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

by leave—It gives me great pleasure today to table the Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) and accompanying national interest analysis. The AANZFTA agreement represents a historic milestone for Australian trade policy—coming as it does with the world in the grip of the global economic crisis. I signed the agreement on behalf of the Australian government on 27 February in Hua Hin, Thailand, along with ministers from the 10 member countries of ASEAN and New Zealand.

The FTA represents the culmination of diplomatic initiatives and efforts dating back to the Hawke-Keating Labor governments in the early 1990s to strengthen economic ties with ASEAN. The AANZFTA negotiations originated at a conference in Melbourne in November 1993, to explore the prospects for a link between the ASEAN Free Trade Area (AFTA) and the Australia-New Zealand Closer Economic Relations (CER) Trade Agreement. That original suggestion for AANZFTA came four years after the first formal meeting of the Asia-Pacific Economic Cooperation. APEC of course was championed by the Hawke-Keating Labor government and the first meeting of APEC economies took place here in Canberra in November 1989.

The tabling of this agreement is a demonstration of federal Labor’s commitment and drive to liberalising trade in the Asian region. AANZFTA will provide a strong platform and legal framework for our economic engagement with the region for years to come. I think all Australians should be proud of this agreement. In the midst of the global downturn, Australia and New Zealand and 10 nations from South-East Asia have sent a powerful message to the rest of the world. That message is this:

• The ASEAN region remains committed to pursuing free trade.
• We are determined to pursue trade liberalisation as a way to boost exports and job opportunities.
• We acknowledge that keeping trade flows open represents the best chance of a quick exit from this global economic storm.

This agreement has come off the back of the stalled World Trade Organisation Doha Development Round talks. It shows that progress in trade can be made if the political will is there. The Rudd Labor government has shown the will to progress Australia’s interests despite these global challenges. I want to highlight briefly to parliament some of these achievements.

This is the largest free trade agreement Australia has ever signed and will reduce or eliminate tariffs across a region that is home to 600 million people and a region with a combined GDP of A$3.2 trillion. It will bind current low tariffs and over time eliminate tariffs on between 90 and 100 per cent of tariff lines, covering 96 per cent of Australian exports to the region.

Australia’s two-way trade with ASEAN countries is worth $80 billion a year and there are now new opportunities for Australian exporters. This means greater job opportunities here in Australia. Australia’s trade with ASEAN, as a bloc, exceeds our trade with Japan, China or the United States.

AANZFTA is the most comprehensive FTA that ASEAN has concluded. It is more comprehensive and deeper than ASEAN’s other FTAs with China, Japan and Korea.

Importantly, AANZFTA is also the first free trade agreement Australia has signed since the onset of the global financial crisis.

Last week there were new signs of just how pessimistic the economic future has become when International Monetary Fund managing director Dominique Strauss-Kahn warned of a looming ‘Great Recession’. We can expect global economic growth to keep falling and the number of unemployed people to keep increasing—and Australia cannot escape this. In this climate, we can expect there will be growing calls for new protectionist measures even though it is a misguided bid to try and prop up national economies and preserve local jobs. The Australian government argues strongly and consistently this is the wrong message. Going down the protectionist route does not save jobs. Quite the contrary, it sacrifices jobs.

Trade is the great stimulator of the world economy and what the world needs now more than anything is growth. History has shown us that since 1950 world trade has grown three times faster than world output. That is one of the key reasons why the Australian government has protested so strongly against the United States congress passing the Buy American provisions as part of its stimulus package and why we have protested so strongly against the European Union’s decision to re-introduce dairy export subsidies. Trade flows have suffered significantly in the global financial crisis, but trade is not the cause of the problem. Trade can be a big part of the solution.

There is new emerging evidence of the crucial role trade can play in stimulating global economic activity. The Organisation for Economic Cooperation and Development has revealed research suggesting that a 10 per cent increase in trade is associated with a four per cent rise in per capita income. This is new evidence showing that boosting trade will boost income. It means that with historic agreements like AANZFTA, new opportunities will open up for people across the region which will ultimately increase living standards, both in Australia and in ASEAN countries.

The link between rising trade and rising income will be part of a major OECD analysis to be formally launched next month in Paris with the title ‘International Trade: Free, Fair and Open?’ This analysis will reinforce the message that trade liberalisation can stimulate world growth and raise living standards, around the globe. The detailed analysis finds:

• Full tariff liberalisation in agriculture and industrial goods but not services would improve global welfare by US$100 billion.
• Scrapping all tariffs on merchandise trade and reducing trade costs by one per cent of the value of worldwide trade would boost global welfare by more than US$170 billion a year—in some areas adding the equivalent of two per cent of GDP.

This is something we must aim for. The ‘International Trade: Free, Fair and Open?’ report also provides a powerful argument against reverting to protectionism. It finds:

• The more countries try to ‘protect’ themselves by isolating their economies both exports and imports decline, and more jobs are lost.
• That protectionist measures such as raising tariff barriers restrict availability of products and services and reduce domestic demand.

This OECD analysis shows that a sweeping agreement such as this AANZFTA agreement can be a major contributor to boosting economic activity and assisting the region.

AANZFTA represents a great opportunity for Australian companies and businesses. According to Austrade, there are around 18,500 Australian exporters already doing business in ASEAN countries. I have asked Austrade in the light of this agreement to develop and roll out a commercial strategy to take advantage of the market openings created by this agreement. There are new opportunities across many sectors, including exports of agricultural products, industrial goods and services.

The National Farmers Federation has recognised what has been achieved for agriculture with this agreement. The NFF President wrote to me today saying the FTA would be positive for the agriculture sector, become increasingly important over time, and prevent the ASEAN region sliding into protectionism. Australian farmers are now being guaranteed access to developing South-East Asian markets, many of which have a growing appetite for high quality Australian produce.

This is the second great benefit to the Australian economy from AANZFTA. What this agreement does is guarantee market access for Australian exporters into South-East Asian markets. When this agreement comes into force, which will be 1 January 2010 at the latest, the existing tariff rates will be locked in. This is a big win for Australian exporters and delivers new certainty. Before this agreement, Australian exporters selling into ASEAN had a threat hanging over them that their products would suddenly be hit with a major tariff increase to the maximum permitted under World Trade Organisation rules. With this agreement, however, Australian producers now know they cannot be locked out overnight with a major tariff rise.

Reduction and elimination of tariffs, plus the guarantee of market access into South-East Asia, are the two big benefits to Australian exporters from this agreement. AANZFTA will create greater certainty for Australian investors in the region, with access to international arbitration extended to the whole region if there are disputes.

The full detail of the advantages offered by this agreement, sector by sector, is available on the Department of Foreign Affairs and Trade website. I urge Australian exporters and those looking to become exporters to go to that website, look at the new opportunities and, most importantly, work with Austrade to export more into the region.

The Australian government is highly satisfied with this agreement but I also make this point: the work in the region in terms of further liberalising markets there is not over. Negotiations on breaking down barriers for Australian exporters into the region do not stop for this government with this FTA.

Negotiating with so many countries with varying offensive and defensive interests has not been easy. All of the 10 with whom we have negotiated are at different stages of economic development and at times it was like playing a game of 10-dimensional chess dealing with countries at their different stages of development and trying to find the basis on which we could secure our collective agreement.

The federal Labor government is committed to pursuing the most ambitious trade agenda possible which will drive world trade but will also boost the Australian economy and create local jobs. That is why negotiations on breaking down barriers for Australian exports into the region do not stop with this FTA. We consider this as part of a larger plan—a platform for progressively advancing Australia’s interests.

We are extending the platform, for example, with the announcement recently of the entry of the pursuit of a free trade agreement with Indonesia, having previously announced an FTA approach with Malaysia. With Thailand, of course, we have an existing agreement negotiated by the previous government and which has a trigger mechanism for review. In my discussions in Thailand two weeks ago Cambodia and Vietnam have already indicated their preparedness to negotiate further with us, to develop a strategy further with us for strengthening the trade relationships with them.

The shadow minister at the table talked the other day about the concerns about the automotive sector in this agreement. When it comes to this sector, the Rudd Labor government are absolutely committed to not just preserving local jobs but securing an industry base that positions us to take advantage of the new direction of automotive manufacture that will be dependent on vehicles that are more fuel-efficient and impose less of a carbon footprint. That is why we have unveiled a car industry assistance package worth in excess of $6.2 billion over a number of years designed to help exporters—especially through the Green Car Initiative—and to assist Australian companies become part of the global supply chain for the automotive industry.

Negotiations in this sector of the agreement were particularly tough. In fact, they could have brought the agreement undone. We did fight for the best interests of the local Australian car industry. Reflecting offers they put forward, Australia will undertake a slower phase-out with those countries that did not come to the same liberalising end result as a number of other countries. So vehicle manufacture in Indonesia, Malaysia and Thailand compared with automotive tariff reduction with other ASEAN nations needs to be looked at by those who would seek to criticise.

We look forward to progress in this sector, particularly with Indonesia and Malaysia, in upcoming bilateral negotiations. We have already put both of those countries on notice that we will be pursuing further trade liberalisation in this sector with them.

AANZFTA will enhance Australia’s participation in the region’s evolving economic architecture. As ministers of member countries noted, it will serve as a catalyst for enhanced and accelerated regional integration throughout the Asia-Pacific region. The AANZFTA treaty text expresses confidence that the FTA ‘will serve as an important building block towards regional economic integration’. From an Australian perspective, though, this is much more than a symbolic achievement. This is a treaty that furthers our integration with the Asia-Pacific, a region with which our nation’s economic future and our security are closely tied up. As such, AANZFTA represents a tangible and highly practical demonstration of this government’s commitment to deepen Australia’s engagement with the Asia-Pacific region.

Like any agreement there are sensitivities on a range of products including in agriculture. But overall there have been great gains for Australian producers—including, I might add, in the crucial commodity sector of sugar. For our trade in sugar with Malaysia, which is a major market for Australian sugar, we successfully negotiated that Malaysia will bind its sugar tariff at zero from AANZFTA’s entry into force. In addition, Vietnam will start reducing its 30 per cent tariff when the agreement starts. Four other ASEAN countries will bind their sugar tariffs at zero from the start of the agreement or reduce them to zero or very low levels over time.

This is a significant advance for the Australian sugar industry. I note that this should be contrasted with what the previous government were able to get out of their free trade agreement with the United States—not a series of developing countries, where there are particular sensitivities and we know them, but a developed country—when they negotiated it back in 2005. Under that agreement with just one country—developed, as I say—the coalition could not even get sugar in. They gave up completely with a sugar carve-out with the FTA with the United States.

I do acknowledge that on AANZFTA the previous government did some important work. I pointed out before that in Melbourne, when we were last in office, back in 1993, we were part of the exercise that initiated this agreement. It took the previous government some 11 years to commence formal negotiations. They did not commence until 2004. You will recall that I said that the initiation of this process occurred back in 1993. I think that is not because they did not have the desire to do this; they just do not have the same commitment and drive and political will as we have demonstrated in the times that we have been in office to really pursue these agreements to an effective conclusion. What they have not given us is the engagement or the leadership to keep pushing trade liberalisation rather than just paying their support to that cause.

I think that the Howard government failed to drive Australia’s interests with ASEAN countries. This was symptomatic of the Howard government’s neglect of our interests in the Asia-Pacific region and what I believe is our very strong need to engage with key institutions within our region. The previous government managed a process, rather than being a driver of ambitious goals and delivering real outcomes. They let the negotiations with ASEAN languish for some considerable time, just as they failed to deliver meaningful progress towards the Bogor goals that we drove with the establishment of APEC and on which this agreement involves some considerable advance on the objectives and the deadlines that those Bogor declarations proposed. They did not require an objective of liberalisation in developing economies until 2020. This agreement involves trade liberalisation in all of the countries well in advance of that 2020 objective.

My point in all of this is that it was a previous Labor government that created the environment for AANZFTA back with the establishment of APEC and back with the position that we talked about in 1994. That was one book-end to this relationship. I think we should see the agreement signed a couple of weeks ago as something of another bookend in this exercise, but we want to keep adding the volumes in between as we continue to push for liberalisation. I make that point because the previous government presided over nearly 12 years of lost opportunity in world trade liberalisation. I think that they did fail to deliver real and meaningful outcomes in many of the areas where the basis was laid for them to really take up the mantle that was the follow-up to the Uruguay Round and that was the foundation built upon with APEC. These were all the building blocks established by a previous Labor government, because we did understand the importance of Asia as a region to our economic future.

AANZFTA is also an extension of TAFTA, the Thailand-Australia Free Trade Agreement. I do acknowledge that the previous government did obtain important gains in the Thai agreement, but AANZFTA takes those gains to a regional level and builds on them. What we have achieved, in addition to what was negotiated by the previous government, with the major markets of Indonesia and Malaysia in trade liberalisation, in many respects, goes beyond what was achieved in TAFTA.

I give you these examples. Within three years of AANZFTA’s entry into force, Indonesia will have tariff-free treatment of 73 per cent of tariff lines, Malaysia will be on 84 per cent and the Philippines on 80 per cent. This compares to just 55 per cent of tariff lines with tariff-free treatment in Thailand, three years after TAFTA’s entry into force. The Rudd government will address the Thailand agreement in the mid-term review, given our more ambitious approach to trade agreements. AANZFTA is a significant advancement of TAFTA  and while there are still some inconsistencies and issues remaining in AANZFTA we are working to address them.

Last month I had the pleasure of launching a new publication measuring for the first time in broad terms Australia’s engagement with Asia. Using seven criteria, the Asialink Index found that since 1990 our engagement with the rest of the world has increased three-fold. Over the same period, Australia’s engagement with Asia increased four-fold. And the intensity of our engagement with ASEAN is underpinned by the fact that, with ASEAN, it grew five-fold since 1990.

I have no doubt that in future historians will look back and see the ASEAN-Australia-New Zealand Free Trade Agreement as a key marker in accelerating our integration into the region. If we have been able to achieve $80 billion in two-way trade without the agreement, imagine the potential for growth with this agreement.

And while there are many gloomy outlooks, particularly about the economic future of a North Asian giant like Japan, there is still growth in the region. Developing Asia is the fastest-growing group of nations, with the IMF predicting growth of more than four per cent for this group in 2009.

The Australian government is committed to deeper engagement with the Asia-Pacific region. This has been and will continue to be one of the principal drivers of our nation’s prosperity. Trade and measures to facilitate trade, like AANZFTA, are vital elements in our regional recovery road map. Through our commitment to a more liberal international trading system, including FTAs in our region, we are determined to harness the power of trade.

I ask leave of the House to move a motion to enable the Leader of the Nationals to speak for 27 minutes.

Leave granted.

I move:

That so much of the standing and sessional orders be suspended as would prevent Mr Truss (Leader of the Nationals) speaking for a period not exceeding 27 minutes.

Question agreed to.

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

I am pleased to respond to this ministerial statement by the Minister for Trade, which is very similar in style and content to his statement at the beginning of last week where he dealt with a range of trade issues and referred also to the ASEAN-Australia-New Zealand Free Trade Agreement. Today that agreement has taken a step further, with the text, at long last, being made available for some degree of public scrutiny. I thought it was quite unusual for the text of this agreement to be kept secret for such a long time. Indeed, even after the minister had announced that he had signed this agreement, the text was not available. I do not think that that is an accountable and open way in which to deal with these sorts of agreements.

I appreciate that there will now be a time to look at the text and, presumably, there will be the usual inquiry from the Joint Standing Committee on Treaties, so people will have an opportunity to be involved. But the level of consultation about the detail of these particular discussions has not been of a similar nature to what occurred in the discussions, for instance, about the Doha Round or in other trade negotiations that have occurred over the years. It is widely believed that there were some very difficult issues—and I think the minister has confirmed this today—in relation to the motor vehicle industry, and probably the clothing, textile and footwear industry, which had not been agreed at the time when the initial signing actually occurred. Again, that seems to me to be a rather unusual way to do business, that critical issues are left unresolved and yet we have already agreed to the document. I think questions could reasonably be asked during the Joint Standing Committee on Treaties review of this particular agreement about some of the processes that were involved.

As I said last week, trade and trade policy is generally reasonably bipartisan. I welcome the fact that another step has been taken in Australia’s trade negotiations and that a further free trade agreement has been signed. As the minister said, this one is a plurilateral agreement in that it involves a number of countries and therefore is an important building block in a comprehensive program of free trade agreements involving Australia and our major trading partners.

However, it does grate a little when the minister, in discussing the history of this matter, chose to accentuate the role of Labor Party people—naturally, I suppose, coming from his side of politics—in the development of this process and to write out of the history some of what actually happened when Labor was not in office. It is important to note in this particular agreement that the informal consultations in 1995 in Brunei, to which the minister referred, between ministers from ASEAN, Australia and New Zealand agreed to region-to-region linkages between AFTA and CER. That was probably the first time that there was any kind of genuine willingness on behalf of the partners to actually talk about some kind of a free trade agreement. Prior to that, there had certainly been some engagement and discussions and at one stage the Deputy Prime Minister of Thailand, Dr Supachai, made some supporting comments. But under the previous government it took many years—more than a decade—to get to a stage where there was some willingness to actually talk about region-to-region linkages.

It was in October 1999, under the coalition government, that ASEAN and Australia and New Zealand ministers established a high-level task force to examine the feasibility of an AFTA-CER free trade area. In October 2000, The Angkor agenda: report of the high-level task force on the AFTA-CER free trade area supported the establishment of an AFTA-CER free trade agreement. In September 2002, AFTA-CER Closer Economic Partnership was established. In November 2004, leaders from the 10 ASEAN countries, Australia and New Zealand agreed in Laos to launch negotiations on a comprehensive FTA covering goods and services as well as investment. In March 2005, the AANZFTA negotiations began in Manila. Since then, there have been 16 rounds of negotiations. Most were under the previous government but were taken up seamlessly by the incoming government.

I insert those parts of the history of this agreement so the record can be full and complete. I think any fair-minded observer would acknowledge that there was a very substantial contribution to the negotiation of this agreement by the previous government. The minister has come along at the right time to complete and sign the agreement. I cannot say that if the previous government had been in office we would have signed the same agreement, because I think we would have had different priorities. I would strongly dispute what the minister says about ambition and about Labor having greater ambition in trade. In fact, I think this example is a triumph of expediency over ambition. A mere achievement of preventing backsliding is now seen as worthy of honour. Rather than making new advances, we are supposed to be now thankful that the agreement is not going backwards. In fact, there has been a contribution from both sides, but I want to concentrate my remarks on the actual content of this agreement.

I want to make one final comment about something which, I have to say, does concern me. I am concerned in relation to the fair reporting of the history of events. The Department of Foreign Affairs and Trade seems to currently be going through a process of rewriting its country briefs, writing out references to the coalition government in these particular briefings. There is a 12-year gap starting to appear in the history of the arrangements between one country and another; that no minister has visited during that time. There were no discussions. Their ministers did not come to Australia. There is just a 12-year gap. I think that is unfortunate, because DFAT has tried very hard to give bipartisan service to the government of the day. History does not stop because there is a change of government; it goes on. The written record, therefore, should not be purged of references to the achievements of the previous government. I call on the government to stop this process and make sure that the records provided and the history in the department’s records remain honest, true and a fair assessment of what happens and that they do not just get rewritten because there is a change of government.

As I mentioned earlier, there are clearly some advances in the ASEAN-Australia-New Zealand Free Trade Agreement. But I think it falls well short of what could be considered a good deal for Australian industry. Indeed, I think Australia has given away more than it will receive in return. Under the agreement, Australia has agreed to reduce 96.4 per cent of its tariffs to zero at the beginning of next year. That compares with 47.6 per cent which were at zero in the base year. Of the 12 countries that are party to the agreement, only Singapore will have lower tariffs in 2010. Of course, Singapore has a range of other restrictions on trade with Australia, particularly in services—which is the main area of its economy and which will not be changed as a result of this agreement—which places barriers in the way of a free and proper exchange of trade and commerce between our two countries. Singapore does not have a range of sensitive industries, apart from services—and, as the minister said, the previous government negotiated a free trade agreement with Singapore which is exceptionally comprehensive. There are a lot of zero rates there. But, in some of the key areas, like services, Singapore does need to improve its record, and this agreement makes no progress in that regard.

Under the arrangements that have been negotiated, three countries will have less than five per cent of their tariffs reduced to zero by 2010. One country—I admit it is only a small country: Laos—will have none there even by 2013. Burma actually seems to slip back; it has less tariff-free treatment of items in 2013 than it had in the base year of 2005. Cambodia makes no headway. Vietnam makes no headway at all between now and 2013. And yet Australia moves 96.4 per cent of all of our tariff items to zero on day one. Even New Zealand will only reach 84.7 per cent of its items moving to zero by 2010. It is of interest to note that in 2013 around 10 per cent of the New Zealand items will still not have been reduced to zero. So we are making substantial concessions immediately, where other countries are trailing along at a much slower rate. Sometime between 2020 and 2025 most tariffs will be eliminated for some key Australian industry sectors; but, for others, they will never be removed. In some, they will not even be improved as a result of this agreement.

From the first day of AANZFTA, all Australian tariffs on agricultural imports will be reduced to zero permanently. All agricultural items coming into this country will have no tariff protection whatsoever, and that zero rating will be locked in permanently. On the other hand, Australian farmers will continue to face major tariff barriers when they seek to export agricultural products to ASEAN countries. So Australia’s very generous ultimate offer in relation to the full range of agricultural products—we have emptied the whole larder—on day one is not being reciprocated by other countries.

It is also interesting to note the double standards in this agreement. While agriculture has to have zero tariff rates from day one, certain other industries will have only tit-for-tat style tariff reductions—particularly motor vehicles, clothing, textiles and footwear, and a range of other manufactured goods. In many of these industries, Australia will reduce its tariff protection in a similar style to what is happening in other countries. I notice that the minister said in his address that negotiations in this sector—referring to the car industry sector—were tough and that he fought for the best interests of the local Australian car industry. He picks out the car industry as the one for which he fought tough and in the best interests of the local industry. I would have hoped he would have fought for industries other than the car industry. What fight did he put up for the agricultural industry? He immediately reduced all tariffs to zero.

He went on to say that, as a result of the negotiations, there will be a slower phase-out of arrangements for tariffs on vehicles manufactured in Indonesia, Malaysia and Thailand, as we demanded reciprocal arrangements with those countries. It is perfectly reasonable to demand reciprocal arrangements, but when it came to agriculture there were no such demands. He did not seek any kind of reciprocal response from those countries at all. We just unilaterally disarmed—zero on day one.

In other areas, such as the services area, this will be a major disappointment for Australia’s growing services exporters. This is a very large proportion of the Australian economy—an area where we are making significant advances, and the ASEAN countries are key markets. Yet the gains in the services sector are paltry to say the least. I know that that reflects the position with the Doha Round and discussions in relation to services generally. It is very hard to make headway. But since we decided to unilaterally disarm in sectors where Australia is strong, like agriculture, it is disappointing that we are unable to achieve some gains for our services sector.

As I mentioned earlier, many key products will receive little or no improved access, especially in the agricultural sector. Rice has been excluded from any tariff reduction commitments or improved market access offers by Indonesia, Malaysia and the Philippines. Maize has been excluded from the tariff commitments by Indonesia. Indonesia and Malaysia have excluded wine and spirits. Vietnam has excluded 41 mineral lines from tariff commitments. Malaysia will continue to restrict access of Australian milk. There is one product I would like to mention in particular. The Australian fruit industry placed a high priority on the access of mandarines into Indonesia. Once much of the export mandarine industry was in my own electorate. The growing areas are not in my electorate anymore, but the exports have largely stopped anyway because of the high tariffs imposed by Indonesia on Australian mandarine imports. Even though this was probably the highest priority for the Australian fruit industry, there will be no reductions in citrus tariffs into Indonesia until at least 2025 and probably until 2028. At that time, there will be only a 6.4 per cent reduction in the existing tariff. So the barriers are going to remain in place for citrus into Indonesia for another generation.

Let us turn to sugar, which the minister spoke about at some length. ASEAN countries take about a third of Australia’s exports in the sugar industry, so it is particularly important for them. The minister was a constant critic when trade agreements negotiated by the previous government did not make enough advances in sugar. He referred to that again today. After the negotiation of the US-Australia FTA in March 2005, the minister said, ‘We cannot allow that sort of thing to happen again.’ The minister raised the issue again in May last year, when he said, ‘Unlike the previous government, we are not selling out Australian agriculture to pursue an FTA at any cost.’ In reality, the minister has failed on his own rhetoric in relation to sugar. There is little or nothing in this deal for sugar. Most of the signatories to AANZFTA have made no concessions at all on sugar. Some have got an existing zero tariff, and we are supposed to be thankful that they are going to keep it at zero. Where concessions have been made, they are from the smallest ASEAN countries and most of these improvements will have to wait until 2023 to be delivered.

Indonesia, the Philippines and Thailand have said that they will do absolutely nothing. In fact, Thailand has actually delivered much more for sugar under the Thailand-Australia FTA, negotiated by the previous government, than has been arranged in this deal negotiated by the minister. Thailand is actually offering less under this agreement than it previously agreed to provide. I think, therefore, that any achievements that the minister may boast about in relation to sugar are threadbare. He could not even keep in place an arrangement that was already negotiated and already signed. If we are supposed to take credit for no retreat in relation to a free trade agreement, maybe we should be taking credit for the fact that there was no retreat on sugar in the AUSFTA. Let me say that I did not regard that as a good enough outcome. I wanted advances on sugar in the Australia-US Free Trade Agreement, but this minister, who was critical of that outcome, is asking us to be satisfied with a ‘no retreat’ type of solution concerning most of the countries involved in the agreement he has just completed. The reality is that this was not a good deal for sugar growers. There are virtually no advances whatsoever. There may be a little, if they can hang on until 2023, into some very small markets, but in reality sugar has proved to be too hard for this government to include in the negotiations.

If the minister had agreed to be tough and to fight for the best interests of the local industry, as he did for the car industry, he might have been able to achieve something worth while. Maybe if he had agreed to slower phase-out arrangements for some other tariffs in relation to other countries in return for reciprocal arrangements, he could have achieved something. But the priority for this government was with its mates in the car industry, not the Australian farm sector. I guess this really worries the agricultural sector when it comes to the Doha Round. I can hope that there is more ambition and more determination in the Doha Round and that we will not simply accept another argument that we should be satisfied with not going backwards. That is not good enough. Not going backwards is not a reason for us to celebrate. What we have to do, if we are going to have worthwhile negotiations, is to go forward and continue to go forward.

How ambition has fallen. The government regularly uses words like ‘ambitious’ around their trade agenda, but in reality the ambition has now retreated to a situation where all they expect to achieve is that we have not gone backwards. You do not create more jobs by not going backwards. You have to go forwards. You have to achieve greater gains, and these have not been achieved in far too many areas of this agreement.

Can I also raise some concerns I have about the new rules of origin that have been included in this FTA. Exporters are going to be able to choose whether they want a regional value content or a change of tariff classification content under the origin rule. This flexibility will enable a much wider range of products to be classified as coming from that country of origin and be allowed to be imported into Australia to take advantage of the new tariff concessions. Some products that are predominantly grown or made in other non-ASEAN countries will be able to get the benefit of this free trade agreement. To provide this additional flexibility will mean that there is a much wider range of products that will be allowed to be classified as made in Thailand, made in Indonesia or made in Burma than has ever been the case in the past, and has ever been the case in previous agreements. I suspect, also, that that is going to be something that will benefit our trading partners coming into a large consumer market like Australia more than it will benefit Australia in seeking to place our products in ASEAN countries.

The AANZFTA will certainly deliver some benefits to Australian industry and there will be some new market access opportunities, but it is also going to expose a number of Australian industries to much tougher Asian competition. In that regard, I turn to my concerns about the future of the Australian Export Market Development Grants Scheme, which is falling apart under this government. The scheme is unravelling; it has virtually collapsed. There are hundreds and hundreds of people who have undertaken negotiations to export products from Australia to around the world who are now finding that they are not going to have their EMD grants paid. At the last election, the Labor Party went to the people with a promise to expand the scheme to make a lot more people eligible—lower the thresholds, increase the number of grants and substantially extend the grants.

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

Mr Deputy Speaker Thomson, I rise on a point of order. This is a ministerial statement about the ASEAN-Australia-New Zealand Free Trade Agreement. I fail to see what the EMDGS, which the previous government ran down under its reign, has to do with this debate. If you want a debate about the EMDGS, let us have it, but this is not the appropriate context in which to have it.

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

The Leader of the Nationals should address his remarks to the ministerial statement.

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

This statement concerns a whole range of trade issues and I am happy to relate this to traders who would want to sell products to take advantage of the ASEAN-Australia-New Zealand Free Trade Agreement. There are many people working in those countries who are not going to get their current EMDGS claims paid, and there are going to be a lot more who are not going to get their claims paid in the period ahead. The government commissioned the Mortimer inquiry to look at these issues. The Mortimer report recommended unwinding most of the changes that the government made to the scheme.

Australian exporters are going to face increasing challenges in the ASEAN market, some of them as a result of this free trade agreement. They are going to need full cooperation, support and assistance from the government to not only take advantage of any new markets that might have been created but also protect the markets they have as a result of the increased competition in those markets that will be available under this FTA. So it is not good enough for the government now to be short-sheeting the funding for this program. You simply cannot make a lot more people eligible and then offer less money and expect it to go around. We funded it 100 per cent in each of these years and we would have funded it again in the year that you have short-funded it and left people short. You look at our record. We funded it. They did not go without when we were in government.

I know this is not the minister’s fault. I am not blaming the minister for this. He went to cabinet to get some money for it and they knocked him back. Unfortunately, when they knocked him back, the exporters whom we need to work hard and take advantage of trading opportunities were left without funding under the EMDG Scheme. They are hurting and they feel deeply aggrieved because they were used to getting 100 per cent payments and this year they did not get 100 per cent payments because this government refused to provide the top-up funding necessary to make sure that the payments were in fact made. I think that that is a significant issue in trying to take advantage of the new free trade agreement which will come into effect on 1 January next year. We will need to be able to provide the kind of assistance and support that our exporters will need to open up these new markets. Many of them will have to put in a great amount of effort and time to establish the clients and to work through the issues. But it will be very difficult for them to do that if they are not going to get proper reimbursement of their expenses, as they have expected under the EMDG Scheme over many years.

This agreement also talks about new opportunities in Asia for the Australian meat industry. I welcome any new markets that might be possible. However, the chances of Australia opening up new markets for meat have also been dealt a savage blow by the government’s decision to axe the 40 per cent subsidy on export inspection charges. This will add 60 per cent to the cost of meat inspection services in Australian meatworks. It will add millions of dollars to their expenses, something like $40 million or $50 million. That is not the kind of encouragement that an industry would expect to receive if the government were really interested in opening up new trade opportunities. This subsidy has been in place for most of the last couple of decades. It was interrupted briefly by the previous Labor government, but it was reinstated in 2001 and has made a huge difference. No other country in the world expects their exporters to meet the full cost of export inspection services—the cost of a lot of the bureaucracy, the trade negotiations and all sorts of other things that will be added on.

Some of this is being hung on the Beale review, but it seems that only a small part of the Beale review is being adopted. The Beale review recommended significant changes to the way in which these charges are assessed and also that the government pick up the tab for the departmental expenses and a lot of the international negotiations. This government has decided to lump the full cost onto the industry, making exporting from Australia even harder.

We do need free trade agreements but we also need a government that is going to support our exporters to create jobs in Australia and not just see them transferred to other parts of the world. We are not the only people who can take advantage of this FTA; other exporters among the 12 partners can too. If we are going to be competitive in those markets then we will need to have a strong and effective Australian exporting sector that can count on the support of its government and not expect just to have more taxes, more difficult industrial relations and more penalties placed on its capacity to do its job.