounds that the application of domestic emission standards to imported fuel discriminated against countries whose fuel did not meet those standards.

Of particular importance and salience are efforts to tackle the challenge of global warming. Measures such as emissions trading, carbon taxes and emissions labelling are all capable of being challenged in the WTO. The Bush administration, when pressuring the European Union to drop provisions in its cap and trade scheme that would require importers of carbon intensive goods to buy credits, referred to the possibility of WTO violations. I believe that Australia must not undermine its ability to tackle climate change by way of trade agreements. We should lobby the WTO to recognise the primacy of United Nations agreements on climate change and other environment protection treaties and to acknowledge that governments have the right to regulate to mitigate climate change.

Another specific area needing attention in trade agreements is the question of migrant workers. There is clear evidence that the Howard government’s section 457 visa arrangements have led to the exploitation of vulnerable temporary workers. The parliament’s treaties committee was told of workers not getting paid at all, of them owing migration or labour hire agents large fees and of inadequate occupational health and safety standards. Trade agreements should not fetter the power of government to put in place proper labour standards. As the Australian Fair Trade and Investment Network has pointed out, workers are not commodities and the rules that govern trade in goods and services should protect their rights. The position of the previous government that workers rights should be excluded from trade agreements is wrong and should be overturned.

Furthermore, arrangements to allow in temporary workers should not be part of trade agreements. I understand that China wants an expansion of the 457 visa entry to broader categories of unskilled workers as part of a trade agreement with Australia. It is a recipe for exploitation. It has been suggested that we should not be in the business of regulating the 457 visa scheme as this is an important thing for us to trade off in trade negotiations, given that we have so little left in the way of tariffs to give away. I do not agree with such an approach.

I further believe that we will need to look more critically in future at the general tendency of trade agreements to hamstring and limit the power of governments. We have seen recent crises such as the global financial crisis, the climate crisis and the food crisis. They have all forced governments to act and, in many cases, to take drastic action hitherto considered unthinkable. Governments need to have the flexibility and capacity to take strong and decisive action. Trade agreements should not stand in the way of governments being strong and decisive when the times and circumstances demand it.

The Australia-Chile Free Trade Agreement will remove most barriers to Australia’s exports of goods to Chile and provide economic integration for markets through commitments in a range of areas, including trade in services, investment, government procurement, intellectual property, electronic commerce and competition policy. As previous speakers have noted, Horticulture Australia has expressed concern about the potential impact of the free trade agreement on their industries, including the risk of added pressure from Chile for Australia to weaken our biosecurity measures or to expedite Chilean requests for biosecurity assessments. The trade union movement has expressed concern that short-term labour movements from Chile under Australia’s 457 visas conditions, which have attracted controversy and are currently under review, could be locked in by the free trade agreement.

To address these concerns, the treaties committee has recommended that the department undertake and publish a review of the operation of the agreement no later than two years after its commencement to assess the ongoing relevance of the concerns expressed. Furthermore, we have recommended that the government before commencing negotiations for any future trade agreement should table in parliament a document setting out its priorities and objectives. As I indicated earlier, this sort of assessment should consider economic, regional, social, cultural, regulatory and environmental impacts which are expected to arise. I think that would represent a significant improvement in terms of transparency.

The committee heard evidence that, while the Australia-United States Free Trade Agreement contains chapters that refer to ILO and United Nations standards on labour rights and the environment, the agreement with Chile does not and that environmental and labour standards in the Australia-United States Free Trade Agreement were inserted at the insistence of the United States. During the hearing, I asked the department’s trade development assistant secretary whether we had an objection to ILO conventions such as the abolition of child labour being included in free trade agreements. She said:

It is not our preferred position that they be included.

I think members of the House can expect that the question of relevant ILO conventions in future free trade agreements will be the subject of detailed scrutiny.

The governments of Australia and Chile signed this agreement back on 30 July this year. It is scheduled to enter into force on 1 January 2009. It is the first free trade agreement with a Latin American country. It is expected to deliver new trade and investment opportunities to Australia, and it should provide us with growing links with the Latin American market. Tariffs on all existing merchandise trade will be eliminated by 2015. The vast majority of goods exported in both directions will be duty free once the free trade agreement comes into force. It will secure a liberal services regime, it will lock in a liberal investment regime and it will guarantee both sides high standards of intellectual property protection for patents, trade marks, geographical indicators and copyright. The free trade agreement secures national treatment for Australian goods, services and suppliers in the Chilean market for procurements above agreed value thresholds.

I think it has been noted in debate already that trade between Australia and Chile is growing rapidly. Two-way trade was $856 million in 2007, up from $574 million in 2006. Australian exports to Chile include coal, civil engineering equipment, specialised machinery and vehicles. Our merchandise exports to Chile in 2007 were valued at $200 million and our services exports in 2007 reached $120 million.

The Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill will provide the rules for determining whether goods originate in Chile and will introduce powers to allow Customs to obtain manufacturing records from Australian exporters and producers. The amendments will give effect to Australia’s obligations under chapter 4 of the free trade agreement. This provides the rules for determining whether goods originate in Australia or Chile. The rules are essential for the purposes of determining whether imported goods from Chile are eligible for preferential Customs duty rates under the agreement.

This bill is being complemented by the Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008, which amends the Customs Tariff Act 1995 by creating free and preferential phasing rates of duty on goods that are Chilean in origin. Goods will be considered to originate in Chile for the purposes of providing a preferential duty rate if they are wholly obtained or wholly produced in Chile or if they meet the product specific rules of annex 4-C of the agreement. Those product-specific rules use the ‘change in tariff classification’ concept as used in previous Australian free trade agreements. Under the change in tariff classification rules, origin will be conferred on a product where the tariff classification of each non-originating material used in the manufacture of the product is different from the tariff classification of the goods. Those rules are a means of demonstrating that there has been substantial transformation of the non-originating material inputs. Customs will also have the powers to obtain manufacturing records of Australian exporters and producers to verify that the goods that they export to Chile were produced in Australia.

The free trade agreement contains commitments on both sides going beyond the commitments both countries have made in the WTO. It is an important step forward in Australia’s relations with Chile and, more broadly, with the Latin American region. It eliminates, on entry into force, Chile’s tariffs on lines covering something like 97 per cent of trade, including for coal and priority dairy tariffs, all meat and wine tariffs and all other industrial tariffs of interest to Australian industry. It will provide a harmonised and simplified system of customs procedures which aims to facilitate trade and a system of advanced rulings which will enable exporters to ascertain whether their exports will qualify for preferential tariff treatment before shipment. Areas I have talked about which will potentially benefit include energy, such as coal and LNG. I have made the point a number of times in the House that Australia’s vast natural gas resources have a potentially vital role to play in reducing greenhouse gas emissions in the region. All of these areas will potentially increase as a result of the agreement.

I ought to note that there were concerns raised with the treaties committee by the trade union movement and the Australian Fair Trade and Investment Network. It was noted that there is concern in the community about inconsistency in policy which allowed issues like labour standards to be included in the US free trade agreement but not in other bilateral agreements. In particular, there was strong support, in submissions to the treaties committee, for some of the International Labour Organisation’s declarations on fundamental principles and rights at work. These standards include the right of workers and employers to freedom of association and the effective right to collective bargaining, ILO conventions 87 and 98; the elimination of all forms of forced or compulsory labour, ILO conventions 29 and 105; the effective abolition of child labour, ILO conventions 138 and 182; and the elimination of discrimination against women in respect of employment and occupation, ILO conventions 100 and 111.

Concerns were also raised about the inclusion of 457 visas in the agreement, particularly given some of the concerns that have more generally been expressed about the application and operation of 457 visas. In outlining these concerns, it is my intention, as I have mentioned before in the parliament when presenting the treaties committee reports, to encourage the government to table in parliament a document setting out its priorities and objectives before commencing negotiations for any future trade agreements. These priorities should be looking at the inclusion of relevant ILO conventions in future trade agreements.

This particular free trade agreement represents a significant achievement for the government. I believe that it will facilitate trade and investment between Australia and Chile and that it creates a framework of cooperation that builds on existing relationships and facilitates further opportunities for trade and investment that will promote economic growth and development. I commend the bills to the House.

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Energy and Resources) Share this | Link to this | Hansard source

I am pleased to speak on the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and the Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008. One of the reasons I am very pleased to speak on these cognate bills is that I have had the opportunity to spend some time in Chile. Like others who have had the opportunity to represent the government in parts of the world, I have been very fortunate to have been in a number of the countries in South America over the last few years. Chile is probably one of the most impressive countries that I have visited in that region. In fact, the delegation that I was lucky enough to be involved in was led by the former Speaker, the member for Wannon, and, dare I say, the former member for Isaacs before she retired. In addition to those there was the member for Lyons, who was also one of the then opposition members of the delegation.

At the outset I say that I was very lucky to have met our ambassador to Chile, Mr Crispin Conroy. I put on record that Mr Crispin Conroy is an outstanding representative of Australia in the Latin American region. His ability to weave his way through the Latin American countries and to be accepted with such a welcoming embrace everywhere we went was testament not only to his ability but to the staff who represented him in Santiago. Besides the fact that he is fluent in Spanish and that his wife is a Colombian, he obviously has a great affection for the region, and I understand that he has now been deployed to a further role in that region. I just wanted to make sure that people understood what a great representative in opening up opportunities for us in South America we have in Mr Crispin Conroy.

I am sure that other speakers have gone into much of the detail of the bills, and I want to speak to some tangential issues associated with the bills. Realistically, of course, the coalition supports this Australia-Chile Free Trade Agreement, because it was on the drawing board and its implementation commenced while we were the government. I am sure ex-Minister Truss, the member for Wide Bay, would have said that in his contribution, and it is pleasing to see that the Labor Party, now in government, have finalised this free trade agreement with Chile.

The fact is that Chile in itself is an outstanding country in the region because it is a good strong democracy. Since the demise of the military rule of Augusto Pinochet it has been a beacon of democracy in the South American region and it has been a modernised economy which is an example to the rest of the economies in South America, probably second only to Brazil in terms of its ability to have modernised. Brazil is obviously a huge economy not only in size as a country but also in size and volume and GDP et cetera. But Chile has got its parliamentary infrastructure in place. I was also lucky enough to visit the parliament in Valparaiso and to meet in the chamber with many of its deputies, and we were made very welcome as Australians. From that point of view, we do have a very good relationship with Chile.

For example—and I know that it is not recorded everywhere in the documents that we were given—there is a huge and increasing education trade between Australia and Chile. I am sure that it will benefit from this free trade agreement because it takes away so many impediments. We met representatives who were organising the cross-pollination of our students, and largely their students, to Australian universities. This is a very big income earner for Australia. Australia is a very popular destination for Chileans to further their tertiary education in particular.

This is a milestone because it is the first Latin American country, as I am sure many others have outlined, to have a free trade agreement with Australia. When this was initially proffered the argument was—and we could go into it further—that it really was not a good opportunity in some respects because we are in the southern hemisphere and many of the goods and tradeable items with Chile are ones that mature in the southern hemisphere at the same time as ours. Whether grain crops or other agricultural produce, obviously it is beneficial to us if we can trade with somebody in the northern hemisphere in the opposite cycle of the seasons.

The other huge impediment is the distance. Anyone who has ever flown to Santiago from Australia will know what a long and arduous trip it is. Lan Chile is probably one of the better airlines around the world, and certainly in South America, but it is a long trip. You have to break your trip in Auckland and then spend a long time over the water across the Pacific. If it takes that long by air, imagine how long it takes by ship. It puts a huge impost on the cost of transporting goods because we are such a distant trading partner.

But, as I said, we do have a great relationship and it is growing all the time. The trade at the moment is relatively modest, something like $856 million in 2007, coming off a base of $574 million in 2006. We are the fourth largest investor in Chile, with over $3 billion invested from Australian companies. I believe that we are something like 29th in terms of our trading volumes with Chile and 27th in terms of their trade with us. Once this agreement is implemented, as I understand, in January 2009, it will take away the tariff barriers and this will make it far more acceptable and attractive to trade with Chile.

While I am on South America, I was also lucky enough recently to go to Colombia. We know that Colombia wished to have a free trade agreement with the United States. That might be somewhat circumvented by the election of the Obama government, not for any other reason than that the Obama government, according to some commentators, is predicted to be more an insular government than an expansionist government. There are a lot of outstanding issues. For those who want to continually say, ‘What a terrible country Colombia is because it is racked by drug lords and cocaine and all these sorts of things,’ I put on the record that we had something like a three-quarters of an hour meeting with their President, Dr Uribe Velez, who is an outstanding gentleman. That was the delegation led by Senator Steve Hutchins. President Uribe Velez is one of the outstanding leaders of the world at the moment in terms of what he has done for Colombia.

I know I am digressing from the debate but I am talking about the fact that Colombia would like to have a free trade agreement with us as well. They would be very keen to get that off the ground. In some respects, they would probably be highly attractive to us because of their location in South America. It is tropical and they have a whole range of different, attractive trading items that Australia would probably be interested in. The FARC has largely been driven back deep into the jungle in Colombia, and that is testament to President Uribe’s strong policy on narcoterrorism. Apparently he has a popularity rating with his people of 80 per cent; some of our political figures would certainly like to get even close to that. They are actually having to change the constitution to let him run for a third term to continue what he is doing in modernising Colombia.

People in Australia have little concept of what South America has to offer. Being born of the Commonwealth of nations and English speaking, we seldom venture into Latin American parts of the world, where there are opportunities to find new and other trading partners. I will try to stick to the reasons why we should have a free trade agreement with Chile!

One of the large trade items that Australia will likely be trading with Chile is coal. Chile is very deficient in energy resources. It is such a beautiful country, starting way in the north at the bottom of Bolivia and going right down to Tierra del Fuego in the south, as far as you can go in terms of landmass. It has a huge range and we know that it is, at its widest, hundreds of kilometres wide, backing up onto the Andes mountain range. It is very diverse in what it offers, but what it does not have is energy resources. From that point of view, Australia is playing a very interesting role in Chile, because the Australian based company Pacific Hydro has a number of sites in what they call run-of-river hydroschemes: you do not dam the river but divert some of the river through the hydroelectric station. It is very environmentally friendly because the river barely gets disturbed. You have these very fast-flowing rivers out of the Andes, and they generate an enormous amount of electricity. As a result, they provide great, clean, green energy to not only the inhabitants of Chile but the industries. For example, at the Coya power plant on the Cachapoal River, where they have a run-of-river project, they produce a huge amount of electricity for the copper mines in that region, which we know are very energy intensive—so a great big tick to the Pacific Hydro company. Pacific Hydro, as we know, has a whole range of wind farms in Australia. We are very proud of Pacific Hydro and the contribution it is making in Chile.

Chile had a problem in that it was getting most of its gas from Argentina. Argentina’s economy—and I had better not say too much, because I am supposed to be going to the Argentinean embassy tonight—has been in a bit of disarray and, as a result, it cut off the gas, and this nearly caused a war. Chile did not want the gas to be suddenly cut off, due to its energy requirements. There was a pipeline across the Andes to Chile providing large amounts of natural gas, which was highly desirable. But, without much notice, it got cut off. For those who do not know, Chile is a very strong country militarily. It is well armed and it has seldom lost any wars that it has gone into. They tell me that Bolivia would like to pick a fight with Chile but, as it has never won one, it cannot bring itself to do it. Bolivia is the same as Argentina: it has a large amount of gas and it is not allowing it to go into Chile.

Australia has some very good interests in Chile. BHP, for example, is the largest owner of the Escondida copper mine, which we visited, in the Atacama Desert. For those who know their high school geography, the Atacama Desert has barely had a drop of rain ever. When you drive across it, it is just like driving across a moonscape. There is not one blade of grass. We drove across the Atacama Desert and finally got to the mine, which is located at a high altitude, which the member for Lyons found a little challenging. At this high altitude they mine the world’s largest reserves of copper at the Escondida mine. Escondida means something to the effect of ‘hidden’. The story is that a geologist begged and pleaded with his company for one more drill hole—a regular theme in all of the mining stories of the world—and they finally hit pay dirt when they hit a good copper reserve. There are copper mines all around Escondida now. Escondida itself is expanding and even now, with a huge hole in the ground, the mine has something like a 40-year life, so BHP is certainly in there.

When you hop on a plane, the number of Australian engineers and mining engineers who are off to Chile is amazing. We flew from Santiago to a place called Antofagasta, which is a staging point to the Escondida mine. You would think you were home in Australia because of the amount of Australian expertise that is going into the mining industry in Chile. So Australia has certainly a great interest there, and we very much appreciate the opportunity to share our expertise with the Chileans. As we know, major international companies swap executives and they end up in places like Alcoa in Western Australia, which has the same sort of makeup as these nationally owned mining companies.

What Chile can offer us is obviously copper, as well as non-ferrous based metals, pig iron, pulp waste and, as I said, a range of agricultural products. Interestingly—and I know most people have covered the detail of this bill, but I think it is interesting to put some of these things on the record—Chile has a huge and unique wine industry.

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

Not bad wine either!

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Energy and Resources) Share this | Link to this | Hansard source

Yes. If the member for Barker, who is from the largest wine growing region in Australia, flew north from Santiago, he would spend a long time flying over vineyards. President Clinton, when he visited Chile, spent a fair bit of time looking through the wine areas because they were so impressive. Their wines, particularly their white wines, are world class. On that note, there is an interesting wine the Chileans have—and I would like Australian wineries to think about this, and the member for Barker might be able to mention it to them—called caminera. The caminera wine variety was thought to be lost to mankind because it had been wiped out in Europe through some fungal disease. However, the early Spanish invaders had brought it to South America. It was considered a weed as a wine and it was only ever used as a base mix—a bit like merlot, which I hate. They put that in some good shirazes and cabernets and mess them up. They put caminera into some of their other wines, and caminera is now viewed as one of the best wines in the world—good red wine. You are lucky if you can get hold of it, and of course Crispin made sure we had some good examples of caminera. I have tried to suggest to people like Lamont’s in Western Australia that they might want to do a trial planting of this unique wine that was rediscovered in Chile after 500 years.

The opportunity for tourism is huge in Chile as well. As I said, you start in the north. You might think the Atacama Desert, being so dry, is a place that you just would not want to be, but as you drive across it to the foot of the Andes there is a place called San Pedro de Atacama. When you first get there, you think, ‘My God, what have I arrived at?’—it is all mud adobe huts and it is a real frontier town that you would have seen in a spaghetti western—but it is a sensational place because it is where the Incas settled in their southern drive through South America.

You still see there a lot of historical and cultural artefacts left behind by the Incas and the original inhabitants. There is a fort just outside of San Pedro de Atacama where they held out against the invaders for years and years before they eventually succumbed. You can go into the mountains, and dormant and semidormant volcanos surround the region. So as a tourist destination Chile is quite outstanding.

I have not talked a lot on the detail of the bills—there probably has not been any need to—but I have talked up the fact that Chile is a great destination and a great country for Australia to do business with. It is a democratic country and it has a lot to offer, and we have a lot to offer them. By taking away the impediments that exist in terms of tariffs, there will be a huge increase in trade. Cross-government and cross-industry relationships will also develop from this free trade agreement. I look forward to seeing more of the Chilean people come to Australia and promote their destination, as I am sure they will promote Australia. I endorse this legislation.

Richard Marles (Corio, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and the related bill, which amend the Customs Act 1901 and the Customs Tariff Act 1995 for the purpose of implementing the Australia-Chile Free Trade Agreement. This free trade agreement represents the most significant partnership between Australia and Chile since the member for Isaac’s marriage. It was, until now, clearly the most significant partnership between Australia and Chile, as I think he indicated in his own speech!

The Australia-Chile Free Trade Agreement was signed on 30 July 2008 by our foreign minister, the member for Perth, and the Chilean Minister of Foreign Affairs, Mr Alejandro Foxley, during Mr Foxley’s visit to Australia. This followed a process of negotiation, undertaken by the Minister for Trade, the member for Hotham, on Australia’s part, which commenced in February of last year under the former government and concluded in May of this year. This bill will allow both nations increased access to goods and services by breaking down the trade-inhibiting conditions which currently exist between the two countries. In doing so, it will further strengthen the ties between our two nations, enhance the growth and prosperity of both Chile and Australia and enhance security in our region.

The Rudd government sees this legislation as providing increased opportunity for Australian business particularly on the South American continent, which is one of the fastest growing regions in the world. This policy is indicative of the Rudd government’s trade policy of open engagement. It is a policy which is consistent with the government’s commitment to the Doha Round of trade talks and the APEC Bogor goals to foster ‘further global trade and investment liberalisation’.

In recent times, Australia has engaged in an increasing number of free trade negotiations. We have signed agreements with Singapore, Thailand and the United States of America. We have the longstanding Closer Economic Relations Trade Agreement with New Zealand, and negotiations are underway to transform that into a fully-fledged free trade agreement. There are free trade agreement negotiations currently underway with Japan, China, Malaysia, the ASEAN group of countries and the Gulf Cooperation Council, and there are also free trade agreement feasibility studies examining the possibility of agreements with India, Indonesia and the Republic of Korea. So there is a great deal of activity on the free trade negotiation front, on both a multilateral and a bilateral basis, between us and other countries and also between us and regional groups of countries.

The government has also undertaken the Mortimer review, which was commissioned by the Minister for Trade in February of this year. It is a review into Australia’s export policies and programs. Among its 70 recommendations are:

• Market access: opening up export and investment opportunities by removing impediments and distortions imposed in other markets.

…            …            …

Accord a high priority to the Council of Australian Governments’ efforts to construct a seamless national economy for goods and services that delivers a truly consistent regulatory environment.

…            …            …

Adopt a future approach to the negotiation of double taxation agreements that supports the internationalisation of Australian business.

In addition to that, the trade minister will also give the government’s response to the Mortimer review shortly. Indeed, he is speaking to the Press Club on 26 November.

These recommendations, or at least some of them, are already embodied in legislation which has recently passed through this parliament or which is in fact being debated in this parliament, not only in the context of this bill but in other bills, as we speak. For example, the National Measurement Amendment Bill 2008, which is to come up in the House of Representatives later today, is a bill introduced at the request of COAG and which decreases unnecessary regulatory burdens in the form of inconsistencies around our weights and measures system. We have the International Tax Agreements Amendment Bill (No. 2) 2008 going through the parliament, which removes the system of double taxation that currently exists between Australia and South Africa. And, of course, we have the present bill.

Taken in their totality, these facts indicate that this government is absolutely committed to removing the restrictions on Australia’s export growth. This is a government which is all about trying to assist Australian businesses to grow their exports while at the same time growing our national economy. That is being done with considerable success. In September of this year, for example, Australia recorded its second largest trade surplus on record, $1.5 billion, and that was up 18 per cent on the revised August forecast.

That stands in stark contrast to the efforts and achievements of the former Howard government, which had a legacy of ineptitude and laziness when it came to Australia’s trade performance. We saw under the Howard government 72 consecutive trade deficits, which culminated in the worst three-month trade figures in Australia’s recorded history, being the last three months of the Howard government. In only two of the 12 years of the Howard government did we see net exports grow. By contrast, we saw net exports grow in 10 of the 13 years of the Hawke-Keating government.

The Rudd government is working to support Australian trade. It is building upon a very strong Labor history when it comes to promoting Australia’s trade with other countries. We intend to reverse the neglect of the Howard years. We absolutely understand the critical importance of international trade to a country which has a relatively small domestic market like ours. We also understand how important international trade is to our national interest and indeed how important this free trade agreement will be to the national interest of the people of Chile. But, even though we and indeed the people of Chile can see that, unfortunately those opposite failed to see that in the 12 years of the Howard government, and they fail to see it now they are in opposition.

Like Australia, Chile is pursuing free trade agreements. It currently has 54 preferential trade agreements, including benchmarks for any future negotiations. But our ties with Chile do not simply end with free trade. Nor do they simply end with the marriage of the member for Isaacs. There have been multiple official visits between Australia and Chile, particularly around the 2002 APEC meeting which was held in Chile and the 2007 APEC meeting which was held in Sydney. In 2005, the Chilean President, Ricardo Lagos Escobar, made an official visit to Australia. This was the first by a sitting president of Chile in over a decade and only the third in our history. Both countries are also members of the Cairns Group.

There are approximately 40,000 Chileans currently residing in Australia, contributing in a great way to Australia’s multicultural society through organisations and events such as the Chilean film festival in Melbourne, the Chilean Australian Club here in Canberra, the New Chile Social Club in Western Australia and many other folk dance and sporting clubs scattered across our nation. In the business context we also see this occurring through the professional network of Chileans in Australia.

The business and economic ties between Australia and Chile are strong and we hope to build upon them through this free trade agreement. In 2007-08 Australia imported $563 million worth of goods from Chile, and that meant that Chile ranked 37th in terms of bilateral merchandise trade with Australia. It accounted for 0.3 per cent of Australia’s total imports. The principal items that we imported from Chile included copper, pulp and wastepaper, pig iron and wood. At the same time, Australia exported to Chile $210 million worth of goods, which meant that Chile ranked 44th in terms of our export markets and accounted for about 0.1 per cent of our total exports. Our principal exports to Chile include coal, civil engineering equipment, measuring and analysing instruments and rubber tyres, treads and tubes.

In addition to goods, in 2007 Australia exported $120 million worth of services to Chile and at the same time imported $195 million worth of services from Chile. In recent times the Chilean economy has grown exponentially—in 2003 the Chilean GDP was $74 billion and the forecast for the Chilean GDP in 2008 is $181.5 billion. For Australian businesses in the context of the Australia-Chile Free Trade Agreement it means that, as the Chilean economy continues to grow, they will have increased opportunities and links in a very significantly growing market. This is one of the reasons why the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill is so important.

This bill and the complementary Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 amend the Customs Act 1901 and the Customs Tariff Act 1995 to give effect to Australia’s obligations under chapter 4 of the Australia-Chile Free Trade Agreement. This chapter provides for the rules in relation to identifying goods of Chilean origin and whether those goods are then eligible for preferential custom duty rates in accordance with the free trade agreement. To meet this eligibility requirement, the goods must be wholly obtained or produced in Chile. That obviously makes sense, but it does not stop there in terms of those goods which will meet the eligibility requirements. If they meet the specific requirements of annex 4-C of the agreement, then they also qualify. Consistent with other Australian free trade agreements, that provides for goods which satisfy the grounds of demonstrating Chilean origin—which essentially is the case where there is a significant alteration of non-Chilean materials, with that alteration occurring in Chile. The legislation also allows Customs to obtain manufacturing records from Australian producers and exporters. In a sense, that provides for the reciprocity of the agreement to verify that goods exported to Chile were, indeed, produced in Australia.

It is important that these bills are passed in this current sitting because that will enable the free trade agreement to take effect on 1 January 2009, which is the current scheduled date. The Australian government values its relationship with Chile and values very much the significant two-way trade which currently exists between Chile and Australia. The agreement and these bills are aimed at trying to boost that trade. The government sees that the Australia-Chile Free Trade Agreement is an opportunity for Australian businesses to expand into one of the growing markets in the world and also to advance overall the principles of trade liberalisation, which are key to allowing greater markets for Australian goods.

In doing that, the government are absolutely committed to rectifying the appalling legacy of the Howard government in relation to trade. We are dedicated to improving Australia’s international trade position, which is already occurring within the first year of the Rudd government. We are dedicated to providing a greater opportunity for Australian businesses to find markets around the world in what is now, of course, a global economy. We are committed to engaging in dialogue with other nations to advance this cause of trade liberalisation not only on a bilateral basis—which, of course, is the subject of this legislation—but also on a multilateral basis. With those comments, I would certainly say that these bills support all those objectives and I commend the bills to the House.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

I am pleased to speak on the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and cognate bill on behalf of the people of the electorate of Ryan, whom I represent in the Australian parliament. This legislation is all about exports and jobs and creating economic prosperity for the people of Ryan as well as, of course, our fellow Australians who, through the length and breadth of this country, are involved in trade, commerce and business. On 27 May 2008 the Australia-Chile Free Trade Agreement negotiations were concluded. On 30 July 2008 the agreement was signed. Both sides are aiming for entry into force of the agreement on 1 January 2009. Australia has commenced the domestic processes to ratify the treaty.

In December 2006 the former Howard government agreed in principle to commence a bilateral negotiation process with Chile with a view to developing a comprehensive free trade agreement to strengthen and deepen the trade relationship. In the first half of 2007 officials conducted a series of consultations with Australian industry, state and territory governments and other interested stakeholders to assess barriers to trade with Chile that could be addressed by a free trade agreement. Australian officials also met with Chilean officials to determine the scope for achieving a comprehensive, fully liberalising trade agreement. In July 2007 Australia agreed to enter into FTA negotiations with Chile. Four negotiating rounds were held between August 2007 and April 2008 along with two intersessional meetings in March this year to advance negotiations in particular areas. Negotiations were concluded at the end of May 2008.

This will be Australia’s fifth free trade pact and our first with a Latin American country. The agreement will deliver new trade and investment opportunities to Australia and it will be an important milestone in our growing engagement with the wider Latin American market. The FTA covers trade in goods, services and investment and is truly liberalising, with commitments that go beyond both countries’ WTO commitments. This is consistent with Australia’s policy that free trade agreements should support and complement our efforts to promote further multilateral and regional trade liberalisation. It is a WTO-plus initiative. The Howard government when in office was not exclusively of an ideological mindset that it would only pursue free trade agreements. It was very much a team that batted for multilateral trade liberalisation but took the view in government that it could not stake everything exclusively on the Doha Round’s completion. Anyone with an interest in international trade will know that the Doha Development Round has spectacularly failed and prospects for its success in the near future are grim indeed. The Howard government shone the spotlight on regional trade agreements, some of which have been very effective, and I will come to those in a moment.

This legislation is consistent with Australia’s general trade policy. It introduces a high-quality FTA into the APEC region—a model for other bilateral and regional trade and economic integration efforts among APEC members. Australia is a very important member of APEC and Prime Minister Rudd will go to Latin America to participate in the next APEC meeting, which will be hosted by Peru. The FTA delivers the most comprehensive outcome on goods in any such agreement negotiated with another agricultural producing country since the CER agreement with New Zealand, our very close friend and neighbour, who now has an even stronger advocate in new Prime Minister Key for more liberalised trade with the wider world.

Tariffs on all existing merchandise trade—in both directions—will be eliminated by 2015. The vast majority of Australian goods exported into Chile—and Chilean goods exported to Australia—will enter duty free from entry into force of the FTA which, as I touched on earlier, is expected to be 1 January 2009. Chile is Australia’s third largest trading partner in Latin America. It has a population of 16.6 million and a GDP of US$164 billion. I note the latter figure in order to compare it with Australia which, as the 13th largest economy in the world, has a GDP of some $1.1 trillion plus. Chile is seen to be Latin America’s most stable and transparent market, a commercial and dynamic place to do business. It is a country that buys our coal. We have a lot of engagement in the engineering area with civil engineering equipment, specialised machinery and vehicles.

Australian merchandise exports to Chile totalled some $200 million in 2007. Chile is a country that buys our services exports, valued at some $120 million in 2007. It is an area that we very much hope will expand. It is a country with over 70 Australian, or Australian affiliated, companies, mainly in the area of mining services, gas distribution and power generation. It is a country that has significant natural resources as well. Two-way trade between Australia and Chile is growing fast—up from some $574 million in 2006 to some $856 million in 2007. Our nation is the fourth largest foreign investor in Chile with around US$3 billion of direct investment. All this is very positive and it provides a base, I think, from which we can expand. It is an investment which we hope will encourage all those who engage in free enterprise, all those who want to see Australia on the global stage in international business, to seize these opportunities with one of Latin America’s most dynamic countries.

The free trade agreement will offer Australian exporters opportunities across the board. This will be particularly valuable in the areas of services and investment in mining and energy technology, engineering and consulting services, franchising services, education and training, information technology, tourism and infrastructure. It is, of course, generally known that the Asia-Pacific region is a part of the world that is very much plugged into our education system. We should acknowledge and value that, but we should also have one eye to diversity. We should also try to diversify the markets and the regions of the world by bringing in students from those parts of the world to be exposed to our values and the quality and excellence of the Australian education system—students from not only the likes of Asia, the subcontinent and the Middle East but also places in Latin America. Chile is, I think, a good place in which to start an aggressive campaign. I am sure that many of the fantastic entrepreneurs of our country will take advantage of this FTA agreement.

Other areas that will benefit include the areas of coal, LNG, renewable energy—hopefully—and agriculture. Our country has a superb reputation in agriculture and we must do what we can to ensure that the perception—and reality—of Australia as a clean, healthy place where agriculture flourishes must be maintained. It must be expanded upon and promoted so that the consumers of increasingly prosperous parts of the world, and increasingly prosperous parts of the developing world, can with confidence continue to buy products—such as our dairy products and meat—which will give our people extra revenue and which will benefit the country overall. Let me not forget wine. The Australian wine industry is one that is increasingly becoming one of global regard. All of us, in both formal and informal capacities, should continue to be advocates for the wine industry.

I want to touch on the FTAs that Australia successfully negotiated during the time of the Howard government, because I think that they provided a terrific platform for the Australia-Chile Free Trade Agreement that has now been successfully concluded. The Singapore-Australia Free Trade Agreement is one which, for those of us who are for freer trade with the region and with Singapore—one of our strongest allies and friends in Asia—we can be proud of. SAFTA negotiations were launched following an announcement by both countries at the APEC leaders meeting in November 2000. Ten full rounds of negotiations were held between April 2001 and October 2002. On 17 February 2003, SAFTA was signed. I had the pleasure of being at the occasion of the signing and I recall having an opportunity to discuss the success of the agreement with the then Singaporean Minister for Trade and Industry, George Yeo. George Yeo is now, of course, Singapore’s Minister for Foreign Affairs. The final agreement was subject to a parliamentary consultation processes and entered into force on 28 July 2003 following an exchange of diplomatic notes.

The other agreement that I think should be complimented is the Thailand-Australia Free Trade Agreement, a major document that opened access for Australian businesses to the Thai market. That agreement has substantially improved the area of environmental business. I know of some businesses in the Ryan electorate that have a very fine record in environmental technology and are doing business in Thailand, and I am delighted with their success. Australian businesses are urged to take a close look at the opportunities created by the Thailand-Australia Free Trade Agreement. The reduction of Thailand’s high tariff barriers, which for some tariffs were up to 200 per cent, means that exports may now become viable for a range of products. Opportunities are increasingly there for service providers, investors and Australian manufacturers.

The Australia-United States Free Trade Agreement was hotly contested. It is a comprehensive agreement that covers goods, services, investment, financial services, government procurement—importantly—as well as standards and technical regulations, telecommunications, competition related matters, electronic commerce, intellectual property rights, labour and the environment. The key outcomes of the agreement include that, upon entry into force, the United States eliminated duties on Australian goods on 82-plus per cent of its tariff lines. By 2010, this will rise by an additional 4.1 per cent and by 2015 a further 10-plus per cent. So that is very positive indeed. By 2022, it is expected that nearly 99 per cent of tariff lines and 99.9 per cent of imports will be duty free. The US remains the most significant country and the world’s most significant economy. The global financial crisis has shown us that what happens in the United States economy affects pretty much every country in the world—from the great and the good to the middle powers of the world to, unfortunately, developing economies that depend on a stable global economic framework.

I want to briefly touch on the free trade agreements being negotiated at the moment. The Australia-ASEAN-New Zealand free trade agreement is of immense significance. ASEAN, with a population of some 550 million people, is not a market to be sneezed at. It is one that we must engage in more than we have even in previous decades. That part of the world will, in decade’s time, show its collective strength. Of course, the countries that make up ASEAN are diverse and at different stages of development, but no-one should underestimate the political will within the ASEAN nations and no-one should underestimate the psychological and emotional determination of the people of ASEAN to improve their economies and to create opportunities for their people, as they rightly should.

The Gulf Cooperation Council is another part of the world that we are talking to. Japan is a country that Australia has had a very strong and very warm relationship with since the end of the Second World War, and it is a country that we should always count amongst our best friends in Asia. Australia has a relationship with Malaysia, which  is Muslim but which has a very strong view about how its people can be plugged into the world economy. Last, but certainly not least, on the Australia-China free trade agreement that continues to be discussed, I have said both publicly in the media and privately that I am proud of the fact that the Prime Minister of the country I am a citizen of has the capacity to speak Chinese and has strong links with this very significant country. I hope that his links and his language skills will be an asset for our country. I encourage him very strongly to use that priceless asset to promote a successful conclusion on the Australia-China free trade agreement because it is something that is in our country’s interest.

I think I am the only member of the House of Representatives with part-Chinese heritage and, for the record and for the benefit of the people of Ryan, the marriage of my personal background and my professional position is one that I am pleased about and one that I would like to take advantage of to play a role in pushing for Australia’s 21st century prosperity and our place in the region. In all the great debates of the 21st century—be they about energy, the environment, the geopolitical area or whatever—China will be front and centre. It is absolutely in the interests of this country to sit right by the leadership of China. I congratulate all Australian businesses that are doing fantastically well in China and in the rest of Asia. I also compliment the Chinese businesses that are investing in our country. It is in the mutual interests of both of our countries and for the prosperity of both of our peoples.

In the couple of minutes left to me I want to make some observations about global trade generally. The Australia-Chile Free Trade Agreement is one that I wholeheartedly support and I congratulate all those involved in concluding it. It goes to a broad philosophy that we all share in this parliament—that is, having an open world economy, having a freer world economy and having opportunities for Australians to engage with the world. That is in our interests and also in the interests of alleviating global poverty. Countries that close their economies, that close their peoples off to others, give themselves no benefit whatsoever. India is developing but, like China, will stand front and centre in the world. In 1960, life expectancy in India was limited. It has risen by more than 20 years. Closer to home, in South Korea illiteracy was once widespread but is now pretty much nonexistent because it has engaged with the world; it has become a global country.

No country that has succeeded in the past five decades has succeeded or made progress by ignoring the signature theme of our times: globalisation. Whether we like it or not, we live in a globalised world and we live in globalised times. Our country is one of some 21 million people. We are thousands of kilometres from any large developed market. There are no two cities in Australia with a population of over one million that are closer together than 600 kilometres. By way of comparison, the state of California has a population of some 35 million in an area around one-twentieth of the size of Australia. That gives a taste of how vast our country is and of the distance between our country and others of economic and political significance. It is absolutely in this country’s interest to be plugged into the international community, to be on the world stage and to be an advocate for freer trade, for open economies and for a greater engagement with the world around us. (Time expired)

Judi Moylan (Pearce, Liberal Party) Share this | Link to this | Hansard source

I would like to take the opportunity right at the outset to acknowledge the work of the member for Ryan. I had the great pleasure of working with the member for Ryan in the previous parliament. I was the chair of the Australia-China Parliamentary Group and the member for Ryan was the secretary of that group. I have witnessed the considerable energy and enthusiasm that he has given to developing trade not just between China and Australia but also further afield. And, indeed, he is a very capable Mandarin speaker. I know that in his electorate he has held trade forums on many occasions, inviting people from China to meet potential trade partners in Australia. He is a young, vigorous member of parliament who is doing his bit to promote trade, which is a very fine contribution to the work of this parliament.

I am pleased to speak on the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and cognate bill, legislation that actually had its genesis under the coalition government. Considerable work was done to bring the legislation to its fruition but it has reached its finality under the current government. The Australia-Chile Free Trade Agreement should commence early next year—I think on 1 January. It is a comprehensive and wide-ranging agreement that provides Australia and Chile with more liberal access to each other’s good and services.

The Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 contains proposed amendments to the Customs Act 1901. These amendments provide the rules for determining whether goods originate in Chile and introduce powers to allow Customs to obtain manufacturing records from Australian exporters and producers. The amendments will give effect to Australia’s obligations under chapter 4 of the Australia-Chile Free Trade Agreement. This chapter provides the rules for determining whether imported goods from Chile are eligible for preferential customs duty rates under the agreement. The bill will usher in a new and exciting period for Australia-Chile relations that have the potential to be mutually beneficial for both countries. From an Australian national interest point of view, there are likely to be many benefits from a closer alliance with Chile.

Over the last 15 years Chile’s economy has grown at an average rate of almost 5.5 per cent a year and is estimated to reach a total GDP of US$170 billion this year—but I am not quite sure how it is faring in the current financial circumstances. Chile is Australia’s second largest export market in Latin America, with coal, civil engineering equipment, lead, optical equipment and refined petroleum accounting for the majority of exported goods. Imports from Chile into Australia also increased by 125 per cent between 2006 and 2007. The majority of those imports are of copper, nonferrous base metal waste, pulp and waste paper, pig iron and wood. Having served on the Joint Standing Committee on Foreign Affairs, Defence and Trade Subcommittee in the last few parliaments, I know the work of the former member the Hon. Bruce Baird, who fostered closer ties with South America, including Chile, and led a delegation. Unfortunately, I was not able to go on that delegation at that time, but I commend that report to anyone who has a long-term interest in export into the South American countries, because there was a lot of very good information encompassed in that report.

According to the Department of Foreign Affairs and Trade, Australia is the fourth largest foreign investor in Chile, with around US$3 billion of direct investment. Chile already has a number of existing free trade agreements with most Latin American countries, the European Union, India, the United States of America, Canada, Japan and China. The Australia-Chile Free Trade Agreement will put Australia on an equal footing with competitors from these countries—in particular with Canadian coal exporters, who have increased their market share following the elimination of tariffs under the Canada-Chile FTA in 1997. Australian coal exporters will therefore be more competitive and increase their market share in Chile. I expect that the falling of the Australian dollar might also advantage them.

Through trade, Australia’s abundant resources and the skills of our people are building wealth at home and abroad. While the global marketplace is highly competitive, it abounds with opportunities. By exporting, Australian businesses access a global marketplace of more than six billion consumers. And, by participating in the global marketplace, Australia’s businesses are more likely to be innovative, to enhance their productivity and to integrate into global supply chains. In fact, I think it is fair to say that, in a country such as Australia with a population of 22 million, it is essential for many kinds of businesses to look to market their products further afield and to expand their marketplace. The domestic market in Australia is relatively small in global terms and we have many highly competitive and innovative businesses that benefit from seeking markets outside the domestic market and getting into the export market.

Strong and responsible budgets by the coalition government, I might say, delivered perhaps the longest period of sustained low-interest rates since the 1960s. This, coupled with low inflation and very low unemployment, allowed our businesses to grow and take further advantages in seizing export opportunities. In the 2006-07 period, Australia’s exports grew 10 per cent to a record $216 billion—more than double the level of a decade ago. Exports of manufactured goods, resources and services all reached record levels in this period. Resources exports rose nine per cent to $72.8 billion and services exports grew 11 per cent to $46.2 billion. Manufacturing exports increased 11 per cent to $44.1 billion, with strong growth in exports of metals, machinery and other manufactures.

An open and dynamic economy is the key to delivering the benefits of trade to all Australians. The nation is now reaping the rewards of two decades of wide-ranging structural reforms that have improved the functioning and flexibility of our goods, services, labour and capital markets and delivered 15 years of uninterrupted economic growth. In fact, the export of services is rapidly growing, and it is something that we are seeing in this decade as being highly beneficial—Australia having some good services to trade. Australia continues to pursue high-quality free trade agreements which offer the prospect of worthwhile gains for Australia—faster and more extensive gains than can sometimes be achieved through the World Trade Organisation process, which can be a bit cumbersome, a bit slow and a bit unwieldy. The Australia-Chile FTA will generate export opportunities for Australian companies in many services and investment areas, such as mining and energy technology, engineering and consulting services, information technology, tourism, agriculture, and the food and wine industry.

In an era when improving technology is seeing the world become a smaller place, free trade agreements are vital to continued prosperity and provide stimulus to both economies. While a good free trade agreement is recognised for what it offers, a great FTA should be applauded for what it protects. For this reason, I wish to acknowledge the contribution of the Joint Standing Committee on Treaties in the final shaping of this agreement, especially in its intentions to keep an eye out for the Australian horticulture industry. I suppose I have a vested interest in this, because in the electorate of Pearce we have a very substantial number of growers across the horticultural sector. In securing the economic wellbeing of our country we must make sure we do not destroy our local producers. We have an obligation to our own industries to ensure their safety and longevity. For an electorate such as mine, where almost anything you can imagine can be eaten is produced, this is very important.

The Joint Standing Committee on Treaties tabled report 95 on October 16, which included three recommendations on the Australia-Chile FTA. These were that the committee supports a review of its operation in two years to assess the ongoing relevance of concerns regarding phytosanitary measures, the impact on Australian horticulture, and labour and environmental standards. Phytosanitary measures protect plant life in the territory of each party to a free trade agreement and are usually considered in conjunction with sanitary or animal related measures. These are more commonly known as quarantine measures. With horticulture and agriculture playing such a vital role in the Australian economy, particularly in the electorate of Pearce, these measures are more than welcome. We need to make sure that, as I said, we are looking after our producers, pests and diseases that this country has not seen are not introduced and, indeed, the public have an opportunity to be sure that the produce they are purchasing is clean and healthy to consume.

This agreement has already made and will continue to make many horticulturalists nervous. I have to say that. Horticulture Australia’s submission to the Joint Standing Committee on Treaties pointed out that, because Chile and Australia are both in the Southern Hemisphere, they share common seasons. This means that Chilean horticultural products can be imported to Australia at the same time as Australian horticultural products are on the market. Horticulture Australia anticipates that the price of the Chilean products will be less than that of the Australian products because of the cheaper labour costs in Chile. These are not unreasonable considerations. You cannot blame our producers for being a little nervous. There have been warnings in Western Australia that rising costs of fertiliser, chemicals and fuel have increased the cost of planting a crop by more than a third and are threatening next year’s grain plantings in relation to farm incomes.

The Australian government is committed to bilateral and multilateral free trade or trade-liberalising agreements which aim to open up global markets as rapidly as possible. Horticulture, like other agricultural commodities, is and should be a part of these agreements. However, from these agreements horticulture needs and seeks tariff outcomes into target markets which are equivalent to those granted into Australia and at least equivalent or superior to those granted to other suppliers under similar agreements into those markets. On top of this, there must be a deep and mutual understanding of the sanitary and phytosanitary measures adopted by each country and there should be strengthened cooperation between the governments of Australia and Chile over sanitary and phytosanitary matters. In any free trade agreement the aim must be to facilitate bilateral trade in food, plants and animals while protecting as a priority the human, animal or plant life of each country.

While it should be remembered that free trade agreements can be beneficial to local farmers and producers, with export opportunities for their own goods, a way of promoting free trade with Chile while protecting our own growers and producers is through urgent amendments to Australia’s country-of-origin labelling laws. This is something I have been on about quite a lot lately, particularly in my electorate. If the current government listened to what growers wanted—clearer and simpler country-of-origin labelling for processed food and enforced compliance with these labels for fresh food—it could be a win-win situation. I think it is only fair, I say once again, that when the Australian public are buying products for consumption they fully understand whether those products are safe and where they have come from and that they have a choice of whether they buy imported products or Australian products. The government promised to overhaul its country-of-origin labelling laws, but the truth in labelling remains hidden. We have not seen evidence that there is any strong intent right at this point in time to deal with this matter of truth in labelling.

We as legislators need to examine how government can provide policy to assist farmers through difficult times and, at the same time, ensure the continuity of food supply, because it is a matter of national priority. We need to strike a balance between the need to have a vigorous trading system while understanding the pressures on our domestic producers and valuing their contribution in bringing clean, high-quality produce to the market and in providing a level of food security in this country which, to my mind, is greatly undervalued. Striking the right balance is particularly important during these times of drought, low market prices and high input costs. We cannot leave our growers to continually take a hammering without providing them some support.

That being said, we would not be looking after our long-term interest if we ignored the need to take sensible steps to remove trade barriers. Australia’s GDP has increased dramatically and has been a contributing factor in seeing us become one of the most financially secure nations in the world. At no time in our history has that been more apparent than today. So how does one manage the balance between foreign trade and looking after domestic producers? Some may say, ‘You can’t have your cake and eat it too.’ The recommendations of the Joint Standing Committee on Treaties will allow Australia to keep tight measures over this agreement. Having the option to assess the operation of the FTA after two years will provide the government with the appropriate checks and balances to ensure that the Australian horticulture industry, phytosanitary measures and labour and environment standards are not negatively affected.

I have long been a strong supporter of the agriculture and horticulture industries in Australia, particularly those within the Pearce electorate. That support has extended to pork producers seeking to ensure that we keep our industry free of disease and expand our export opportunities, to the table and wine grape industry, to olive growers and to those who produce high-quality fruit and vegetables for both domestic and export consumption. I fully understand the anxieties that they sometimes have about free trade agreements and believe our first obligation is to ensure the health and future of our own home-grown Australian industries. But the two objectives are not always mutually exclusive. It is a balancing act.

It is undeniable that at times there are tensions, but for a vast and productive country like Australia with a small population export is vital to our continued economic success and the growth and continuation of our commercial interests. I believe this FTA has the potential to be beneficial to all concerned, and there is some assurance that there will be opportunities within two years to make the necessary changes.

Some were of the view that the Minister for Trade could have made a more thorough assessment of the costs and benefits of this free trade agreement, but I am reassured with the recommendations of the Joint Standing Committee on Treaties that we will be able to manage this and that a proper review of the operation of this agreement will be carried out, as was recommended. I support the bill. But I look forward to seeing the results of the review and, hopefully, to the bill providing greater opportunities for Australian producers.

Bob Debus (Macquarie, Australian Labor Party, Minister for Home Affairs) Share this | Link to this | Hansard source

in reply—I do thank all of those members who have contributed to the debate tonight. All of them were in support of this legislation to establish a treaty with Chile, which is indeed one of the leading democracies of South America. There are two pieces of legislation: the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008, which amends the Customs Act, and the Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008, which contains amendments to the Customs Tariff Act.

The customs related legislation amends rules for determining whether goods originate in Chile. The amendments are the result of the free trade agreement that was signed on 30 July this year. The amendments commence on the day that the agreement enters into force, which is expected to be 1 January next year. The rules are essential for the purpose of determining whether goods imported from Chile are eligible for preferential rates of customs duty under the agreement. The bill requires Australian exporters or producers that wish to claim preferential treatment in Chile to keep certain records. The amendments to the tariff legislation provide duty-free access for certain goods and preferential rates of customs duty for other goods that are Chilean originating goods. They provide for phasing the preferential rates of customs duty for certain goods to zero by 2015, and they create a new schedule 7 to the tariff to accommodate those phasing rates of duty.

I should mention several matters that have arisen during the debate. I refer to the recommendations of the Joint Standing Committee on Treaties which were mentioned by the chair of the committee, the member for Wills, and were mentioned again just moments ago by the member for Pearce. Of course I will undertake to draw those recommendations to the attention of the Minister for Trade. I would just observe, in any event, that the Australia-Chile Free Trade Agreement does contain specific articles on cooperation on the issues of both labour and the environment. The provision on labour, which is article 18.2.4, provides for cooperation between Australia and Chile on labour matters of mutual interest. That cooperation is to be based on the concept of decent work, including the principles embodied in the International Labour Organisation Declaration on Fundamental Principles and Rights at Work. The provision on the environment, which is article 18.2.5, provides that cooperation between the two parties on the environment will reflect both parties’ commitment to strengthening environmental protection and promotion of sustainable development in the context of strengthening the parties’ trade and investment relations. The government’s present approach to these sorts of matters is to consider the inclusion of labour and environment provisions in free trade agreements on a case-by-case basis. These provisions are considered to be appropriate in the particular context of the Australia-Chile Free Trade Agreement and Australia’s existing trading relationship with that country.

A number of members have drawn attention to concerns that were raised by Horticulture Australia concerning this particular free trade agreement—that Australian horticultural industries may be adversely affected in relation to the phytosanitary measures to protect plant life in this country. Obviously those matters are of great concern. Australia’s quarantine arrangements are amongst the most stringent in the world, as they should be, and of course the Australian government will in fact make no concessions on those strong quarantine and biosecurity arrangement under this treaty. Indeed, I draw attention to the work of the Treaties Committee, where it points out that the measures contained in the treaty at chapter 6 are limited to improving cooperation and communication between Australia and Chile over sanitary and phytosanitary measures within the framework of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures. The committee points out:

In real terms, this means that the Agreement does not override Australia’s quarantine barriers that prevent the spread of pests or diseases, whether in existence at the time the Agreement is made, or imposed during the life of the agreement.

So I hope that the committee’s analysis does give some comfort to horticulturalists who, understandably enough, are concerned about protecting the circumstances of their own industry.

I also point out, particularly in relation to some observations I heard made by the member for Forrest concerning the avocado industry, that the Australian government has been very careful indeed not to put horticultural producers at a disadvantage in economic terms. I would point out that at the present time there is no duty on avocados. There will be no duty on avocados under the terms of the agreement. But the avocado industry, as an example that was raised in the debate, is not disadvantaged by the new agreement in terms of tariff levels.

I say again that we are grateful, and the Minister for Trade is grateful, that members from both sides of the House have been supportive of the legislation to implement this free trade agreement with Chile. It is one that we very much hope will be to the advantage of both countries; obviously, that is the reason why the negotiations to sign the agreement proceeded. I commend the bills to the committee as a consequence.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.