Tanya Plibersek (Sydney, Australian Labor Party, Deputy Leader of the Opposition) Share this | Link to this | Hansard source

Labor supports the passage of the Customs Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014 and the Customs Tariff Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014. These bills are an important part of the implementation process of the Japan-Australia Economic Partnership Agreement. Labor supports stronger trading relations within our region and the world. Former Labor trade ministers Simon Crean and Craig Emerson contributed to the progress of negotiations on this trade agreement with Japan. Those negotiations were part of Labor's embrace of our region. The former Labor government's 'Australia and the Asian Century' white paper mapped out the opportunities and the challenges for Australia in our region. It is a bit hard to find the white paper these days—the incoming government junked key white paper initiatives and banished the document itself from the website of the Department of Prime Minister and Cabinet—but anyone who can get a hold of a copy will appreciate the seriousness with which the former government embraced the task of preparing this nation for the coming Asian century.

In relation to trade, the white paper identified the following pathways to help navigate our way: 1) working persistently to reduce barriers to trade and investment through existing multilateral and regional forums such as the World Trade Organisation, the G20, the Asia Pacific economic cooperation forum, the Association of South-East Asian Nations and its free trade agreement partners and also through bilateral arrangements; 2) working towards a free trade agreement for the Asia Pacific region by encouraging competitive liberalisation and regional agreements through our ongoing participation in negotiations for the Trans-Pacific Partnership Agreement and participation in negotiations for the Regional Comprehensive Economic Partnership; 3) promoting rules of origin in trade agreements that lower business compliance costs and facilitate trade; 4) assessing the benefits of joining the Pacific Alliance of Chile, Colombia, Mexico and Peru as part of our efforts to position Australia as a connecting rod between Latin America and Asia; 5) working to increase access for Australian investment in Asian markets; 6) continuing to advocate market based reforms in Asia that promote stable, efficient and open financial markets, for example through further work towards the establishment of direct trading between the Australian dollar and the Chinese renminbi in mainland China; and 7) supporting efforts towards complementarity of financial market regulations within the region to open up market opportunities, for example through APEC's financial market integration efforts including the Asia region funds passport initiative.

These pathways were part of a whole-of-government plan to encourage and support Australian businesses operating in and connecting with growing Asian markets. The white paper notes that Australian businesses and their employees can be big winners from the Asian century with new and expanding opportunities for our miners, our manufacturers, our farmers and our service providers. It notes, however, that Australian businesses—no matter how competitive—cannot participate in the Asian century if they are locked out of markets. That is why in addition to pursuing multilateral and plurilateral agreements, the former Labor government was committed to concluding high-quality bilateral trade agreements with South Korea, China and Japan amongst other trading partners. The key phrase here, of course, is 'high-quality'.

In the assessment of many the Japan-Australia Economic Partnership Agreement fails to meet that test. In almost every area of activity cynicism about what this government is doing is warranted. The conclusion of bilateral trade agreements negotiated according to arbitrary time lines and concluded to coincide with available photo opportunities are no exception. Australian industries were short-changed to facilitate an announcement of the conclusion of negotiations on the Japan-Australia Economic Partnership Agreement during the Prime Minister's visit to Japan in April. That is not just a Labor observation. The National Farmers Federation, the Minister for Trade's old employer, said that the agreement

… falls short of the mark. It does not improve or marginally improves market access and terms of trade for a number of sectors such as dairy, sugar, grains, pork and rice.

Australian Pork Ltd described the agreement as 'substandard and a missed opportunity'; canegrowers called it 'another kick in the guts for Aussie cane growers'; the Ricegrowers Association was extremely disappointed; the Australian Dairy Association observed 'our words fell upon deaf ears'. These judgements are from industry organisations that rely on governments to advance their trading interests abroad.

After time to review the full agreement and the opportunity for inquiry and report by the Joint Standing Committee on Treaties, Labor and many others have formed the view that, on balance, the agreement is in the national interest. Labor welcomes the modest market access concessions it achieved. These concessions represent a crack in the door for many exporters, especially for Australia's premium agricultural products and our advanced, high-quality service sector. The Japan-Australia Economic Partnership Agreement will enable Australian exporters to establish and build strong quality and reliable brand names in households throughout Japan. This will be crucial in order to hold on to the first-mover advantage provided by this agreement. We know that other competitors, including Canada and the European Union, are negotiating their own preferential bilateral trade deals with Japan. The agreement with Australia includes favourable review mechanisms and most-favoured nations provisions, which hold promise for wider and deeper market access. We urge the government to proactively utilise these mechanisms to gain further market access to Japan, especially for those export sectors dudded by the Abbott government in its haste to announce a deal.

Labor welcomes the liberalisation in investment agreed to in the Japan-Australia Economic Partnership Agreement. Lifting the Foreign Investment Review Board's threshold to over $1 billion for non-sensitive investment from Japan treats Japanese investment the same way as non-sensitive sector investment from the United States, New Zealand and South Korea. Australia has always relied on foreign capital growth. Lifting the threshold for Japanese investment is a good thing. What is not a good thing is the government's pandering to the National Party by lowering the Foreign Investment Review Board's threshold for agricultural land and agribusiness. It is simply unrealistic to think Australia can scale up to the level needed to meet demand for our premium agricultural products without the help of foreign investment. Additional barriers to investment do not encourage additional investment.

Labor welcomes the absence of an investor-state dispute settlement provision in this agreement. In contrast to other agreements negotiated by the minister over recent months, the Japan-Australia economic partnership agreement does not provide foreign investors with greater rights than domestic investors. Labor strongly opposes the inclusion of investor-state dispute settlement provisions in investment in trade agreements. We note with some concern the investor-state dispute settlement review mechanisms embodied in them. It is difficult to understand why the signing of a future agreement with another country containing investor-state dispute settlement provisions should trigger a review of Australia's agreement with Japan.

Last week the government announced that it had concluded negotiations on a preferential agreement with China that unfortunately includes investor-state dispute settlement provisions. Pursuant to the terms of our agreement with Japan, Australia must commence a review within three months following the date the Australia-China agreement enters into force with a view to establishing an equivalent investor-state dispute settlement mechanism under the agreement with Japan. This is most regrettable. The folding of the Abbott government on investor-state dispute settlement provisions in the Korea-Australia free trade agreement, and now in the China agreement, has not been warmly welcomed by the Australian community. It is clear that such provisions, notwithstanding the inclusion of so-called safeguards, are not desirable and present significant risks.

The Gillard government showed global leadership in this area in 2011 when it announced that it would not agree to provisions in investment and trade agreements that confer greater rights on foreign businesses than domestic businesses or provisions that constrain the ability of the government to make laws on social, environmental and economic matters. Labor has not supported a private senator's bill in this parliament that sought to grow the treaty making powers of the executive. But no sensible government can or should ignore the concerns of many Australians, including the Chief Justice of the High Court of Australia, regarding investor-state dispute settlement provisions.

Today Labor again urges the Abbott government to rethink its decision to include investor-state dispute settlement provisions in trade agreements. In relation to the Japan-Australia economic partnership agreement, we caution against the backdoor introduction of investor-state dispute settlement through the agreement's review provisions. A future Labor government would exercise Australia's right as a party to the agreement to propose the excision of any subsequently included investor-state dispute settlement provisions.

In relation to the movement of people provisions in the Japan-Australia economic partnership agreement, Labor is disappointed by the lack of balance and reciprocity between the parties, specifically with respect to contractual service providers. As with the Korea-Australia free trade agreement, the government has given up the right to undertake labour market testing ahead of granting 457 visas to categories of foreign workers. These visas allow foreign residents to work temporarily in Australia. In most cases, there is a requirement for labour market testing to demonstrate local skills shortages. We are particularly concerned about the government's decision to deny itself the capacity to undertake labour market testing with respect to contractual service providers from Japan.

Good trade agreements should support and create jobs for Australians. Australians should have the opportunity to fill job vacancies where they have got the capacity to do the job that is required. Exemptions from labour market testing in this and other agreements do not support that objective. No doubt we will get some assurance from the government that the Japan-Australia economic partnership agreement will create more jobs for Australians and no Australian worker will be displaced as a result of the exemption from labour market testing. If that is the case, we ask the government to put in place measures to more accurately track visa entrants based on trade agreement provisions, including exemptions from labour market testing requirements. This will allow us to more accurately measure their impact and devise future policies that better support Australian businesses and workers.

I want to say a few words about the China-Australia free trade agreement announced by the government last week. While we welcome the finalisation of long-running negotiations, Labor is concerned that the deal struck by the government to meet its self-imposed timetable will deliver sub-optimal outcomes. We cannot make an assessment of the quality of the agreement because the government has not seen fit to release the text. Consistent with recent tactics from a government that is well versed in political spin, all we have seen is a bunch of press releases and glossy pamphlets. Last month my colleague Senator Penny Wong, the shadow minister for trade and investment, set out clear benchmarks for a high-quality free trade agreement with China. We will closely examine this deal against those benchmarks. We urge the government to release the text of the agreement so that Labor, the parliament and the Australian community can assess its quality.

Japan and Australia have a good, strong and stable relationship. We welcome the opportunities provided by this economic partnership agreement to further build on that relationship. We have been reliable trading partners for many decades. In 2013 Japan was our second largest trading partner, with two-way trade valued at $70.8 billion. We are also reliable investors. Japan has been a long-term investor in Australia, with investment stock of $131 billion at the end of 2013. This investment has been critical to enable Australia to capitalise on the demand for our resources and provide jobs and economic growth.

Australia has also invested in Japan, with Australia's stock of investment in Japan at $50 billion at the end of 2013. Japan is Australia's second largest agricultural market, with approximately $4 billion in exports in 2013. Australia's agricultural industry is significant for Australia's future economic and job growth. Currently the red-meat sector alone employs more than 200,000 workers, most of whom are in small local government regions. Dairy is forecasting jobs growth in excess of 6,000 skilled workers next year. Australia is the first major agricultural exporter to conclude an economic partnership agreement with Japan. This gives Australian exporters a real competitive advantage.

Japan is also Australia's second largest partner for non-agricultural goods, with over $42 billion in export trade in 2013. This agreement opens the way for significant export growth and jobs in these sectors. On services, this agreement opens the door to expand service exports to Japan—in particular, legal, education, telecommunications and financial services. Australia's service sector employs four out of every five workers. So we believe that the government could and should have secured a more comprehensive and inclusive agreement with Japan. Nevertheless, we believe that, on balance, this agreement with Japan provides benefits to Australia and is in the national interest. We support the Japan-Australia economic partnership agreement and we support the bills before the House. This support is not however without reservation. For the reasons I have outlined, I move:

That all words after 'That' be omitted with a view to substituting the following words: 'whilst not declining to give the bill a second reading the House urges the government to:

(1) not agree to any inclusion of investor state dispute settlement provisions in the Japan-Australia Economic Partnership Agreement;

(2) enact policies to ensure that Australian workers benefit from jobs growth created under the Japan-Australia Economic Partnership Agreement; and

(3) utilise the review mechanisms in the Japan-Australia Economic Partnership Agreement to seek further market access gains, especially in agriculture.'

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I second the amendment.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable Deputy Leader of the Opposition has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. If it suits the House I will state the question in the form that the amendment be agreed to. The question now is that the amendment be agreed to.

Eric Hutchinson (Lyons, Liberal Party) Share this | Link to this | Hansard source

It gives me great pleasure to rise in this debate on the Customs Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014 and speak on what truly was a historical agreement for this nation. In a past life, I spent nearly 14 years working for a Japanese owned trading company in Melbourne. I have spent a lot of time in that country over the years. I have many friends and colleagues there and have done a lot of business there over many years, mainly within the wool industry. This agreement truly is ground breaking.

I acknowledge the work that Minister Robb did with the South Korean free trade agreement—prior to the announcement of the Japan-Australia Economic Partnership Agreement. That was, indeed, an agreement of some note as well. If we are being brutally honest, it was about playing catch-up cricket, I suppose, with our competitors in that space—countries like New Zealand and the United States which had a distinct advantage. Let's make no mistake: we are competing as a nation, as an agricultural exporter, with countries like New Zealand and the United States. The agreement with South Korea was indeed noteworthy from the point of view that it set in place an opportunity for Australia to compete on a level playing field. Let's make no mistake about this: this was the single most protected agricultural importing market in the world, bar none, and we broke through. Minister Robb broke through.

I thought for a minute there that I was in a parallel universe. Those opposite had six years. There were white papers and there were media releases, but there was no agreement. Nothing happened, and they had six years in government. Member for Sydney, for goodness sake, I come from a regional area of Australia. The member for Sydney mentioned dairy. I will make one comment about dairy. Yes, they did not quite get everything they wanted—that has been well and truly made up for in the recent China agreement, mind you—but they got concessions, and one of the things that they got concessions for was cheese. Lo and behold, my state of Tasmania exports 95 per cent of all the dairy products we produce and much of it is cheese. The tariff free quota on cheese into Japan has increased enormously—so we are not complaining.

For six years we stood there and nothing happened. We were committed, but we were living in a parallel universe and nothing happened. It is about time and we are getting on with it. Did we get everything we wanted? No, we did not. But that is what happens in negotiations. You never get everything you want. I commend Minister Robb and all of those people who did magnificent work. And rice was mentioned rice. Even my 15 year old knows that rice is sacrosanct in that market. If there were one agricultural commodity that was not going to get through, it was likely to be rice.

Make no mistake, this is a huge win for our nation. Whilst the Korea-Australia Free Trade Agreement was catch-up cricket, this was groundbreaking stuff with one of our most important customers. Indeed, Japan is Australia's second largest trading partner. As a result of a historic economic partnership agreement which was signed in April this year, more than 97 per cent of Australia's exports to Japan will receive—and here is the key word—'preferential' access or enter duty free when the JEPA is fully implemented. We are competing as a nation and we are an exporting country.

I touched briefly on dairy. The member for Corangamite—who sits here—also comes from a state where they manufacture dairy products. I think the majority of Australia's dairy products are manufactured in the state of Victoria. So, whether it be the by-products of milk powder, the proteins and different things—all of which now have preferential access into that important market—or whether it be dairy and the cheeses that I mentioned previously, whilst they did not get everything they wanted, they were all advantaged enormously there.

There are a number of things I could talk about. I could talk about, for example, the education services and the cooperation that will undoubtedly come with, for example, the University of Tasmania and the excellent research capacity that that the Japanese have in Antarctic research. I have no doubt that, as a result of these collaborative arrangements, and the Japan-Australia Economic Partnership Agreement, we will see further collaboration as a result.

My state is not a big producer of wheat, but we do produce a lot of malting barley—and indeed some very fine beer to go along with that malting barley. But what I wanted to focus on particularly, though, was beef and the benefits for the beef industry from this agreement. I do not believe there are too many beef cattle in the member for Sydney's electorate. But, nevertheless, beef was unanimously hailed as a success out of the Japan-Australia Economic Partnership Agreement. Significant concessions have been given upfront—and this is very important. Whilst the tariffs do reduce over a period of time, we have got substantial reductions in tariffs for beef.

When I look through this agreement, it could have been the Tasmania-Japan free trade agreement, because the benefits are there for seafood and the benefits are there for beef. Indeed, we have a Japanese owned feedlot in Tasmania that I know as a result of this agreement is planning to expand its commodity lines. Who do we compete with there? We compete with the United States. We are an expensive country, and there are the freight challenges that we have out of my state, and all of a sudden the feedlot in Tasmania is looking to compete with US beef into the Japanese market with frozen product. Their primary product, of course, is high-value chilled product. That is the main game for this country and certainly for my state of Tasmania. We do not have the scale of Queensland, notwithstanding the terrible drought they are having there at the moment, or the Northern Territory but we can put high-quality branded grass-fed and grain-fed beef into a very important market like Japan. It is not a particularly attractive issue, but the concessions granted on offal are significant as well.

The member for Sydney in her contribution acknowledged the most favoured nation status that Japan has given Australia in this agreement. What does ‘most favoured nation’ mean? It means that if at any time in the next few years the United States or any similar competitor to Australia exporting into the Japanese market get a better or more substantive agreement we can revisit our agreement immediately. These are well-negotiated and significant concessions, and again I commend the minister for the work he has done. This truly is a groundbreaking agreement. It has been a long time in the making—it started under John Howard, but for a while after that there seem to have been a parallel universe, in terms of the contribution of the member for Sydney. Nevertheless, this is something that we should as Australians celebrate. This is the second of three substantial agreements that this government has been able to negotiate since coming to government. Did we get everything we wanted? No, we did not. Will this be of substantial benefit to our nation, that is an exporting nation, and will it put more money in the pockets of farmers in the electorate that I represent? Absolutely—and that is the ultimate test. Yes we have to get behind a whole range of other initiatives that, again, the government was concerned about in respect of the Export Finance and Insurance Corporation Amendment Bill, which we debated prior to this bill—allowing, for example, not just cows to access insurance but also the product that those cows produce, milk. That is pretty important as well. So there are some practical changes that the government is making.

This agreement is a game changer. After the announcement was made I sent an email to a number of colleagues I had worked with in Japan many years ago just to get their feedback. The press in Japan was very positive about this. Make no mistake, Japan has made enormous concessions—it has been a very protected market for a very long time. The thing that the Japanese customers and consumers were looking forward to most was being able to buy more Australian beef—and some of that beef will be Tasmanian. That is a wonderful story. I thank the House for the opportunity to make a contribution today.

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

These customs and customs tariff amendment bills implement the Japan-Australia Economic Partnership Agreement, and we are also debating the amendment moved by my colleague the member for Sydney. We have had some very distinguished visitors to this chamber and to our country in the past 12 months or so, some of them associated with the G20 that has just finished, but it is important to recall the visit of Japanese Prime Minister Abe to this chamber earlier on during this parliament because he did bring a very welcome message to Australia about the deepening of economic and defence ties between our two democracies. There were some light moments in that speech, as there were in some of the other speeches given by esteemed leaders in this place, but that fundamental message about closer economic ties was a message our whole nation could appreciate. That is what we are talking about in the context of this agreement. As my colleague said, we have a number of reservations but we do support the agreement that the government has struck with the Japanese.

The agreement is the second of the three significant trade negotiations that Australia concluded this year, the others being with Korea and China. Colleagues on both sides of the House have mentioned those agreements and it was appropriate that the member for Lyons mentioned the work of the trade minister. Whether you agree with every aspect of every agreement, they are hard work for the people associated with them. I want to pay tribute in particular to the DFAT officials, the PM&C officials and the Treasury officials—Australian patriots who work on these agreements over a long period, certainly longer than the life of any of the last couple of governments. They do put in long hours to bring these agreements to fruition, so I want to pay tribute to them. I also want to pay tribute to the six years of work done by my esteemed predecessor in Rankin, Dr Craig Emerson, along with Simon Crean and also Richard Marles for the role that they played in these agreements.

Throughout the life of at least the last three Labor governments we championed freer trade, because that is consistent with Labor principles and it is consistent with our approach to growing the economy and creating jobs here in Australia. We do appreciate that average Australian families are major beneficiaries of freer trade because of cheaper consumer goods and greater access to a diversity of products from right around the world. Free trade also helps us to develop stronger international ties culturally and economically, which makes for a far more dynamic and resilient economy. In that context, a trade agreement with Japan is an important stepping stone for Australia.

Honourable members are aware of some of the statistics about the trade relationship. Let me just touch very briefly on some of those. Japan is already Australia's second-largest agricultural export market, worth about $4 billion last year. It is also our second-largest market for non-agricultural goods—something like $42 billion worth in 2013. Our trade surplus with Japan was a bit over $28 billion in 2013, which is second only to our trade surplus with China. Exporters have historically faced, and currently face, higher tariffs into Japan, with agricultural tariffs of up to 219 per cent currently being levied. As it stands, Japan is a big market for Australia. There are some really good foundations of that relationship, but we hope and expect to see this agreement build on that economic relationship to the benefit of Australians.

When it is implemented, Australia will become the first major agricultural exporter to enter into a bilateral agreement with Japan. This gives Australia what the aficionados call 'first mover advantage' over our competitors. It means Australia will be able to develop a whole lot of relationships and have greater presence with Japanese consumers before some of our global competitors can. It also means Australian exporters will have access to preferential tariff arrangements that our competitors in New Zealand, Canada, the US and the EU will not necessarily have. On top of that, the inclusion of a most favoured nation provision means that we will maintain that first mover advantage even as other nations enter into agreements with Japan. Any tariff cuts that Japan gives our competitors in the future will automatically flow through to Australia as well.

It is worth touching on some of those tariff advantages that Australia will enjoy as a result of the Japan-Australia Economic Partnership Agreement. More than 97 per cent of our exports to Japan will enter duty free or will receive preferential access when the agreement is fully implemented. It entirely eliminates tariffs on all of our current minerals, energy and manufacturing exports. Given that LNG, coal and iron ore are currently Australia's top three exports to Japan, this will be a big benefit to the resources industry. In the services sector the agreement guarantees Australian service providers outcomes equal to or better than the best commitments Japan has made in any of its other agreements. There are a range of ways that that will be important. Japan will maintain levels of access for Australian legal service providers, financial service providers and telecommunications companies, and Japanese students will also become eligible for certain government scholarships to study at a university in Australia, which is also very important.

In the investment space, the decision to raise the Foreign Investment Review Board screening threshold for non-sensitive sectors should be interpreted by Japan as a sign that Australia is keen for Japanese investment here. In agriculture, as my colleague said, we do think it would have been possible to secure a more comprehensive and inclusive agreement. Despite all of the other benefits I have mentioned, it is the case in some areas—acknowledged by the member from the opposite side of the House—that there have been some exclusions from the deal. We acknowledge some good aspects, including the abolition of tariffs on milk products, wine, seafoods, lamb, beer, wool, honey and cotton. We also acknowledge that Australia will become the only nation with a preferential tariff on beef, which will be a good head start for the Australian beef industry. Tariffs on beef and pork will be reduced, but they will still be in place even in 18 years time, which is not an ideal outcome.

The agreement does not contain tariff reductions, as others have mentioned, for processed or high-polarity raw sugar, which makes trade with Japan more difficult for the sugar sector. As a result of these weaknesses, the agreement has been criticised by a number of industry groups, which we should note in this place, including the NFF, the canegrowers associations, the Australian dairy industry, the Ricegrowers' Association of Australia and Australian Pork. As part of the amendment moved by the Deputy Leader of the Opposition, we have called on the government to work harder to seek further market access gains, especially in those agricultural areas.

As well as sharing the agricultural sector's, or part of the sector's, concerns with the market access outcomes in parts of the agreement, the opposition also has concerns around labour market testing requirements under the Japan-Australia agreement. We do believe that Australians should have the opportunity to fill job vacancies where they have the capacity that is required to do the job. This is a really important point, even for those of us who support the agreement. This is a crucial point worth noting. We are concerned about the government's decision to deny itself the capacity to impose labour market testing on contractual service providers from Japan under the 457 visa program. Section 457 visas allow foreign residents to work temporarily in Australia. In most cases, there is a requirement for labour market testing to demonstrate those local skills shortages, as is appropriate.

This agreement provides that Australia will permit Japanese nationals to perform certain categories of work temporarily in Australia without any requirement for labour market testing to assess whether the work can be performed by Australian residents first. These categories include the traditional business visitors, intracorporate transferees and investors, as well as the contractual service suppliers. We believe, on this side of the House, that the government should retain labour market testing or comparable safeguards on temporary migration, and that is another reason why we have moved our amendment.

One of the major issues identified in the very good JSCOT committee report on the Japan-Australia Economic Partnership Agreement was non-tariff barriers. A common view held by businesses who currently trade with Japan is that the market is complicated and difficult to work in, with unique trading arrangements. A recent study for the Export Council of Australia, undertaken by Austrade, Efic and the University of Sydney, found that the key barriers to doing business in Japan were licences and standards, local culture and a complex regulatory framework. For example, Japan's sanitary and phytosanitary protocols are exceptionally high, even by Australia's very stringent standards.

Apple and Pear Australia reported that despite the tariff reductions on Australian apples, only nine per cent of apples grown in Australia are able to be exported to Japan. In particular, all apples grown on the Australian mainland are prohibited, making tariff reductions meaningless for many of those growers. As it stands, only Tasmanian apples may be exported to Japan. These, we feel, are overly stringent non-tariff barriers. They can make gains from trade very difficult for affected industries.

The agricultural sector is not the only one to have to deal with a difficult regulatory framework in Japan. The Financial Services Council have also indicated the need to simplify regulations, including their desire for a licensing mutual recognition arrangement. Action to address non-tariff barriers to trade between Japan and Australia was one of the key recommendations put forward by the JSCOT when they examined this treaty. The government needs to do as much as it can, even more than it is currently, to resolve the non-tariff barriers to trade between Australia and our trading partners, including Japan.

I have argued in this place previously that we need to evaluate trade agreements on balance and not on the basis of one very specific part of an agreement or another. In trade, as in business, as in all fields of life, not every deal is a perfect deal, which means that Labor is always committed to closely scrutinising the outcome of all of the Abbott government's trade negotiations. As policymakers and as parliamentarians we do have a responsibility to be hard headed and to seek an agreement which is, on balance, in the best interests of Australians, whether that be our businesses, our workers or both.

Despite our concerns about labour market testing and a less than ideal outcome in the agreement for parts of the agricultural sector, Labor will be supporting the Japan-Australia Economic Partnership Agreement. In doing so, we acknowledge that bilateral FTAs will never be the ideal way to go about trade liberalisation, for those of us who believe in trade globalisation, and I think that was a point made very well by colleagues on both sides of the House in that important JSCOT report. The best progress is multilateral and an approach that addresses both the tariff and non-tariff barriers to trade. But, in an environment where multilateral momentum has stalled, bilateral and regional FTAs do play an important role as 'stepping stones to multilateral agreements', as my colleague Senator Wong has described them.

The Japanese academic Takashi Terada has described this as the 'domino approach' to regional integration in a piece for East Asia Forum, which is a tremendous source of information and commentary on these matters. He and other trade academics are excited by the prospect that the trade deal signed between Japan and Australia will lead other countries to feel an incentive to strike deals and agreements with the two countries. So, really, the writing is on the wall for the US and others to obtain similar benefits as a result of negotiations for any proposed Trans-Pacific Partnership Agreement. This means that one of the most profound effects of the JAEPA could be, in an ideal world, the regional and multilateral progress we see as a result.

Labor is supporting the agreement and the bills before the House today. We have noted our concerns about labour market testing and the non-tariff barriers to trade. But, on balance, we will be supporting the deal for three key reasons. The first is that the agreement will likely create economic growth and jobs for Australians; the second is that it will give Australian exporters first-mover advantage over our competitors; and the third is that it will ideally lead the way for further regional and multilateral trade progress into the future.

Michael McCormack (Riverina, National Party, Parliamentary Secretary to the Minister for Finance) Share this | Link to this | Hansard source

It is a pleasure to follow Dr Jim Chalmers, the member for Rankin, who in a past life was chief of staff to the immediate past Treasurer and who succeeded Craig Emerson in the electorate of Rankin. He acknowledged Dr Emerson's work in getting these trade agreements through, and I too acknowledge the former member's work in this regard. I will admit also that my friend the member for Rankin was Executive Director of the Chifley Research Centre after leaving Wayne Swan's office and then was preselected for Rankin. That is a bit of history for you on Dr Chalmers.

The Chifley Research Centre is replicated in the National party by the Page Research Centre, and the Page Research Centre, in conjunction with Senator Matthew Canavan—who is doing some fine work for Queensland as a Nationals senator—has republished this book in recent times, John McEwen: His Story. This relates to the legislation before the House, and it is historically important, because John McEwen helped to forge Australia's first relationship with Japan as far as trade is concerned. I will just read from this little 86-page book, about when Black Jack McEwen went to Japan and helped to forge that first relationship. He writes:

The second great international negotiation I was involved with in my first years as minister for trade was the creation of a trade treaty with Japan. The Japanese economy was discussed extensively with the trade department, between John Crawford, Alan Westerman and myself.

He writes:

The circumstances that had made Britain and Australia such big customers for each other's products were being repeated with the Japanese. In addition, under the terms of the peace treaty following World War II, Australia was obliged to make some move in favour of trade with Japan. We decided to have a go at negotiating a trade treaty with Japan. The negotiations were complicated by our obligations under the General Agreement on Tariffs and Trade.

Now, it would not have been easy for Black Jack to help forge a relationship with Japan, particularly at that time, when there was a lot of hostility—understandably—from many Australians towards the Japanese following the atrocities perpetrated on prisoners of war during the Second World War, between 1939 and 1945. There was a lot of racial intolerance towards the Japanese over what had been perpetrated on Australian soldiers, Australian nurses and Australians in general. Black Jack fought through that, realising the great potential there was in having a trade treaty with Japan—and full credit to him.

Similarly, this government has forged another trade agreement with Japan. The Customs Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014 and the Customs Tariff Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014 are good pieces of legislation, and it is with pleasure that I speak on these bills. The economic partnership agreement between Japan and Australia established earlier this year by the Prime Minister and the minister for trade, Andrew Robb—who is doing a fantastic job, an absolutely fantastic job—is a groundbreaking trade deal. It will drive economic growth and continue to build and to develop stronger trading relationships in Asia.

Collectively with the Korea-Australia and China-Australia preferential trade agreements—I prefer to call them preferential trade agreements, because they are not totally free trade; if they were, rice and all these other things would be included—the Japan-Australia economic partnership agreement forms a powerful trifecta and positions Australia as a major partner to these three economies, which are powerhouse economies both in our region and globally. Indeed, the three trade agreements with South Korea, China and Japan, negotiated and concluded by the coalition government this year, are the most comprehensive trade deals ever achieved by Australia in Asia. Together these three economies represent more than half of Australia's exports. Not only will all Australians benefit from this landmark agreement with Japan but regional Australia in particular will be a substantial benefactor. I represent the seat of Riverina, which will be a winner from these trade agreements, the Japanese trade agreement in particular. Australia and Japan concluded negotiations in April this year during the Prime Minister's historic and highly successful visit to North Asia. He conclusively signed the agreement with Japanese Prime Minister Shinzo Abe during Mr Abe's visit to Australia on 8 July.

Japan is an economic heavyweight. John McEwen recognised that. Tony Abbott recognises that. Japan has a population of almost 127 million people, a rapidly growing middle class and the third-largest economy in the world, and it is our second-largest export market. This partnership agreement with Japan represents enormous new opportunities and an expansion of current trading relationships for Australian producers, farmers and exporters. This is the most ambitious trade deal Japan has concluded with any nation whatsoever. It is the first time that Japan has signed a trade deal with another major agricultural country—and it is with Australia. It is a remarkable achievement, particularly for Australian farmers, for Riverina farmers.

Australia will benefit from major concessions across a wide range of areas, most notably in agriculture but also in education. A domain of traditional sensitivity for the Japanese is agriculture. This agreement will give Australian primary producers and exporters a significant competitive advantage by expanding current access to new Japanese markets. It eliminates high tariffs on a wide range of Australian exports. It will see more than 97 per cent of Australia's exports to Japan either receive preferential access over our global competitors or enter duty free when the agreement is fully implemented. This agreement positions Australia to capitalise on providing produce and services to an exploding population across Asia, which is expected to grow from 600 million to more than three billion people within the next 15 to 20 years. This economic partnership is an important step forward in our trade relationship with Japan, but the establishment of trading agreements with South Korea and China are a significant advancement for diplomatic relationships in the wider North Asia region. Building stronger trading relationships with Japan will have profound effects on local job creation, will lead to greater market certainty and will secure a positive future for Australia's economic growth.

Australia's agriculture sector is world class. We all know that. We should be extolling the virtues of Australian agriculture at every possible step. We all should—on both sides of the House—because Australia's agriculture is the very best in the world. We produce more than we can consume at home. About two-thirds of our domestic agricultural production is exported overseas, as it needs to be. We need trade agreements. We need to help the balance of payments. To reduce the barriers we face in major agrifood markets overseas we do need these sorts of trade agreements. Our competitors in the United States of America, Canada, New Zealand and Brazil, for example, will not have the level of access that we have negotiated, that Andrew Robb has negotiated.

This is a major win for our beef producers. Under this agreement the frozen-beef tariff will be reduced from 38.5 per cent to 19.5 per cent over 18 years and that for fresh/chilled beef will go to 23.5 per cent over 15 years. This is an excellent outcome in our largest market for beef, with a trade valued at close to $1.5 billion last year. I know how much the Minister for Agriculture, Barnaby Joyce, has pushed our beef—pushed the live cattle, pushed the chilled boxed beef—at every opportunity. We are making great strides in that area. Meat and Livestock Australia forecasts that, as a result of the Japan-Australia Economic Partnership Agreement, sales will jump by $5.5 billion over the next 20 years. Importantly, unlike our competitors, Australia will never again have to face Japan's 50 per cent snapback tariff on beef.

Similarly, we have also negotiated good export outcomes on dairy, wheat, malt/barley, sugar, seafood, oilseeds, wine and a whole host of other agricultural goods. It is great news. A large number of these horticultural products are produced in the Murrumbidgee and Coleambally irrigation areas in the Riverina. I actually have some of the irrigators sitting in my parliamentary office here in Canberra now. I know that they are very excited about the prospects that these sorts of trade arrangements have for themselves, for the local producers whom they represent.

In citrus—oranges—the 16 per cent tariff faced by Australian exporters in our peak exporting season will be eliminated over 10 years under this economic partnership agreement. What great news, absolutely fantastic news, for Griffith, for Leeton, for Coleambally, for Hillston, for Narrandera, for all of those great citrus-producing areas in the Riverina!

With dairy there are new market access opportunities in a heavily regulated industry, with a complete network of World Trade Organization quotas and domestic laws and quotas controlling all aspects of production and importation. However, Japan is one of Australia's most important dairy markets and Australia is Japan's largest supplier. Our exports were valued at $452 million last year, including $372 million of cheese, which faces tariffs of up to 29.8 per cent. Under the new partnership agreement dairy exporters will be able to access a new Australia-only duty free cheese quota for natural cheese for processing, growing from 4,000 tonnes to 20,000 tonnes, and also for cheese for shredding, growing from 1,000 tonnes to 5,000 tonnes. That is good news.

For a company trying to resurrect its original 1921 locally made and handcrafted cheese-producing facilities, this agreement is just the kind of incentive, just the kind of opportunity, that Coolamon Cheese Company in my electorate, would be looking for and could potentially benefit from. The Coolamon Cheese Company is expected to open mid next year and will see the creation of 12 to 15 full-time jobs in Coolamon. That might not sound like too many to the member for Kingsford Smith, who is sitting opposite, although he has been to my area and he knows that for little towns 15 jobs is a huge number. The multiplier effect from that is massive. Coolamon Cheese Company will produce handcraft boutique cheeses under the guidance of Australia's most experienced cheesemaker, Barry Lillywhite, and will be an icon for the Riverina. I am sure the member for Kingsford Smith will enjoy some of that product when I bring it in after the factory opens mid next year.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

Look forward to it!

Michael McCormack (Riverina, National Party, Parliamentary Secretary to the Minister for Finance) Share this | Link to this | Hansard source

I will have to do it now, won't I? This multifaceted agritourism business will bring benefits locally to the Riverina but there is also the potential to expand and access international dairy markets such as Japan's under this partnership arrangement.

This landmark agreement also has improved outcomes for wine producers. We all know that the best wine comes from the Riverina.

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | Link to this | Hansard source

Ha!

Michael McCormack (Riverina, National Party, Parliamentary Secretary to the Minister for Finance) Share this | Link to this | Hansard source

'Hear, hear,' I hear the chamber say! Wine exports to Japan were worth an estimated $42 million last year. Australian wine is currently at a disadvantage to Chilean wine. Under their partnership agreement with Japan, Chile secured tariff elimination over 12 years. It is a great result for Australian wine producers, such as De Bortoli and Casellas, in the Riverina that the 15 per cent tariff imposed on our wine will be eliminated over seven years under this agreement. When I bring the member for Kingsford Smith some Coolamon cheese, I will have to bring him some Riverina wine as well!

Honourable members interjecting—

You can hear that the chamber is so excited about the prospects for these small Riverina farmers!

Our grains—including wheat, barley and sorghum—and their milling products are one of Australia's biggest agricultural exports to Japan, worth $770 million last year. Wheat on its own was worth $356 million, making Japan our fourth largest wheat market. Wheat is so important. It is so critical to the Riverina. Whilst we normally want rain—and lots of it—because there is money in mud, at the moment we just want dry and clear skies because our farmers are busy stripping. Riverina farmers on their headers listening to this broadcast know how valuable and good our wheat is in the Riverina—and elsewhere.

Japan's grain trade is highly regulated. While there are relatively low tariffs on grain, there are complex tendering arrangements, WTO quotas, duties and other mark-ups. Outside this quota system, wheat for food and feed faces prohibitive tariffs when quotas have been met. Under the economic partnership agreement, Australian grain growers will exclusively be able to immediately export wheat and barley for feed duty free outside of the existing quota system as well as have streamlined export arrangements for some Australian wheat varieties. This is another win for Riverina grain growers. With the rise of a bulging middle class across Asia, Australian growers have a premium product for a premium market which poses little threat to local regional growers across Asia, so crucial to economic growth in developing nations. This partnership agreement with Japan presents increased opportunities for Australian producers, who will inject high-quality products into new and existing markets.

By establishing and building upon our existing strong trade relationship with Japan, this coalition government is achieving results. Farmers, industry and regional Australia can only get stronger and better because of what we as a government are doing. We are kicking goals. We are doing what we said we would do. We are getting access to these rich Asian markets. I commend the trade minister, Minister Robb, for what he has done to forge these relationships. I can only commend these bills to the House. They are very important. They are certainly important for Australian farmers. When Australian farmers are strong, so too is our nation.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

I look forward to the wine and cheese night next year in the parliamentary secretary's office! I support the passage of these bills . This is enabling legislation which gives effect to agreed reductions in tariffs and rules-of-origin agreements under the Japan-Australia Economic Partnership Agreement. I support the passage of these bills because they liberalise trade. They will create greater access to a very large and growing market in Asia for Australian producers. In turn, that will create jobs.

However, that is in respect of this enabling legislation. In terms of the wider Japan-Australia Economic Partnership Agreement, I and the Labor Party have reservations, particularly in relation to the elements related to access to the Australian labour market. Under this agreement, access to the Australian labour market by Japanese labour will be liberalised in the form of the removal of and reduction in some of the guarantees and protections that are currently in place for Australian labour through labour market testing prior to Japanese or any other labour being introduced into the Australian market. I will have more to say on that in a moment.

I support these bills because they encourage greater access to markets. They will create jobs in Australia. This legislation will give Australian exporters increased access to the Japanese market and a 'first mover' advantage over key competitors such as New Zealand, Canada, the United States, the European Union and others who are seeking further market access in Japan.

In the past, Australia's trade relationship with Japan has focused on energy and resources. In 1957 Australia and Japan signed an agreement on commerce which designated Japan as a 'most favoured nation'. As a result of this agreement and the resultant increased ties with Japan, Australia benefited greatly. In the late 1960s, Japanese investment and vision helped to develop the Western Australian iron ore industry. In turn, Japan benefited from access to Australian iron and coal, supercharging its industrialisation and economic boom in the 1960s. Trade between our two countries would go on to increase four-fold from the mid-1970s through to the 1980s. This is a wonderful example of trade liberalisation resulting in benefits, economic growth and job creation for both of our economies. Our economic partnership has continued to grow, with Australian exports to Japan doubling from $24 billion in 2001 to $50 billion in 2011.

Labor has strongly valued the work to bolster Australia's economic relationship and ties with Japan. It was between 2008 and 2013, under Labor, that the majority of the negotiations—the heavy lifting, if you like—for this agreement were conducted. In addition, to a large extent, Labor is responsible for laying the groundwork necessary for Australia and Japan to come together and reach this agreement.

In October 2012, the Labor government released the Australia in the Asian century white paper, designed to ensure we had the very best chance at maximising the opportunities of large-scale growth in the Asian region. The white paper included a comprehensive examination of five key areas: strengthening the economy, particularly through stronger trade relations; building capabilities; connecting with growing Asian markets; building sustainable security; and developing deeper and broader relationships.

It is good to see that vision outlined by Labor in the Asian century white paper being brought to fruition in this agreement. Growth in two-way trade between Australia and Japan has also coincided with the diversification of products and services that passed between our countries. Today, Japan is Australia's second largest agricultural market for Australian agricultural products, with approximately $4 billion exported in 2013. Australia's agricultural industry is significant for our nation's future and for jobs growth. Currently, the red meat sector alone employs more than 200,000 workers, most of whom are in small local government regions. Dairy is forecasting jobs growth in excess of 6,000 skilled workers next year.

Japan is also Australia's second largest market for non-agricultural goods, with over $42 billion in 2013 being traded with Japan. This agreement opens the way for significant export growth in jobs in these sectors. But the agreement on the whole, not specifically the legislation that we discussed today in terms of tariff reductions, does have some misgivings and shortcomings, and it is not without its detractors. Labor believes that the government should have done more to secure a more comprehensive and inclusive agreement with Japan. The agreement is being criticised by a number of industry groups and organisations whose job it is day to day to represent Australian businesses who are looking to secure greater access to markets in Asia, particularly Japan. The president of the National Farmers' Federation, Brett Finlay, was quoted in The Sydney Morning Herald on 8 April, saying: 'The agreement does not improve, or only marginally improves, market access in terms of trade for a number of sectors, such as dairy, sugar, grains, pork and rice.' The canegrowers association, the Australian dairy industry, Ricegrowers' Association and Australian Pork Ltd also had a few choice words for this agreement earlier this year.

The largest reservation that I have and the great disappointment about this agreement is the reduction in the liberalisation of protections put in place to ensure Australians have first access to Australian jobs. This agreement provides that Australia will permit Japanese nationals to perform certain categories of work temporarily in Australia without the requirement for labour market testing to assess whether the work can be performed by Australian residents. That is something that does not have the support of the wider Australian community. All Australians believe that, given that we have large youth unemployment in particular regions throughout Australia and an unemployment rate that is growing in our nation, Australians should have first access to jobs, particularly jobs in some rural and regional communities through which these will be based. To remove elements of labour market testing—the requirement for employers to advertise locally first, to test the market in a local economy before advertising and before going to foreign labour to fill vacancies—does not wash with the Australian public. It is a great deficiency in this agreement. I only hope that this is not the thin end of the wedge, and Labor waits with bated breath to see what has been negotiated in terms of the details with regard to the China free trade agreement. Some of the categories that will be allowed greater access to the labour market and where the labour market testing rules will be relaxed include traditional business visas, intercorporate transferees and investors, and contractual service suppliers. Labor is disappointed that the agreement does not maintain policy space for labour market testing conditions, particularly for contractual service providers, which cover a whole host of industries throughout Australia.

Labor does agree with the Joint Standing Committee on Treaties report on the Japan-Australia economic agreement, including its conclusion, to support the implementation of this agreement, and JSCOT's concluding comments, which state: 'The Japan-Australia economic partnership agreement will give Australian exporters significantly improved market access in goods and services, eliminating or sufficiently reducing tariffs on a wide range of Australian goods exports, including beef, natural cheese, wine, horticulture and energy resources and products. It will guarantee equivalent or better market access than Japan has provided any other trading partners in key areas of commercial interest to Australian service providers, including education, financial, legal, telecommunications, engineering and other professional services.'

That is why I support the passage of these bills. That is why Labor supports the passage of these bills—for the benefits that they will bring to those industries and those exporters in Australia. Nevertheless, we reserve our rights to oppose the wider agreement in respect of what has been negotiated by the government relating to labour market testing and the relaxation of those conditions in Australia, which unfortunately may see Australians miss out on job opportunities, particularly in rural and regional areas.

By supporting these bills, Labor will ensure Australian industry gets the earliest possible access to first mover reduced tariffs on goods exported to Japan and new market access for services. Labor has for many years recognised the great opportunities that will continue to present themselves in the Asian region and has worked hard to highlight the importance of harnessing these to further enhance jobs and growth for the Australian economy.

Labor supports these bills but exemplifies our commitment to labour market testing and the ideals contained in that. I want to congratulate and put on record my congratulations to the people who do the heavy lifting with these trade agreements, and they are notably the staff of the Department of Foreign Affairs and Trade. Credit also needs to be given to former trade ministers, in particular Craig Emerson and Richard Marles, for their work in bringing this economic partnership agreement and these bills to fruition.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

Order! The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour