David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Hansard source

I rise to speak in support of two bills, the Customs Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018 and the Customs Tariff Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018, that will implement Australia's obligations under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, known as the TPP-11 for short. It's a free-trade treaty involving 11 countries. The treaty was originally negotiated when it included America. When President Trump decided to withdraw, probably because he'd been listening to the Greens, it left 11 members: Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam, along with Australia. Despite America's withdrawal, the treaty is largely unchanged. The TPP-11 will enter into force 60 days after the date on which at least six, or 50 per cent of the number of signatories, ratify it. It has already been ratified by Japan, Mexico and Singapore. More are expected to ratify by the end of the year or close to it. It will soon take effect.

Many countries are aware of the benefits of free trade agreements. A number are already showing an interest in joining the TPP-11. Even China is thinking about it as a possible counter to increasing trade barriers with America. The TPP-11 is a step towards realising the long-term vision of a free trade area in the Asia-Pacific. It is absolutely in the interest of Australians for more countries to join and for Australia to ratify the agreement. Free trade is an unqualified good. There are no circumstances in which it is not. Restrictions on trade hurt both sides of the trade equation, sellers and buyers. In the end, trade occurs only when it's voluntary and mutually beneficial. Ideally, free trade would occur without agreements. Australia's barriers to free trade hurt only Australians.

Since the world seems to think there has to be an agreement between countries before something that benefits both of them is allowed to occur, free trade agreements are increasingly common. Bilateral free trade agreements are okay as far as they go—better than nothing, perhaps—but multilateral trade agreements are far superior. They establish a broader base of trade in which multiple countries are all operating by the same rules. Australia has existing free trade agreements with some of the TPP-11 parties, but they've not fully addressed the barriers and restrictions in those markets and they limit the extent to which our goods and services exports can expand.

In addition, Australia does not have FTAs with Canada or Mexico, and our exporters are disadvantaged due to existing FTAs between these countries and our competitors. Canada and Mexico in particular provide significant new opportunities, because Australia has underdeveloped economic relationships with both of these G20 economies. The TPP-11 presents an opportunity to address both these issues. Through the FTA with Japan, Australia has secured increased access for many products already, but it continues to face high tariffs on, and quota limited access to, Japan's sensitive products. In dairy, products face tariffs of up to 40 per cent. Beef tariffs, while reduced, are still quite high, at up to 23.5 per cent after 15 years. Wheat and barley face tariffs. Rice is subject to a big tariff. Sugar, similarly, faces a high levy. A range of tariffs also remain on other Australian interests in horticulture and seafood.

Australia has two existing FTAs with Malaysia, the ASEAN-Australia-New Zealand Free Trade Agreement and the Malaysia-Australia FTA. Nonetheless, Australia still faces tariffs and quota-limited access into Malaysia on beer, wine and other alcoholic beverages. Pork faces tariffs of 25 per cent or 50 per cent. Liquid milk has tariffs of 20 per cent and 50 per cent. Australia has an existing FTA with Vietnam. However, that agreement did not eliminate Vietnamese tariffs on a range of products of interest to Australia, which include petroleum, which faces a tariff of 20 per cent; iron and steel products, on which tariffs are as high as 40 per cent; beer, where the tariff is at 47 per cent; wine, at 56 to 59 per cent; and spirits, at 55 per cent.

With regard to China and Canada, Australia faces a wide range of tariff barriers. We have no FTA agreement with either of those countries, as I mentioned. Access into the Canadian dairy market is currently significantly limited by quotas and high tariff arrangements. That's something, in fact, that provoked President Trump to threaten to pull out of the NAFTA agreement. Canada has agreed to renegotiate that, with America agreeing to re-sign it because Canada has reduced some of those barriers. Tariffs on dairy products range up to 369 per cent. There are also tariffs of 94 per cent for barley and tariffs of 20 per cent on wine, industrial products and so on. Those tariffs are largely eliminated for Canada's other FTA partners, of which Australia obviously is not one.

To finish this point: Mexico has tariffs of up to 67 per cent on wheat, 115 per cent on barley, 125 per cent on dairy, 25 per cent on beef and 20 per cent on wine. On industrial products, Mexico's tariffs can range from 15 to 30 per cent for automotive parts or mining equipment. They are key barriers faced by Australian services exporters and investors in TPP-11 countries as well. Service exports and investors are reduced as a consequence. Once the TPP-11 takes effect, most of these tariffs, quotas and barriers will either be removed or become negligible over time. Of course, Australia has very few remaining tariffs. However, to the extent that they remain, they will also be removed. This will be good for Australians, who will pay lower prices on imported goods and services.

The Liberal Democrats support free trade—that is, we support the free movement of goods, services and capital. Our support is without qualifications, apart from legitimate biosecurity precautions. I do mean legitimate concerns, not the confected concerns of those trying to keep out competition. In principle, we also support the free movement of labour, but, as the great libertarian Milton Friedman famously pointed out, you can't have unrestricted immigration while you have a welfare state, so we acknowledge a need for limits on it. What we don't support is so-called 'fair trade', unless we get to decide what 'fair' means. If anyone else decides, it won't be fair. What we might mean by fair is maximum choice in terms of quality and price for the benefit of consumers. It does not mean propping up businesses that can't compete; that's what others think fair trade means. Australia's suppliers of goods and services are generally world class and internationally competitive. Those that aren't, do not deserve to be protected. It is not the business of the government to keep uncompetitive businesses in business.

Finally, on the ISDS issue, I do not accept that this is a problem. In fact, it is Australian businesses that will benefit the most. Some countries simply don't have the legal structure to enforce contracts. The ISDS process ensures there is a rules based system that they can use. Australia does have a rules based system; it has independent and properly functioning courts. It's unlikely that it will ever be called upon within Australia but, for Australian exporters, the ISDS process provides them with commercial certainty. These two bills should pass. The TPP-11 is a good thing for Australia, and there should be more of it.