Penny Wong (SA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I rise to speak on the Customs Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014 and the Customs Tariff Amendment Japan-Australia Economic Partnership Agreement Implementation) Bill 2014. On behalf of the opposition I indicate our position, which is as was expressed in the other place: that we support the passage of these bills, which are an important part of the implementation process of the Japan-Australia Economic Partnership Agreement.

I do want to raise an issue about timing, and there may be a clear explanation of this, but the government announced negotiations on this agreement concluded on 7 April 2014. The opposition, at the request of the government and from representations by Japan, has facilitated timely parliamentary consideration. But we are debating this legislation in the second-last sitting week of the year. As I said, there may be an explanation for the time frame between April and now as to why that is the case but it does seem that there has been some delay.

Enough of that: I want to move at the outset to the importance of trade. Labor has a long history of supporting stronger trading relationships with our region and the world. In fact, when I had the privilege of giving the 'Light on the Hill' speech and exploring some of the speeches and policies of Ben Chifley, the former Labor prime minister, it was quite clear that in fact even then the Labor Party was talking about the importance of trade with Asia. Of course, previously in this place, I laid out the history of trade liberalisation under Labor governments, whether under the Chifley government or subsequently the Whitlam, Hawke, Keating and, of course, the Rudd and Gillard governments. We in the Labor Party support trade because it is all about ensuring that we can try to create more jobs and build higher living standards for Australians. Fundamentally, Australia—given the size of our market—will not be able to do that if we sell only to ourselves. So it is a fundamental economic principle, and that has guided this trade liberalisation approach of the Labor Party over successive Labor governments.

The most recent exposition of Labor's position on this in many ways in government was the Australia in the Asian century white paper, which the former Labor government commissioned. That mapped out the opportunities and challenges for Australia in our region. My colleague in the other place, Ms Plibersek, outlined some of these pathways. These, of course, were part of a whole-of-government plan to encourage and support Australian business operating in and connecting with growing Asian markets. The white paper noted that Australian business and their employees have their potential to be big winners from the Asian century, with new and expanding opportunities for our miners, manufacturers, farmers and, importantly, service providers. Services are obviously a large part of our domestic economy and a smaller part of our exports. Over the decades to come I think all Australians would hope to see high-quality services being delivered to the growing markets of Asia, enabling good jobs and better living standards for Australians.

But, as we all know, Australian businesses, no matter how competitive they are, no matter how highly skilled their employees are and no matter how innovative they are cannot participate fully in the Asian century if they have restricted market access. This is why, in addition to pursuing multilateral progress and plurilateral agreements, the former Labor government was committed to concluding high-quality bilateral trade agreements with our trading partners.

I want to turn now to the initial reaction to the economic partnership agreement with Japan. I regret to say that this criterion of high-quality agreements has, certainly from the perspective of many stakeholders, been downgraded by the government in its quest to stage signing ceremonies to coincide with bilateral visits. Many Australian industries have expressed concern about being short-changed. We know that the announcement of the Japanese agreement was timed to ensure that it coincided with the Prime Minister's visit to Japan in April.

The public record records the disappointment of the National Farmers' Federation and of key export sectors. The NFF said the agreement falls far short of the mark and 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 Limited described the agreement as 'substandard' and a 'missed opportunity'. Canegrowers called it 'yet another kick in the guts for Aussie cane growers'. The Ricegrowers' Association of Australia was extremely disappointed. The Dairy Industry Association of Australia observed, 'Our words fell upon deaf ears.' One wonders, given the litany of views that I have outlined from these industries, where the National Party was when these complaints were being raised with the government.

After the tabling of the text of the agreement some months after the conclusion of negotiations, there have been two parliamentary inquiries relating to the economic partnership agreement. The first was by the Joint Standing Committee on Treaties, known as JSCOT. I thank the committee on behalf of the opposition for its work in investigating and reporting on the Japan-Australia Economic Partnership Agreement and also to those businesses, organisations and individuals for their valuable and informative submissions and statements made to the inquiry.

The JSCOT report was unanimous and, whilst it acknowledged the limitations of the agreement, the committee report highlighted several benefits of the bilateral trade agreement. These benefits included improved market access for some Australian exporters of goods and services including particularly beef, wine, horticulture, energy and resource products as well as services. Secondly, they included a first-mover advantage for Australian industries, providing exporters with time to build strong, quality and reliable brand names in households throughout Japan. I note this is of some significant advantage because Japan is currently negotiating a number of trade agreements, including some with some of Australia's key agricultural competitors. Thirdly, they included favourable review mechanisms and most favoured nation provisions which hold promise for wider and deeper market access. And finally, they are a first step with potentially greater improvements to come as a result of the outcome of ongoing negotiations that are occurring regionally.

JSCOT concluded that it was satisfied that the Japan-Australia Economic Partnership Agreement has the potential to provide Australian business and industry with a range of profitable opportunities, and that binding treaty action should be taken. The opposition agrees that this agreement does have the potential to provide opportunities and we urge the government to assist business in realising those opportunities. We welcome industry outreach in education programs, in particular by the Australian Customs and Border Protection Service, but note there is more to be done. We also commend efforts by industry groups and business groups, including the Export Council, to extend the reach of benefits under free trade agreements. Labor also maintains its position of encouraging greater transparency and simplicity in administration and rules so that many businesses can possibly benefit from the opportunities in this agreement. We urge the government to proactively utilise the review mechanisms built into the agreement in order to gain further access to the Japanese market.

The second inquiry was conducted by the Senate Foreign Affairs, Defence and Trade Legislation Committee which examined the provisions of the bills before the chamber, and we welcome the second report. During a prior inquiry into bills relating to the implementation of the KAFTA—the Korea-Australia Free Trade Agreement—the Senate Legal and Constitutional Affairs Legislation Committee recommended that customs make available a table which refers to each of the specific provisions of the KAFTA, and identify where those provisions have been adopted or have been proposed to be adopted into legislation, regulation or procedure. Such a table was subsequently produced and is now available on the Australian Customs and Border Protection Service website. This is a practice which arose directly out of Senate committee recommendations—an example of government and legislative process being improved through the adoption of Senate committee recommendations—and I urge the government to continue to take this approach. I understand that a similar table in relation to the partnership agreement before us is not yet available, and will be after the legislative processes are finalised. Labor's suggestion is that the recommendation of the committee—that the customs service make publicly available the table which refers to each specific provision and which also identifies where those provisions have been adopted or are proposed to be adopted, whether in the bills otherwise in legislation or regulations or by procedure—be accepted. So, consistent with recommendations not just from the Senate committee but also from groups such as the Customs Brokers and Forwarders Council of Australia and the Export Council of Australia, I would ask the government to ensure that the table for the Japan-Australia Economic Partnership Agreement be published today. I note that the minister's adviser is here in the box and I wonder if he could do us the courtesy, perhaps, of passing that indication from the opposition on to the government, particularly in light of our facilitation of the legislation before the chamber.

We also urge the government to improve transparency on trade agreements. I again draw the attention of the government to the resolution passed by the Senate on 11 December 2013 requiring the tabling of concluded trade agreements at least 14 days prior to signature. The government's announcement of the China-Australia Free Trade Agreement—another photo-opportunity—is another example of trade agreements being choreographed by the Prime Minister's office with little transparency about the detail of the agreement. I reiterate that the opposition expects the government to table the concluded agreement before signing, particularly given the government has already announced substantial portions of the agreement. There is no argument by the government that it should not table the text after the agreement is concluded but prior to signing.

I would also indicate, given that the minister's adviser did not acknowledge my previous request, that I would be grateful if the representing minister could perhaps pass this on. The opposition wrote to the government on Wednesday 19 November seeking a full briefing on the China-Australia Free Trade Agreement. I did have a conversation with the minister to follow up this request, but we have not yet received a response to this request. In the interest of ensuring that the opposition is fully briefed on such an important arrangement, I would ask if the government could follow this request up. We have demonstrated a cooperative approach in relation to this bill, and where possible—and it is not always possible, but where possible—the opposition seeks to bring a bipartisan approach to trade policy and legislation where it is in the national interest. I would ask the government to do the opposition the courtesy of responding to that request shortly.

There are some areas in terms of trade policy where we do part company from the government, and I am pleased to say that one of those aspects is not an issue in this agreement. We welcome the absence of an investor-state dispute settlement provision in this agreement. In contrast to other agreements concluded by the government, the Japan-Australia Economic Partnership Agreement does not provide foreign investors with greater rights than domestic investors. We note with some concern the review mechanisms embodied in this agreement do make reference to ISDS, and it is difficult to understand why the signing of a future agreement with another nation containing an ISDS provision should trigger a review under Australia's agreement with Japan. Last week the government announced it had substantially concluded negotiations on a preferential agreement with China that regrettably includes an ISDS and we remain concerned on this side of the chamber with that inclusion.

Pursuant to the terms of this agreement with Japan, Australia must commence a review within three months following the date the China-Australia agreement enters into force with: 'a view to establishing an equivalent ISDS mechanism,' under the agreement with Japan. I wish to record our concern with this. I wish to, again, say that the government should not ignore the concerns of many Australians—including the Chief Justice of the High Court of Australia— regarding investor state dispute settlement provisions.

The Labor government announced, in 2011, it would not agree to provisions in investment and trade agreements that confer greater rights on foreign businesses than domestic businesses and, in particular, that we would not see their inclusion in any trade agreement. We, again, urge the government to rethink its decision to include settlement provisions such as these in trade agreements, and we caution against any possible backdoor introduction of such an agreement through the review provisions in the Japan-Australia agreement. I flag that a future Labor government would exercise Australia's right as a party to the agreement to propose the excision of any subsequently included ISDS provisions.

Another area where the opposition has laid down a marker is in relation to the movement of people provisions. We do believe that any trade agreement should increase, not replace, Australian jobs. We do believe that the movement of people provisions should include the requirement to undertake labour market testing or other safeguard in the agreement. We do believe Australians should have the opportunity to fill job vacancies where they have the capacity to do so. The government's failure to include labour market policy space for labour market testing in this and other agreements do not support that objective.

Australia and Japan have a strong and stable relationship, a good relationship, and one that we do want to continue to build on. We welcome the opportunities provided by this agreement to further build on that relationship and to grow our economies and domestic employment. Labor do believe that the Abbott government should have secured a more comprehensive and inclusive agreement with Japan. However, we do recognise the agreement provides benefits to Australia. We support the bills before the chamber, which are critical to the implementation of the agreement.

Consistent with the position we outlined in the other place this support is not without reservations and, for the reasons I have canvassed, both in this debate and more broadly, I move the following second reading amendment, which has been circulated in the chamber:

At the end of the motion, add:

but the Senate calls on the Government to:

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

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

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

Joe Ludwig (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Customs Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014 and related bill. Can I, at the outset, indicate that I did not get an opportunity to talk on Report 144 of the Treaties Committee. I am on the Treaties Committee and did want to use this time to speak on the bill and obviously underline a treaty that now supports it. Of course, the Treaties Committee plays a very valuable role in both looking at the treaty itself, the national interest analysis provided by the government, and looking at the submissions from a range of individuals about the impact of the treaty. The interest that this treaty did provoke, not only in agriculture, but in minerals and energy and a range of financial services highlights the interest from stakeholders in this particular treaty. Some may ask why. If you look at Japan from Australia's perspective it is our second largest export market, which is in the vicinity of $4 billion. We have had attempts to finalise a treaty arrangement with Japan for some time now, so I do congratulate the government for finalising this important agreement.

I note that Labor has always supported stronger trading links within our region, and in government we had pursued and successfully completed a number of free trade negotiations with our regional neighbours. As I indicated, Japan is Australia's second largest trading partner after, of course, one of our near neighbours, China. It is an important agreement, nonetheless, which will open up many opportunities for agriculture, for financial services sector, and for oil and gas. The Regulatory Impact Statement for this agreement shows that Japan has granted tariff reductions to beef, sugar, seafood, wine and horticultural goods. I will come back to sugar in a moment. Japan will also eliminate its tariffs on Australia's mineral and fuel resources within 10 years. Australia has been given increased quotas for goods such as pork, dairy and grains. I might just come back to pork as well.

However, there are some concerns as noted by the National Farmers' Federation which said the agreement 'falls short of the mark'. That was said by the National Farmers' Federation, which represents the interests of farmers right across Australia. They also said that 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 Limited said the agreement is 'substandard' and a 'missed opportunity'. Cane growers said, more stridently, it was 'yet another kick in the guts for Aussie cane growers'. When you look at the Joint Standing Committee on Treaties report, we do go through some of these issues; although I think the government did play down the missed opportunities for both pork and sugar. The sugar industry in my home state plays a significant role in our economy, and it was looking for a much better opportunity in its export markets. It supports many regional economies in Queensland, it supports jobs and opportunity and it supports investment as well. It would have been good to see the sugar industry benefit. Having not been part of the negotiations—these are matters for the executive to do—I encourage the executive to continue to press for better opportunities for sugar for Queensland specifically, although I do recognise that New South Wales does contribute to the sugar industry; but I am not going to talk about New South Wales.

It is important that we do have a government that remains focused on agriculture, because the benefits for agriculture in Japan are very good. We did mention sugar briefly in the treaties committee when dealing with agriculture. Japan is our second-largest agricultural market with an estimated total market of $4 billion. In real terms that amounts to about 10 per cent of Australia's agricultural exports in 2013. Significantly, beef is up there as one of the high marks, and beef will have reduced tariffs, from 38.5 per cent to 19.5 per cent for frozen beef, and 23.5 per cent for fresh and chilled beef over 18 years and 15 years respectively. This will ensure that we maintain our ability to compete in that market with the US and that we can continue to have opportunities in the domestic market in Japan. Of course, these cuts are heavily front loaded because they do provide an early benefit to beef. From the perspective of the negotiators of this agreement, they did listen to the beef industry, who had been seeking much better access over some time for this market.

There are some areas where Australia will be permanently exempt from Japan's global snap back safeguard, whereby Japan has the right to increase the tariff to 50 per cent should beef imports from all sources exceed a volume limit. There is also improved access for offal preserved meats and live cattle. When we talk about beef people often think about rump steak and T-bones. But it is important that the whole animal—in its broken-down state, of course—including offal, accesses these markets, because that is where the beef processors can realise some great opportunities and sustain interest in those markets.

The pork industry will gain preferential access for a large volume of product—more than 10 times the current trade and around 40 per cent of Australia's total pork exports to all countries. The industry acknowledges the significant quota for Australian pork but it does highlight Japan's continuing high surcharges.

I will deal with sugar before I go on to deal with the broader issue that I think the pork industry has touched upon. The report of the treaties committee says that the Australian sugar industry has expressed disappointment that low polarity raw sugar was excluded from the agreement. The sugar industry had pushed for improvements in its access for high polarity raw sugar, and I mentioned their view on that. But one of the areas overall, and I think the pork industry did highlight it, is that it is about the agreement providing opportunities into the Japanese market by having a reduced tariff and by having those opportunities. But one of the areas where the government must remain vigilant is in ensuring that there are no technical barriers to the trade, that the Japanese market remains open and that Australian exporters can compete, because it is noted in the treaties report that there are non-tariff barriers. While it says that the significance of the tariff elimination reductions are generally acknowledged, there remains considerable concern over ongoing non-tariff barriers inhibiting access to the Japanese market. This is where the government who has signed this agreement must remain very vigilant to ensure that those non-tariff barriers do not get in the way of Australian exporters going into that market. The Export Council of Australia told the committee:

… that Japan's 'relatively complex and multi-layered regulatory framework' proved a deterrent to Australian businesses …

It is important that this government works with the Export Council of Australia and its members to make sure that those non-tariff barriers are not significant, that they can be ironed out and that they do not provide a barrier to trade between Australia and Japan, particularly in agricultural products.

This agreement comes with the support of the Labor Party. That is why the previous government released the Australia in the Asian Century white paper—because we believe it is important to have a plan for the opportunities as well as to prepare for the challenges in our region. The white paper is clear on how we can move forward in this regard:

The Asian century offers a wealth of opportunities and career choices in a variety of businesses (including small and medium-sized enterprises), especially for Australia's young people:

The Australia in the Asian Century white paper laid down these fundamental principles about how we should engage with Asia, because it is important to have a plan for the future. I note that the Abbott government has shunned the Australia in the Asian Century white paper. It has been taken down from the website of the Department of the Prime Minister and Cabinet. That concerns me for many reasons but for one in particular. It seems to be just like the Abbott government to do this, because it does not have a plan for Australia in the Asian century. It also reflects on a government that does not have a plan for health, education, infrastructure, defence, manufacturing—and the list goes on, unless you consider that the only plan that they have is cuts, cuts, more cuts, a bit more pain and a few more cuts. That appears to be the only plan that they could have.

Government Senators:

Government senators interjecting—

Joe Ludwig (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Some others that do not have a plan—if we want to get under their skin—are the Newman government in my home state of Queensland. We have seen the impact that that can have on the economy. Business confidence and investment and trade opportunities for Queenslanders can slump. The unemployment rate today in Queensland is 6.8 per cent. That is right—6.8 per cent. When Labor was in government, it was 5.4 per cent. That does rouse the opposition, but what are they doing to assist exporters in sugar and other industries to ensure that they have opportunities in Queensland, to create jobs and to ensure that we have great export markets into Japan, other than just whinge from the sideline? That seems to be their major way of progressing the issue.

Let me deal with some of the key benefits of implementing the agreement. We have a first-mover's advantage. Australia has secured preferential market access for some of its goods and services ahead of any other country. This preferential access, coupled with Australia's clean, green image and reliable supplier status, will result in increased exports to Japan, and they should grow over time as these tariff barriers come down. I just hope that this government remains focused on ensuring that technical and market access issues are dealt with quickly and in the right way to ensure trade continues to grow.

The joint standing committee, as I referred to, provided a unanimous report, with no additional comments or dissent, because of the significance that Japan has to Australia. The report provided a balanced view on the benefits, as well as—and I have touched on these—the suboptimal outcomes and the regulatory complexity that could be a barrier to trade. Importantly, multiple parties support this agreement—including the National Party in Queensland, because of sugar, I suspect. They can explain to that industry what happened, and they can then clearly indicate to beef and the remaining agricultural industries that there has been a good outcome by this Liberal government federally. But, if I want to go back, the work started in 2007 under Labor. I visited Japan to push for an agreement and a reduction in tariff barriers for agriculture. Why? Because I recognise the importance of Japan to agriculture, both in Queensland and nationally. It has been difficult across the divide, particularly in agriculture, to get our countries focused on ensuring that we could reduce those tariff barriers.

Turning to some of the important parts of this agreement and the subsequent amendments, the tariff amendments bill will ensure that the customs duty rates applied by Australian Customs to Japanese goods will be in accordance with the preferential rates and phasing-out periods agreed to in the agreement. It will provide rules and procedures to identify and certify Japanese goods that qualify for preferential tariff rates and related matters, and it will ensure that the operative amendments come into force on the day of the agreement so that agricultural products and industries can benefit from this agreement in the first part of 2015.

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to make a contribution in this debate on the Customs Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014 and the related bill.

Mr Acting Deputy President Bernardi, I might have mentioned to you previously that the Senate is a wonderful place and you come across information, which in the normal course of your life you would never, ever stumble across. I thank the Parliamentary Library as they are always a source of incredibly pertinent and succinct information.

The total value of Australian exports to Japan in 2013 was $47,501 billion; imports from Japan—$18,914 billion—so total trade, exports and imports, is around $67 billion. That is a significant figure from my perspective and, I suppose, for any elector in the street, it is a significant amount of money. It is instructive to note that, of Japan's principal destinations, we only rank at No. 10—we are 2.4 per cent of Japan's principal export destination; however, of principal import destinations, we are in the top three—it is China, United States and then Australia.

This is a critically important piece of treaty making, if you like, for the economic welfare of this country. As a member of the Foreign Affairs, Defence and Trade Legislation Committee, we sought some submissions in respect of the making of this treaty and the passing of the enabling legislation. I put the caveat up front that I am going to quote selectively from a group of people who made submissions. It is not my intent to alter their support or general goodwill towards the making of this treaty; it is for a specific purpose, which I will get to in the latter part of my contribution.

We go to the Australian Lot Feeders' Association. They say:

The JAEPA promises to deliver significant tariff reduction gains to the Australian beef industry in what is our largest export market. Under the JAEPA, the tariffs on frozen Australian beef entering Japan will drop from 38.5% to 19.5% over 18 years (with an 8% cut on entry into force (EIF)), while the tariffs for chilled beef will fall from 38.5% to 23.5% over 15 years—including a 6% cut on EIF.

Whilst falling short of the beef industry’s tariff elimination objective, modelling suggests that the tariff reductions will benefit Australian beef export sales by around $5.5 billion over 20 years and annual gross value of Australian beef production by up to 7%.

These are not small figures. The interesting thing is: why would country put a tariff on protein?

Fortunately, I had the opportunity to visit Japan and Korea last month. When that question was put to our ambassador, he simply said they have a recent history of famine in this country. There are still people around who can remember not having enough food, so food security is extremely important to them. They want to grow food or produce beef in their country. It is a particular type of beef for their palate, and they do not want to have to import all their food. That was particularly instructive for me, because I could not understand why you would pay $35 a kilo for beef when you can probably get it a lot cheaper. The second point is that farmers in Japan are a very powerful lobby group. In particular, members of the Diet will be more stringent and protective than some elements of our parliament here in respect of that. I respect that, so it was an instructive visit.

The Cattle Council said:

While the objective of total tariff elimination was not met, under the JAEPA there are significant tariff reductions which will have positive implications for the Australian beef industry.

Once again, the economic modelling takes it up to $5.5 billion over 20 years, despite the fact we will still have significant tariffs.

Senator Ludwig mentioned Australia Pork. They say:

APL welcomes the outcome for Australia's pork producers through the reduction (within quota) of the ad-valorem tariff on all fresh, chilled and frozen pork lines and Australia's exemption from Japan's global gate price safeguard.

However, APL questions the need for an arbitrary quota of 14, 000 tonnes when there has been no application of tonnage restrictions to date. Moreover, with recent annual Australian exports to Japan only a fraction of this quota, pork exports from Australia to Japan pose no threat to the profitability of Japanese pork producers. Given the JAEPA has already been signed, APL seeks that the Australian Government requests the abolition of the quota following the conclusion of the implementation period.

It goes on.

Very close to Senator Edwards and my hearts is the Australian wine industry, because we know—I don't think we will get any interjections or contention—that South Australia produces the best wine in Australia and, arguably, some of the best wine in the world.

Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Bar Tasmania!

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

South Australia produces the best wine in Australia and, potentially, the best wine in the world. But we face a 15 per cent or 125 yen per litre tariff, whichever is the lower, on entering Japan. Unfortunately, the wine of Chile has attracted a preferential rate since 2008 and, as a result of the free trade agreement between Chile and Japan of the previous year, between 2008 and 2013, imports of Chilean wine to Japan increased from 13.3 to 36.4 million litres while imports of Australian bottled wine have fallen: 7.3 to 6.8.

Chilean wine, unfortunately, now constitutes about 20 per cent of the Japanese wine market with Australia contributing less than four per cent. Upon agreement, the tariff on Australian bulk wine exported to Japan will be eliminated upon entry into force. The tariff on Australian bottled wine will decrease in instalments over a seven-year period—only eight per cent of Australian wine exported to Japan is dispatched in bulk, so it is not a perfect solution for the Australian wine industry and, in particular, the greatest producer of that: South Australia.

The Minerals Council said:

No other option … exists at this time to deepen the Australia-Japan economic relationship. Without JAEPA, Australia would gradually lose competitiveness in important sectors of the Japanese market.

The Australia Japan Business Co-operation Committee clearly state:

The Australian ambition in all its trade negotiations is to eliminate tariff and other barriers to trade and investment. The AJBCC is very supportive of this ambition. The AJBCC has warmly congratulated each Minister and government official whom, over the seven years, worked tirelessly for the desired … outcome. Being a WTO comprehensive agreement amongst two sophisticated economies ensured that it would be a tough road. The result has been broadly welcomed across the sectors. Whilst for the present, not all aspirations have been met, the AJBCC welcomes the review mechanisms that have been incorporated within the Agreement as providing for the potential of earlier and/or further liberalisation.

RMAC state:

Whilst falling short of the beef industry's tariff elimination objective, modelling suggests that the … tariff reductions will benefit Australian beef export sales by around $5.5 billion over 20 years and deliver an increase in the annual gross value of Australian beef production by up to 7%.

These submissions all support the prompt passing of this legislation. Very importantly, they all make a similar comment. Another submission states:

These Japanese tariffs in our view are extremely high compared to other importing countries and a constraint on trade and cost on Australian beef processors and ultimately the Australian beef producer in servicing this market. The Australian beef processing sector has and continues to face increasing competition … from the United States.

So we have Chile, the United States and New Zealand in dairy. We are facing a situation where a large economy has great demand for our products and we are actually in these agreements competing with other countries for access. It is not a straight up and down free trade agreement. Some people do not realise that in a free trade agreement some items are free into Australia next year, lots of stuff is free into Japan this year and a whole swag of stuff will be subject to quite high and extraordinary tariffs.

That sets me up for the next part of my contribution. I foreshadow that the Senate Foreign Affairs, Defence and Trade References Committee has agreed to conduct an inquiry into the Commonwealth's treaty-making process. This morning I lodged in this chamber a notice of motion to refer this matter to the committee for inquiry and report by the middle of the year. The timing of such an inquiry, particularly in light of the growing number of bilateral and multilateral trade deals negotiated by both Labor and coalition governments, will enable the committee to examine such matters as whether there is scope for the parliament and parliamentary committees to play a greater and more meaningful role in negotiating, approving and reviewing treaties, whether the current mechanisms for consultation within and between federal and state and territory governments are adequate and whether there is room for improvement, whether there is scope for individual independent assessment, analysis and review of treaties both before and after implementation and, perhaps most importantly, whether the current process for public and stakeholder consultation with government provides an adequate level of openness, transparency and accountability.

Having said that, I accept that, under the Westminster system and the Constitution and consistent with the practices in other Westminster parliaments, the power to enter into treaties is an executive power within section 61 of the Constitution, and I do not see that changing any time soon. Hence this proposed inquiry does not intend to rake over the constitutional and legal grounds covered in great detail by the 1995 report of the Senate Legal and Constitutional Affairs References Committee entitled Trick or treaty? The Commonwealth power to make and implement treaties. However, it has become clear from some of the evidence received by recent parliamentary inquiries into the Korea-Australia Free Trade Agreement, the Japan-Australia Economic Partnership Agreement and, most likely in the future, the China-Australia Free Trade Agreement and the Trans-Pacific Partnership that many of the concerns raised in the mid-1990s about a so-called democratic deficit—a lack of public consultation and parliamentary scrutiny in the treaty-making process—remain as strong, if not stronger, than ever before.

It has been nearly 20 years since wide-ranging reforms to the treaty-making process were introduced as a result of the Trick or treaty? report's recommendations. The tabling of treaties in parliament at least 15 days before binding action is taken, the preparation of a national interest analysis and the establishment of the Joint Standing Committee on Treaties, JSCOT, were all significant changes and improvements to the process at the time—I acknowledge that—yet it has been nearly 20 years since a Senate committee has looked exclusively at the way Australia negotiates and enters into treaties from the perspective of the community and stakeholder engagement during the initiation and negotiation phase of treaty making. That is the nub of the matter for this proposed inquiry by the Foreign Affairs, Defence and Trade References Committee. I believe it is time for the Senate through a public inquiry process to have another look at the 1996 reforms to see if there are opportunities for more openness, transparency and accountability in the way that treaties and in particular free trade agreements are negotiated between Australia and foreign governments.

I know—as you do, Acting Deputy President Whish-Wilson—lots of people who have a view on agreements. They come from their particular points of expertise, involvement or business. It is not hard to find fault with the treaty-making process that we have in Australia if you have a siloed approach or you have a particularly strong view—maybe on the manufacturing of motor vehicles in Australia. It is not hard to find people who say that free trade agreements are wrong.

It is our job in this place to get across all of the detail that we can. The democratic deficit that has been alluded to in this contribution—as you well know, Acting Deputy President, with the TPP—is that it is almost impossible to get advice about what is being negotiated prior to its being tabled here for enabling legislation.

I think that trade is important to this country, and the benefit is easy to quantify and articulate in aggregate. In aggregate it is clear that we do very well with Japan and we do very well with Korea. It is interesting to note that some 30-odd per cent of Japan's imports from Australia are as a result of their nuclear shut-down. The LNG is now going into Japan and having a detrimental effect on their national budget. That may well change in the future, when 20 of those nuclear stations come back on line.

But I think it is incumbent on everybody on this place who has an involvement in these areas to get across some of the detail and to understand that the complexity that the department has in negotiating these agreements. One case that comes to mind is the honey industry—the beekeeping industry in Australia—who do not benefit from access under these agreements. When asked, on notice, whether the department simply forgot about the honey producers of Australia, the answer was. 'No; we did not forget about them; it was just that the other side was insistent on not allowing Australian products into that market.' That is a little strange for our side of the table to accept, when, as the treaty processes through, we will be accepting zero tariffs on motor vehicles from Hyundai or Kia but we cannot even get a bucket of honey into Korea. It seems as if there is no logic in all of that.

However, they have a very strong view on their domestic sectors. Quite clearly, they are prepared to make their populations pay more for staples such as protein than we would be prepared to accept here in this country. I have experienced first hand the ongoing battle that our negotiators face. We had a session in the Japanese parliament and I said, 'Why do you tax your people for beef? Why do you have a tariff on protein in a country as wealthy as this?' The answer is, as I said before, that they have a very politicised sector. They have a very vigilant sector that protects itself. There is a history in the country of people going without food. They do not want to have all their eggs in one basket. They want to have food security, and that involves producing some themselves.

So Japan does not buy all of their coal from one place; they do not buy all of their gas from one place. They spread it out a bit. They do not want to be beholden to any particular market place. But we are pre-eminent in that space. We are one of the best trading partners Japan has. That was very clear from all of the politicians I met, along with the rest of the delegation in the Japanese parliament. They like our wine. They like our gas. They like our coal. They like our iron ore. We are a reliable trading partner. Somehow or other, we need to be able to push them a bit harder on access for or agricultural products, because we are probably not doing as well as we could.

I complimented the chair of the foreign affairs trade committee of the diet on his negotiations in agriculture. I said, 'You've done very well, because we would have preferred these tariffs to come down a whole lot quicker.' And even in the translation the irony was not lost. They did laugh. They know perfectly well. Our treaty makers—our negotiators—are doing a damn good job and are pushing as hard as they can.

My only comment is that there is not enough transparency in the system. We are not taking every stakeholder with us. If this inquiry that we have foreshadowed is able to put some recommendations up to improve the treaty-making process then this Senate will have done its job.

Scott Ryan (Victoria, Liberal Party, Parliamentary Secretary to the Minister for Education and Training) Share this | Link to this | Hansard source

The Labor Party's lengthy discussion of legislation previously considered non-controversial continues. Senator Wong raised a few issues, which I know have been brought to the attention of the minister's office as requested.

Senator Gallacher mentioned the reforms of 1996 to the treaty-making provisions. I might say that in a past life I had some work to do with those reforms before they were enacted by the Howard government. However, I will correct the record to say that those reforms were the product not of issues that had arisen out of trade discussions; they were the product of public concern about the number of treaties that were being entered into by the executive in an attempt to override state powers and abuse the external affairs power under the previous Keating government. They were not the product of discussion about trade treaties.

Turning to this legislation, the Customs Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014 contains amendments to the Customs Act 1901. These amendments implement Australia's obligations under chapter 3 on the rules of origin as set out in the Japan-Australia Economic Partnership Agreement. These rules are essential for the purposes of determining whether goods imported from Japan are eligible for preferential rates of customs duty under the economic partnership agreement.

The bill also includes amendments to include relevant obligations on Australian exporters and producers who wish to export Australian goods to Japan under the agreement and obtain preferential treatment for those goods. Certain powers are also conferred on authorised officers to examine the records and ask questions of exporters or producers of goods exported to Japan in order to verify the origin of such goods.

The Customs Tariff Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014 contains amendments to the Customs Tariff Act 1995 that will implement Australia's tariff commitments set out in the Japan-Australia Economic Partnership Agreement. These amendments are complementary to those contained in the Customs Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014. I take this opportunity to indicate that while the government will not be supporting the second reading amendment moved by the Leader of the Opposition, we will not be dividing on it.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

The question is that second reading amendment moved by Senator Wong be agreed to.

Question agreed to.

Original question, as amended, agreed to.

Bills read a second time.