Ken O'Dowd (Flynn, National Party) Share this | Link to this | Hansard source

On behalf of the Joint Select Committee on Trade and Investment Growth, I present the committee's report of the inquiry into business utilisation of Australia’s free trade agreements, together with the minutes of the proceedings.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—Australia has been an active participant in the international trend to use free trade agreements to advance trade liberalisation. This inquiry investigated the experiences of Australian businesses using FTAs. While the business community strongly supports the policy of pursuing FTAs, this inquiry has also identified potential reforms that could increase the ability of businesses to realise the benefits of FTAs.

Current government processes have clearly been very successful in conducting and finalising FTA negotiations with partner countries. There is potential, however, to make these processes more transparent by having potential FTAs evaluated by an agency such as the Productivity Commission. This would increase public confidence, facilitate business planning and assist government decision making during the negotiation process. Australia could also benefit from allowing greater involvement of peak industry groups in the negotiation process. This would help ensure that negotiators are able to target the most beneficial outcomes for Australian business.

While FTAs create a framework for trade, they do not necessarily guarantee immediate market access. Essential standards, such as those covering product safety or professional qualifications, can unintentionally become barriers to trade. A clear example of this is the impediment that sanitary and phytosanitary, or SPS, regulations place on horticultural exporters. SPS regulations are used by countries to protect their population, industries and environment from the risks of pests and disease. New products are not granted access to a market until they have been assessed for their SPS risks. Australian horticultural producers raised the issue that access to a number of markets has been denied or only granted with conditions that would make trade unviable. In other cases, they have simply not been able to have their products assessed.

The committee has identified a number of measures that could accelerate progress on these issues. A high priority for negotiators should be achieving recognition of Australia's fruit-fly-free zones in the regions. Additionally, providing capacity-building assistance to FTA partners in developing countries can assist them to develop science based SPS protocols and faster assessment processes.

The Department of Foreign Affairs and Trade has Australia's most experienced trade negotiators, who have established relationships with negotiators in partner countries. The committee believes Australia's position would be strengthened by the formal involvement of DFAT negotiators in market access negotiations. Australian negotiators aim for consistency in the rules and conditions used in FTAs, but unfortunately this is not always possible. The proliferation of rules can lead to a complex and confusing regulatory environment for the exporters. Given this, it is imperative the government provides clear, accessible information that explains how business can benefit from the opportunities provided by FTAs.

A high priority is to provide exporters with a means of easily accessing the import regulations used by Australia's FTA partners. The online FTA dashboard being developed by DFAT is an important step in this direction. Ultimately, the aim should be to develop a tool which provides information on all FTA partner countries that is detailed and up-to-date, and yet intuitive and easy to use. The government's North Asia FTA seminar series has been well received by business. There is, however, some concern about the time it is taking to deliver the series across the country. Greater involvement of peak industry groups could speed up the rollout of the seminars and enable the information to be tailored for particular industries. The creation of a recognisable 'brand Australia' logo and marketing campaign would assist business to capture the premium generated by Australia's reputation for producing high-quality, clean and green products.

The government should also support businesses to develop anticounterfeiting technologies that protect them from the damage that counterfeit goods can cause to their brand and Australia's reputation. In closing, I thank the businesses, the peak organisations and the government agencies that provided submissions and appeared at public hearings for this inquiry. I also thank my fellow committee members for their participation and contributions during this inquiry. I commend the report to the House.

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

by leave—It is my privilege to follow my friend and colleague the member for Flynn to thank him for his chairing of this important committee and particularly to thank him for his contribution to what was a climate of cooperation and bipartisanship as we tackled some pretty important issues. I would also salute my colleague the member for Charlton, as well as Senator Bullock and Senator Wang from the other place and other members who participated from time to time—the member for Hume, Senator Smith and others. It is also very pleasing to see members of the secretariat join us in the chamber as we table this report. It gives us the opportunity to thank them directly, face-to-face, for all the hard work that they put into organising the work and helping the member for Flynn and all of us as we deliberated over these important issues. The final thank you goes to the businesses and the organisations who shared their expertise and their experience with us, whether that be in Canberra, Sydney or Melbourne. A lot of them travelled long distances to come and have a talk with us, and so we should put on the parliamentary record our appreciation for their time and for their effort as well.

The fundamental question that this committee dealt with is among the most important that we can ask ourselves as a nation, because if we are to succeed, post the mining boom, in this country, we need to engage more, and more effectively, with other countries in our region to create good and lasting jobs for our people. It is the case that, over the last 40 years or so, Australia has come a very long way when it comes to engagement with Asia—and I am thinking, of course, of Whitlam going to China and engaging in the 1970s; I am thinking of all of that opening up of our economy in the eighties and nineties; I am thinking about the way that we engage with organisations like APEC and others; I am thinking about the Gillard government's Australia in the Asian century white paper. A whole lot of progress has been made with our engagement strategies in the region, but it is certainly true that there is a lot more that we can do to be more successful, particularly when it comes to our trading arrangements here in Asia.

We do have nine free trade agreements. Some of them were inked by this side of the House; some of them were inked by that side of the House. None of them are absolutely perfect, as is always the case when you are dealing with other countries. But all of them are better than nothing, and all of them are, ideally, stepping stones to the sort of multilateral trade progress that has been sorely lacking in recent years—in the last decade or so. All of them should be seen as stepping stones to that genuine, multilateral, broad-based trade progress that has the opportunity to lift living standards here in Australia and around the world.

We also know that, despite us signing these agreements, Australian businesses are not taking full advantage of them. The most credible numbers on this come from the Australia's International Business Survey 2015, which found that up to 52 per cent of firms did not even know whether an FTA applied to them and up to 13 per cent did not know the FTA existed in the first place, and up to 20 per cent knew about it but chose not to try and access the benefits. So there is a problem here. There are considered programs; there are good people in DFAT and Austrade and other agencies; there is lots of effort going into this problem. But I think it is fair to say there is no overarching strategy, and unfortunately there is a lack of leadership when it comes to the government helping business to take full advantage of these trade deals.

Lots of people who talked to us at the committee raised this issue of the implementation of the FTAs. For example, the Financial Services Council talked about the insufficient focus on implementation to ensure market access agreements are actually converted into opportunities for Australian firms to grasp. There are a whole range of reasons for this, and that is why the work of the committee to try to get to the bottom of the problem was so important. We heard about sanitary and phytosanitary concerns; non-tariff barriers, like labelling; country-of-origin issues; recognition of qualifications; counterfeiting; branding; transport costs and much more. The member for Flynn has touched on some of those already. So let me focus on just a couple of other important related issues and recommendations.

The first one goes to the capacity and capability of our workforce. I recall the evidence given to us by the ANZ bank, which talked about the need to reduce the knowledge-related and cultural barriers to trade. I think it is fair to say that, ever since the government binned the Australia in the Asian century white paper, we have not had a proper comprehensive strategy to build the capacity that we need to make engagement with Asia work for more Australians. We are not empowering enough workers to participate in the services boom in the region in particular. A number of witnesses appearing at the committee compared our investment in science, technology, engineering and maths—the so-called STEM cluster of issues—with those of our competitors, and it would not surprise honourable members to know that we do not fare well in that comparison. We are falling short.

This side of the House has proposed some comprehensive policy ideas on boosting our STEM workforce and harnessing the growth in the services sector, because that is, overwhelmingly, where the jobs of the future will come from. My colleague the member for Hotham has been reminding me that every single one of the 10 fastest-growing high-skill jobs in Australia today is in the services economy, and these are the jobs of the future: high-skill, export-facing advanced services. The member for Hotham has put a lot of work and a lot of thinking into that sector of the economy. She knows and we know that to properly position our workforce we need to do a much better job of modelling the agreements as well. The Productivity Commission was very strong on this point. The PC thinks that we should model the agreements at the prenegotiation stage and then at finalisation, and other organisations, like the Australian Chamber of Commerce and Industry, agreed that we need to do better when it comes to modelling these agreements to properly understand the economic impacts. Too often we are flying blind when it comes to these negotiations. We understand and we got evidence from people in the bureaucracy that there are difficulties and there are limitations, but we should not give up on trying to model these agreements, so that the debate that we have, not just in this place and this House but right around the country, is based on facts and so that businesses and workforces can plan to take advantage of FTAs.

I draw the House's attention to two passages in particular from the report which really do go to these issues of modelling and workforce capacity. The first one says:

An Australian workforce equipped with the skills, knowledge and cultural understanding to engage with potential FTA partner countries is central to the ability of Australian business to benefit from FTAs. The Committee considers that developing Australia's science, technology, engineering and mathematics capabilities, as well as widening knowledge of the languages and culture of key trading partners is of particular importance in facilitating engagement with FTA partner economies.

The second one that I want to draw the House's attention to is:

The Committee considers that the Australian Government should undertake modelling of human capital and workforce needs, particularly for the services sector, with the aim of identifying the labour skills needed to take advantage of future FTAs. This modelling should inform the development of a workforce strategy in the early stages of individual FTA negotiations.

Two specific recommendations go to these important points about modelling and about ensuring that we have the workforce that we need to properly take advantage of free trade agreements.

This is an important report with some real insights into ways we can ensure our businesses better utilise trade opportunities in our region. For that reason I commend it to the House.

Ken O'Dowd (Flynn, National Party) Share this | Link to this | Hansard source

I would like to thank my deputy, Dr Jim Chalmers, the member for Rankin, for his hard work and his comments. I move:

That the House take note of the report.

Debate adjourned.