Arthur Sinodinos (NSW, Liberal Party, Cabinet Secretary) Share this | Hansard source

I rise to speak on the Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015. The bill contains amendments to the Customs Tariff Act 1995 that will implement Australia's tariff commitments in the agreement. These amendments are complementary to those contained in the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015.

I want to begin by thanking all those who have contributed to this debate. The China-Australia Free Trade Agreement is a historic agreement for our country, and I am pleased that so many senators have acknowledged the significant opportunities it provides in many different sectors across our economy. Negotiations on the China-Australia Free Trade Agreement began in 2005 and were concluded in November 2014 during President Xi Jinping's visit to Australia. When President Xi addressed this parliament during that visit, he noted that it is estimated that in the next five years China will import more than US$10 trillion worth of goods, its outbound investment will exceed US$500 billion and Chinese tourists will make over 500 million overseas visits—an extraordinary picture of China's economic transformation, the greatest poverty-reduction initiative in world history. It also reflects the changing nature of the Australia-China business relationship. New export opportunities in the future will be found across the premium food sector, value-added manufacturing, financial services, health and aged care services, tourism and many other sectors where Australia is well placed to meet China's growing demand.

This agreement positions Australia to take advantage of these emerging opportunities now and into the future. It is a comprehensive agreement between two highly complementary economies. It has been pleasing to hear the many supportive comments from business and industry bodies regarding the FTA. For example, Brendan Pearson, Chief Executive of the Minerals Council of Australia, has called the China deal 'a watershed moment in our economic history'. Together with the trade agreements with Japan and Korea, ChAFTA will anchor the Australian economy in East Asia for many decades to come and will provide increased opportunity and prosperity for future generations of Australians. Brent Finlay, President of the National Farmers' Federation, sums up the potential opportunities on the horizon for Australia's regional and rural communities, noting that ChAFTA is a game changer for Australian agriculture. In its submission to the Joint Standing Committee on Treaties, the National Farmers' Federation said that ChAFTA would provide millions of dollars in export value to Australian farmers, including those in the red meat, grains, dairy, pork and horticultural sectors: 'The agreement recognises agriculture as one of our nation's export strengths and will open opportunities for the sector in China.'

It is clear this agreement will provide substantial benefits for our agricultural and resources exports. ChAFTA provides Australia with a competitive advantage over our major competitors, including the US, Canada and the European Union. It also levels the playing field for Australia, putting us on the same or an improved footing compared with New Zealand, Chile and South-East Asian nations that currently have free trade agreements in place with China.

The commitments in ChAFTA will allow Australian exporters to benefit from the growing demand in China for quality beef products, dairy products, wine, seafood, horticulture, processed food and other agricultural products. For our resources and energy sectors, ChAFTA eliminates all tariffs of up to eight per cent within four years, including for coal, worth around $8.3 billion within two years. ChAFTA provides greater certainty for our exporters by locking in current zero tariffs on major resource and energy products such as iron ore, gold, crude petroleum oils and liquefied natural gas. Under ChAFTA, China will eliminate tariffs on 99.9 per cent of our resources, energy and manufacturing exports to China.

ChAFTA will also deliver significant benefits for Australia's service industries. China is already our largest service export market, worth $8.2 billion in 2014, and, under this agreement, we have the potential to grow our services trade with China, creating new jobs and prosperity for Australia. China has offered Australia its best ever services commitments in a free trade agreement beyond greater China. Importantly, this includes new or significantly improved market access for Australian banks, insurers, securities and futures companies, law firms, professional services suppliers and education service exporters, as well as health, aged-care, construction, manufacturing and telecommunications service businesses. The agreement also includes a most-favoured-nation clause, under which Australia's competitive position in key service sectors vis-a-vis our competitors will be protected in the future. That is very important.

This agreement improves opportunities for investors in both countries. Chinese investment in Australia has been growing strongly in recent years, up from $2 billion 10 years ago to around $65 billion as at the end of 2014. ChAFTA will promote further growth of Chinese investment into Australia—in particular, by liberalising the Foreign Investment Review Board screening threshold for private Chinese investors in non-sensitive sectors from $252 million to $1,094 million. This agreement is bearing fruit already. In the past year we have seen increased interest from Chinese businesses and investors looking for partnerships and opportunities in this country. Australian businesses, too, are looking to seize the opportunities on offer.

The customs legislation we are debating today is the only legislative change that parliament needs to approve for CHAFTA to enter into force. The Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 contains amendments to the Customs Act. These will implement our obligations under chapter 3 on rules of origin, as set out in the China-Australia Free Trade Agreement. These rules are essential for the purposes of determining whether goods imported from China are eligible for preferential rates of customs duty under the free trade agreement.

The bill also contains amendments to include relevant obligations on Australian exporters and producers who wish to access preferential treatment under the agreement when exporting to China. Certain powers are also conferred on authorised officers to examine records and ask questions of exporters or producers of goods exported to China, in order to verify the origin of such goods.

The Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 contains amendments to the Customs Tariff Act 1995 that will implement Australia's tariff commitments as set out in the China-Australia Free Trade Agreement. The amendments in these two bills are complementary.

Associated customs regulations for foreign acquisitions and takeovers regulations and life insurance regulations will also require amendment before we bring CHAFTA into force. A ministerial determination under the Migration Act is also required. Implementing this agreement will not require widespread changes to Australia's current policy settings. It is crucial that we pass these bills, without delay, so that this agreement can enter into force as soon as possible. Many business leaders have urged early entry into force to allow the benefits to start to flow.

The government is pleased and welcomes the support that has been secured from the opposition to ensure the passage through parliament of this important implementing legislation. Through this agreement, Australia's decades long tradition of bipartisan support for freer trade is set to continue. Our discussion with Labor were both constructive and were held in good faith. I would like to acknowledge the shadow minister for trade and investment, Senator Wong, for the sterling work she has done on behalf of the opposition. The amendments to the migration regulations that we have greed with the opposition will be made shortly. To be clear, the government is committed to maintaining the definition of 'projects' contained in the guidelines of project agreements issued by the Department of Immigration and Border Protection. A project is:

… a collaborative enterprise that is carefully planned to construct infrastructure within a defined geographic area.

These changes and amendments reflect existing government policy settings.

The government is pleased to have drafted amendments that provided further clarity and comfort in regard to key issues raised by the opposition. Crucially, the provisions that we have agree with Labor will not in any way change or contravene the binding commitments we have made to China through our concluded FTA negotiations. Nor will they in any way discriminate against our largest trading partner.

I would also like to acknowledge the work of the Joint Standing Committee on Treaties and the Senate Foreign Affairs, Defence and Trade Committee in conducting their respective inquiries into CHAFTA. I would like to particularly acknowledge Senator Back's leadership in the Foreign Affairs, Defence and Trade Legislation Committee's inquiry into these bills. I also thank Senator Gallacher for chairing the FADT References Committee's inquiry into CHAFTA. I thank them for tabling the committee reports last Friday, ahead of the deadline originally set by the Senate. These inquiries, together with the JSCOT inquiry, allowed many organisations, companies and individuals in the community to have their say on this important treaty. The government welcomes the majority recommendations from each committee as binding treaty action to be taken to implement the China-Australia Free Trade Agreement. The committees made a number of other recommendations regarding the implementation of CHAFTA, after entry into force, which the government will consider closely in due course.

The China agreement rounds out the third in the trifecta of trade agreements the government has concluded with our three largest export markets. Already Australian businesses are seeing the benefits of our agreements with Korea and Japan. Together, these agreements have the potential to transform our economy. The Trans-Pacific Partnership, including 12 countries covering 40 per cent of global GDP promises to further enhance the competitiveness of our country and our economy and to deliver new markets and generate new jobs. I have pleasure in supporting these bills before the Senate.