Kristina Keneally (NSW, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I rise to speak on the Customs Amendment (Product Specific Rule Modernisation) Bill 2019. Labor has consistently argued that free trade should be fair trade. At a time when the government should be doing everything to build the public's confidence in free trade, they're exempting a key part of Australia's free trade framework from this parliament's scrutiny with this bill. This runs a real risk of damaging the public's trust in the issue. Whilst this bill has some merit, the government's attempt at its implementation is dangerous.

The bill proposes what's described as a streamlined implementation of product-specific rules of origin, otherwise known as PSRs. The bill applies to six of Australia's 11 free trade agreements: those with Chile, New Zealand, the United States, Korea, Malaysia and Thailand. PSRs are an essential component of free trade agreements. Each trade agreement has a PSR annex, implemented domestically. If goods meet the requirements, they are essentially deemed to have originated in the agreement party country and are entitled to the preferential treatment on customs duty imports into Australia. Five-year revisions on the Harmonized Commodity Description and Coding System, an international naming system for the classification of traded products, usually requires FTA parties to update their PSRs. This bill purports to streamline that process but, in doing so, has the potential for decreased parliamentary scrutiny. It's all too easy to get caught up in the technicality and legalism of PSRs and forget the importance of this very complex web of free trade principles. The parliament should be very cautious in treating complexity as a licence to pass the buck and have a public servant as the sole handler of these matters.

Labor has worked hard to maintain a healthy and productive bipartisan approach to international trade. While that approach has been further justified by economic headwinds during and after COVID-19, the parliament must be disciplined in our scrutiny of the executive power, now more than ever. The trouble with this bill as it stands is that, under it, PSRs and future changes in the regulations would not be tabled in black and white in the parliament. By amending the Customs Tariff Act to directly reference the agreements themselves, the bill denies senators oversight and scrutiny of the important legislation.

With that in mind, my colleague Madeleine King, Labor's shadow minister for trade, wrote to the former trade minister Senator Birmingham last year. In that letter, the shadow minister said: 'In a democracy like Australia, all parliamentarians should always be sceptical about any attempt to reduce parliamentary. More broadly, Labor is committed to practical rules in international trade that will free up our businesses to contribute to our economy.' Regrettably, though, the then minister's response was unsatisfactory and did not meet the outcomes and requirements outlined by Labor. We did our job. We sought assurances, and the government failed to provide them.

Our concerns remain this year as much as they did last year, when this legislation was introduced. The parliament has a duty to provide scrutiny of our free trade deals and arrangements. As the Labor senators' minority report in the Senate Legal and Constitutional Affairs Legislation Committee stated:

Poorly drafted or ambiguous Rules of Origin, for example, can be an opportunity for firms in third (non-party) countries to gain unfair benefits through an FTA. Any such activities by third parties are likely to undermine the community's confidence in free trade agreements.

PSRs belong in the public debate because they're an important part of Australia's international trade story. While efforts to simplify arrangements are generally welcomed, there is no strong demand for these significant changes, and I'll expand on those matters shortly. If product-specific rule changes are in our national interest, all the better. But without a guarantee of parliamentary scrutiny it's just another issue open to potential blunders and secret failures somewhere in a department or office. It's far more important that we assure our community that anti-dumping rules are in play, that our pandemic recovery in trade is robust and that Australians aren't getting ripped off. These are failures that all Australians would have to pay for, and if they occurred we would need an accountability mechanism.

The most efficient way to assure the Australian public that they are consistently getting a good deal is by running PSRs through regulations under the Customs Act. A disallowable instrument currently comes before the Senate every time the government implements a PSR change. Labor's amendment seeks to protect parliamentary oversight through retention of a process that includes a disallowable instrument. You would think that this government wouldn't—or shouldn't—try to pull one over Australians and escape further scrutiny. This government avoids answering questions on notice. They say that important matters are 'in the bubble' and they shrug off scrutiny at every turn. But they can't pass the buck when it comes to Australia's trade system. By leaving the Senate, including government senators, out of the process, especially on Australia's main window into the global economy, they would intentionally leave in the shadows the specifics of Australia's place relative to that of our trade partners. Labor's amendment seeks to provide certainty to small and medium-size businesses that their interests are front of mind for the parliament.

The alternative put by the government is twofold. First, they have pointed to amendments to the Customs Tariff Act that the parliament can seek every five years. Second, they have suggested that individual members of the Joint Standing Committee on Treaties could seek to form an inquiry PSR. Further, they have suggested that PSRs can be open to scrutiny in the joint standing committee's inquiry into treaty making processes. But our founding assumption should be that Australians want us protecting their interests. There's a meaningful difference between the right to have an inquiry, or putting amendments twice a decade, and the ongoing scrutiny of decisions that must be tabled in the parliament for all to see.

As Australia prepares itself to ensure that global trade works in our national interest when this pandemic is over, Australians deserve assurances that they are not getting short-changed. It shouldn't take an inquiry to make that happen, and people shouldn't have to rely on amendments that may or may not pass every five years. As the shadow minister for trade pointed out in her second reading speech, Australians expect assurances that where Australia signs up to a free trade agreement it is fair and in the interests of working families. We want our free trade agreements to be on the side of working families.

There are times when the parliament can be all too keen to keep important but tough decisions out of the parliament, behind closed doors. The government is now asking that we leave key decisions about Australia's preferential treatment of goods at the border and outside of the parliament. This is part of the complex story of modern trade. But surely that's reason enough to keep this issue in the public eye and in the public's parliament. We can make international trade even easier for local business without excluding the parliament. The curious part of this debate is that the Senate inquiry received only three submissions on this bill: one each from the Australian Border Force and the Department of Foreign Affairs and Trade, in favour of the bill, and one from the Construction, Forestry, Maritime, Mining and Energy Union, against the bill. No industry groups or companies volunteered their support for excluding the parliament from the conversation.

Government submissions to the Senate inquiry identified two reasons for the changes: (1) workload issues and (2) the fact that domestic implementation of PSRs in the latest Harmonized System nomenclature can be several years behind Australia's domestic terror updates. Given the limited public awareness of these highly complex but important arrangements, parliamentary scrutiny is more important than ever. These are commonsense objectives, but they are no reason to exclude future parliaments from the oversight of our trade relationships, especially when it would not slow down positive changes.

Efficiency in the legislation around trade doesn't have to come at the price of scrutiny, and it's unfortunate that our amendment is required at all. I remind the government that Labor's amendments are another opportunity for this parliament to demonstrate the bipartisanship that is expected of us during this recovery. Any senator who dismisses these valid criticisms is failing the constituents they represent, their place and their role in the Senate and in Australia. As Labor has done during the COVID-19 pandemic, a time when this parliament's decisions are more important than ever, we will fight for constructive amendments that will serve the national interests of Australia and be on the side of working families in Australia. Labor's amendments fulfil our commitment to the public. We will support free trade when it is fair trade.

Jordon Steele-John (WA, Australian Greens) Share this | Link to this | Hansard source

I would like to thank Senator Keneally for her contribution. I think the Australian Greens are more or less totally in line with your observations as to the problems represented with this legislation currently put before us, the National Consumer Credit Protection Amendment (Mandatory Credit Reporting and Other Measures) Bill 2019, and we'll be supporting the amendments you just outlined to the chamber. We've been reflecting on this piece of legislation for a while now, since it has risen and fallen and risen and fallen again with the government's thoughts about whether or not they have the numbers in the place for it to pass.

For me, it says two things. One is that the government is fundamentally out of step with community expectations when it comes to our trading relationships with our regional and global neighbours. We know that Australians, our community, want to see us work with our friends and neighbours in the region and around the world. We know that there is support for the exchange of goods and services and trade of all kinds as long as they meet the basic standards: human rights, environmental protections, labour protections, transparency and public accountability. These are the mechanisms by which parliament and the people retain an ultimate position of authority over approval of these processes.

In Australia we are in a situation—due to the, I believe, corruptive influence of corporate money on this place—where we do not have a process by which free trade agreements, whole bar, are scrutinised and agreed to by the parliament. My colleague Senator Whish-Wilson, in his previous role as our trade spokesperson, has spoken at length on the issue and the challenges that are presented by mechanisms such as ISDS within our free trade agreement frameworks. What we currently have is a system by which a government-to-government process ticks the thing off and we are given the opportunity here, as a chamber, to have a look into it through a JSCOT process without teeth and then decide whether or not to implement the relevant sections that pertain to our legislative requirements here in Australia. It is not good enough. It is not a process that the Greens support. It is something that we have continually opposed.

What this legislation seeks to do is take one of the few scraps of parliamentary oversight that still exist in our process and turn it back over to the government, to make an already non-transparent process worse. You have to almost suppress a dark laugh when you read the justification for this legislation as proposed by the government. The justification is that it will make the administrative process for the Department of Foreign Affairs and Trade simpler. They seek to come before us today and propose a piece of legislation that would remove parliamentary oversight so that the people of DFAT don't have to work so hard. It really is a bit of dark comedy in and of itself. We have hardly any oversight at all, as my colleague rightly mentions, and we are to give back one of the only functions of oversight because having that function of oversight is causing the department to have to work too hard. It is not good enough.

Senator Whish-Wilson interjecting—

It is not good enough at all, particularly when the department, as my colleague points out—a very helpful interjection, Senator Whish-Wilson; thank you very much—often operates as a black box. It is very hard to get information out of DFAT. Even during my time on the Joint Standing Committee on Treaties we found that to be challenging.

That's the first thing I would say, observing this legislation. The other bit would be this, and it's a funny old thing. There are many people on the conservative side of the chamber who I expect have spent a lot of time in their lives seeking to be in federal government—to hold the reins of executive office, to have a majority in this place and to be in government—and it defies belief to see so much of the parliament's time spent on legislation like this: tiny, piddly, fiddly stuff that just burns up the time where an actual agenda should be. This has been on the books for—I'm trying to think back to when we first heard of it—probably the best part of a year now.

An honourable senator interjecting—

November 2019. If you have an evil agenda, could we not fight about the evil agenda? Well, you have an evil agenda, but let's see a legislative evil agenda. Let's engage with some stuff, have a contest of ideas. This is a contest of bureaucratic process. Maybe I shouldn't complain about it, because, if you had more terrible ideas, you might get them through, but it's very odd. It's just like sitting in the lane, letting the engine tick over, collecting your salaries and not really doing much. But there you go. We will be, as I flagged, supporting the Labor amendments as put. We will not be supporting the bill as it is currently written, because it reduces parliamentary oversight in a process that is almost free of parliamentary oversight as it is.

Claire Chandler (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I am very pleased to rise today in support of the Customs Amendment (Product Specific Rule Modernisation) Bill 2019. Australia is a proud trading nation. What we make, grow, produce and mine here is sought all around the world, and, because of that, we are able to enjoy a much higher standard of living than we ever could if we shut ourselves off from trading with other nations. Our success in negotiating mutually beneficial free trade agreements with nations all around the world has brought further opportunities for Australian businesses and Australian producers to sell their products overseas. As I say, free trade agreements are a key way that we facilitate this, but these agreements commonly take years to negotiate. They're very complex and very technical documents, and it's important that we monitor them on an ongoing basis to ensure that they are operating effectively and efficiently.

That's what this bill that we are debating here today does. It seeks to greatly reduce the administrative burden of updating product specific rules for six of Australia's 11 free trade agreements, being the Australia-United States Free Trade Agreement, the Thailand-Australia Free Trade Agreement, the Australia-New Zealand Closer Economic Relations Trade Agreement, the Australia-Chile Free Trade Agreement, the Malaysia-Australia Free Trade Agreement and the Korea-Australia Free Trade Agreement. The changes that will be processed as part of this bill will simplify the administration of these free trade agreements, without changing their operation or requiring significant changes in practice by traders seeking to claim preferential tariff treatment for goods imported under the free trade agreements. I must disagree with some of the contribution from Senator Steele-John regarding how insignificant this piece of legislation apparently is. I absolutely disagree with that assessment. These changes are incredibly important as part of our broader approach to dealing with free trade agreements, and ensuring that they are simplified and easy to operate and understand.

It is now more important than ever that we seek to maximise the efficiency of our free trade agreements with valued trading partners around the world. Recent events, particularly in the last 12 months, have demonstrated very clearly that we can't take for granted the fact that just because we have a free trade agreement and history of trading ties with a nation that they will treat our producers and businesses fairly. For example, despite our free trade agreement with China, they have been openly treating our fishers, fruitgrowers, wine producers, barley growers, miners and other businesses unfairly by levying additional tariffs and stopping Australian products getting to Chinese customers. This is being done in breach of World Trade Organization rules, and is a blatant attempt to try and force Australia to change our foreign policies and the way in which we stand up for our democracy and human rights in our region. As Prime Minister Scott Morrison has made clear, Australia will never trade away our values or our right to stand up for our interests, and I wholeheartedly agree with this sentiment. Indeed, I have regularly spoken in this place in agreement with that sentiment.

Because of these breaches of our free trade agreement by the Chinese communist government, many Australian businesses and industries are working hard to now diversify their customer base, to expand their reach into markets like those covered by the free trade agreements affected by this bill: the USA, Thailand, Chile, Malaysia and Korea, as well as other large markets such as India. It's completely understandable, given the impacts of COVID and the behaviour of the Chinese communist government, that Australians want our nation to be more self-reliant, and so we should be. But we also have to remember that the reason we are a trading nation is because in many of our key areas of strength, we are not just self-reliant; we are so much more than self-reliant. For example, our Australian farmers produce 70 per cent more food than our population needs. That's why we need our farmers to be able to get those surplus products to international markets, to ensure their farming operations remain profitable and viable. And that's why free trade agreements with key strategic partners are so important, and why I look forward to seeing our government do even more to strengthen Australian trading partnerships into the future as we recover from the COVID-19 pandemic.

I'm very pleased to speak in support of this bill today because, like I said, Australia is a proud trading nation, and our free trade agreements form a really important, integral part of what makes us such a successful trading nation. We need those free trade agreements to operate efficiently and effectively, and that is what the changes that we are debating here today in the Customs Amendment (Product Specific Rule Modernisation) Bill 2019 will do. They will reduce the administrative burden of updating product-specific rules for six of our 11 free trade agreements. And I pay credit to the former trade minister Senator Birmingham and the new trade minister Dan Tehan, who is in the other place, for their hard work and focus on ensuring Australian businesses and farmers benefit from trade, and from our free trade agreements with our partners. I'm very confident that, going forward, as we recover from the COVID-19 pandemic, international trade is going to form an absolutely vital part of that recovery. Australia will need to focus more on what we can do on island, and I think this government has an incredibly promising agenda, particularly in the manufacturing space, to ensure that occurs. But we need to be looking more broadly across the world to identify new trading partners so that we can trade our way out of this economic crisis we have regrettably found ourselves in due to COVID-19. With that said, I commend this bill to the Senate.

Kim Carr (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

This debate on the Customs Amendment (Product Specific Rule Modernisation) Bill 2019 is timely. It's extraordinary that, in my time here, we've seen growth in the number of bills carried by this parliament that contain an effective dereliction of duty from this chamber to the Public Service. We have a situation now where the number of bills containing legislation by regulation is growing at an extraordinary rate. The number of bills that can obtain instruments where there is no capacity for the parliament to disallow those regulations is equally growing at an extraordinary rate. The fact remains that, as legislators, we are negligent in not doing something about that. We are failing in our responsibilities as members of parliament by not insisting on the capacity of this parliament to properly supervise the work of the executive and the Public Service.

This debate is timely because it focuses on the importance of government transparency and the ability of this parliament to ensure proper oversight. It's timely because it involves our trading arrangements at a time of global economic disruption, at a time when there are trade wars going on between major trading partners, and at a time when one of our trading partners is imposing tariffs and other sanctions on this country involving some 46 per cent of our exports and our other major trading partner, the United States, is engaging in preferential trading arrangements with that country to our disadvantage. So it is no good trying to cloak this in some sort of mantra of anti-communist hysteria. This is a more fundamental issue about the role of this parliament in the protection of the Australian people and the capacity of members of parliament to do their jobs. To suggest that somehow or another this is all legitimised, because we are reducing the administrative burden, suggests to me that we could take that much, much further—couldn't we? Why do we need to meet at all? We can simply pass a series of omnibus bills giving the executive and the Public Service the power to do whatever they like. That's the logic of the argument.

This is a bill that attempts to reduce the transparency of government as well as the government's accountability to parliament. On the positive side, the bill highlights the role of the Senate committee system. I'm the deputy chair of the legislative committee that brought forward the report which led to these amendments being taken up by the Labor caucus—despite the fact that there were very few submissions, because very few people have actually read the legislation. I'm also a member of the Scrutiny of Bills and the Scrutiny of Delegated Legislation committees, and I must remind you, given the years of service that I have put in here, of the splendid work undertaken by the secretariats of those committees; at least we know there is someone here in this building that actually reads all the legislation and points out the consequences of not paying proper attention to the detail.

When I raised the issue that regulatory measures were being taken in such a manner as to take away from the parliament, people first said to me, 'That can't possibly be right.' In fact, it was. In democracies like this country claims to be we should be sceptical about attempts to reduce parliamentary scrutiny in the name of administrative efficiency and reducing administrative burden. We should be sceptical about the failure of our political system to actually keep an eye on our administrators. The minority report of the Senate Legal and Constitutional Affairs Legislation Committee makes that point, and the amendments we've moved today have come about as a result of that report. If they're not carried by the chamber, the Labor Party won't be supporting this legislation. I trust the majority of the Senate won't support this legislation, because it is time to make a stand on the question of delegated legislation and the capacity of this parliament to actually stand up when it comes to proper scrutiny.

This is a bill that relates to product-specific rules, which are important elements of bilateral and multilateral trade agreements. I've been involved in industry policy for a very long time. I have seen how these rules-of-origin arrangements are exploited and abused and how unscrupulous individuals and unscrupulous firms take advantage of them. There is a constant threat of transhipment, where firms in third countries try to export goods to Australia under favourable terms by transhipping them via one of our trade agreements to other partner countries. The consequences of that seriously damage the economic interests of this country and the revenue of this country. They undermine the political interests of this country.

Australia's antidumping commissioner for the time being—he's being given the heave-ho by this government—Mr Dale Seymour, discussed at Senate estimates the transhipment challenges faced by Australia over many, many years, including the question specifically around the matter of unfair competition to Australian firms and to Australian workers who obey Australian laws when they are faced with companies that don't have to. These are the actions that threaten Australian industry and threaten Australian jobs. We have an obligation to stand up and defend those jobs and defend those industries and not abrogate that responsibility to some faceless, unelected bureaucrat.

Australia must maintain strong antidumping measures in a time of uncertainty given the trading system as it is globally. We shouldn't let complaints about China or the many other countries—I want to emphasise that—that take advantage of our lax attitude on these trade issues, or the rabid, fact-lite commentary from the Australian media, particularly TheAustralian Financial Review, divert us from defending our national interests. We've got to make sure that we actually stand up for the Australian people, because the opportunities for circumvention and the misuse of product-specific rules make it more difficult for the Anti-Dumping Commission to ensure compliance with Australian law and with Australia's trading agreements.

The commission has reported that there were 80 measures in force as of 20 June of last year. They involve 22 countries. It's not just China; there are 22 countries. They comprise 69 dumping measures and 11 countervailing measures. Nearly two-thirds of those measures involve the steel industry. During the past five years the commission heard 273 cases, 60 per cent of them related, of course, to China. So we don't have to question the product-specific rules. What we need to ensure is that there's proper accountability in the way in which they're administered and to make sure they are updated accurately and regularly and that robust rules of origin and product-specific rules are, in fact, administered properly.

The framework, which was established in 2013 and expanded in 2015, nominates a series of activities that are likely to constitute transhipment to avoid antidumping penalties. Australia's got to remain alert to those threats, and that's why we believe changes to these regulations should be done by a disallowable instrument.

The PSRs define goods that are eligible for preferable trade treatment if they have been substantially transformed in Australia or an FTA partner country. Product-specific rules define what is sufficiently transformed. Now, based on this so-called harmonisation system, the classification of goods is based on internationally agreed descriptors for goods, and it's updated every five years. The current arrangements provide for a parliamentary role, but the bill's aim is to streamline the way in which the product-specific rules and the origins of these various agreements can be changed in regard to six of the 11 free trade agreements. The proposal is to remove these from the normal regulations. It's said, 'Well, we'll move this off to JSCOT.' JSCOT is not an effective parliamentary committee when it comes to the question of proper scrutiny. It is very low-level scrutiny. Its recommendations cannot be disallowed.

Border Force bell the cat when they make it clear,

… the domestic [Australian] process includes referring FTA amendments to the Joint Standing Committee on Treaties (JSCOT) as a Category 3 (minor) treaty action. JSCOT has agreed to treat all Harmonized System transpositions as minor treaty actions.

These JSCOT-recommended arrangements have not prompted a public inquiry or calls for public submissions, and, of course, any active JSCOT measure is dependent upon an individual member with the resources to take on the bureaucracy and the capacity to alert the rest of the parliament to failures. So the government's reason for not having these matters as disallowable instruments is hollow.

Complexity demands greater parliamentary scrutiny, not less parliamentary scrutiny. The definitions of goods and their origin are complex and technical—that is for sure. There are enormous disputes within industry as to what is a reinterpretation or a subversion. The rules of origin are complex and are critical to Australian industry and Australian workers, and there is an expectation that this parliament will take an interest in guarding the interests of Australian industry and Australian workers. This is not something that should be delegated to somebody else. Transparency and the rules of parliamentary scrutiny are therefore essential.

The Standing Committee for the Scrutiny of Bills has identified concerns with this bill as well. Scrutiny Digest No. 9 of 2019 comments:

… at a general level, the committee will have scrutiny concerns where provisions in a bill allow the incorporation of legislative provisions by reference to other documents …

Three risks are identified. It:

The same committee recently considered the implication of the growth in the number of bills, which I've already referred to. The number of bills involving such dereliction of duty has doubled in recent years, and that has important implications in a whole range of industries: civil aviation, farm household support, the NDIS, vehicle standards and building standards. These are all matters that have been referred to other committees. This is the latest move in an attempt to reduce parliamentary oversight by the Morrison government when it dodges its accountability responsibilities, and it ought to be rejected by this chamber. (Time expired)

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

As a servant to the people of Queensland and Australia, I say that One Nation continues to oppose so-called free trade agreements. Instead, what we support and what we want is fair trade. This bill, the Customs Amendment (Product Specific Rule Modernisation) Bill 2019, does not expand free trade agreements; it simplifies their administration. As such, One Nation will be supporting this bill, which is essentially housekeeping for existing free trade agreements.

Australia's free trade agreements supposedly allow our producers to receive preferential tariff treatment in the countries that our free trade agreements cover. Each agreement specifies what must happen to a product in order for that product to qualify as Australian made. These are called product-specific rules. These rules have been written separately for each free trade agreement and are included in the schedule to each agreement. Each time a rule change was agreed, the free trade agreement had to be updated. This is cumbersome and costly. So what this bill does is that it replaces the individual schedule with the World Customs Organization's common set of definitions and standards. One hundred and eighty-three countries worldwide, accounting for 98 per cent of word trade, use these harmonised systems classifications. People know that One Nation are the last people to support an expanded role for unelected, unaccountable foreign bureaucrats. This bill, though, simplifies free trade agreements and does not expand free trade agreements. In this case, adopting these harmonised definitions helps everyone, including Australian producers.

This does not change One Nation's opposition to free trade agreements. Despite their name, so-called free trade agreements are never free. These agreements always come at a cost to someone, and that cost is usually to everyday Australians. Underdeveloped countries do not sign free trade agreements with industrialised nations in order to give away what they have. It is the industrialised nation that gives wealth away, and that is the history of free trade agreements.

For example, the Indonesian free trade agreement calls on Australia to send educators to Indonesia to train their skilled workers so they can then come to Australia and take jobs from Australians. In return, Australia gets to sell agricultural produce to Indonesia. There is one catch with that: Indonesia is not issuing import licences. Indonesia remains wedded to its policy of self-sufficiency in agriculture. When Australian grape growers tried to use our newly signed free trade agreement just a few months ago to sell this year's crop of table grapes, the Indonesian government refused import licences. Our farmers were left to find other markets for grapes. Indonesia wins and we lose. Australian workers lose. Australians lose. Australia loses. Our table grapes industry is not able to add extra workers, because the increased sales failed to appear. Yet, in other areas of our economy, Indonesian workers that we trained are displacing our workers. Where is the benefit of this to Australians? There is no benefit to our people.

Why does Labor blindly and automatically support free trade agreements that benefit globalists and hurt Australian workers? One Nation do not support free trade agreements; we support fair trade. I'll say it again: One Nation do not support free trade agreements; we support fair trade. The government needs to work harder and honestly to make these so-called agreements fair, or we should just walk away from the table.

Tim Ayres (NSW, Australian Labor Party) Share this | Link to this | Hansard source

As on so many other occasions, One Nation says one thing and does another. Senator Roberts claims that the One Nation party are out there campaigning against free trade agreements, but in this chamber they've just indicated that in this chamber they'll be supporting this legislation, the Customs Amendment (Product Specific Rule Modernisation) Bill 2019. Senator Roberts indicates that he's opposed to unelected bureaucrats dealing with issues like product-specific rules, but this legislation deletes parliamentary scrutiny for product-specific rules. Like so much of One Nation's activity it's saying one thing to its constituency, particularly in Queensland, and doing another. That's why they were voting with the government this morning to support the big banks, against some sensible amendments that would have made for better financial governance and protected ordinary consumers, particularly low-income consumers in country towns, from predatory practices of the big banks. Yet Senators Hanson and Roberts, as they are so many times, were on the government's side of the chamber supporting the Morrison government's agenda.

Senator Carr's contribution, as it has been on so many occasions on questions of trade and industry policy and protecting the interests of Australian industry, was exactly right. The principles that this bill touches on go to parliamentary scrutiny and to enforcement of product-specific rules. I think that Senator Carr's contribution went to some detail about the importance of product-specific rules—in particular for protecting Australian manufacturers—and the importance of parliamentary scrutiny. This bill means less scrutiny, and less scrutiny inevitably means less enforcement. It is so consistent with this government's approach to all of its responsibilities, not least its approach to trade questions. It's all talk and no delivery.

It is absolutely vital, in the agreements that Australia signs off on and the trade that is conducted, that unscrupulous firms are not allowed to breach these provisions. What stands against unscrupulous firms breaching these provisions, which costs workers jobs—particularly in the suburbs and in our regions—are three things: a good legislative framework, strong parliamentary scrutiny and strong enforcement, and resources behind strong enforcement. We have none of those things in the Australian framework. We have a weak framework of protection against dumping and a low level of commitment from the government to that framework. We are deleting parliamentary scrutiny in this bill. We have a government that is not committed to strong enforcement action, to working with Australian industry and to protecting Australian industry against dumping and against unscrupulous firms who manipulate the complex array of product-specific rules.

Senators Carr and Fierravanti-Wells have been very strong on the issues of parliamentary scrutiny and parliamentary accountability and on this parliament not delegating its authority and its proper role. More attention should be paid to the work that they have done in these areas. I'm sure that the parliament and the Senate are going to hear a lot more about it.

If we want to enforce preferential trade agreements for Australian goods, we have to be capable of monitoring whether, in fact, a good is manufactured in Australia or not. This does become more complex as supply chains become longer. The process of regulation becomes increasingly complex and product specific. Take, for example, a radiator. If an Australian company wants to avoid export duties in Indonesia under the Australia-Indonesia FT, it has to prove that its radiators are Australian made. If the radiator is made from imported parts—cooling fans, pipes et cetera—at least 40 per cent of the final product's value must be from the Australian manufacturing process. Salmon exported to Indonesia must be fished in Australia to avoid tariffs, but smoked salmon made from imported fish and smoked in Australia will also avoid tariffs. Those regulations and complex product-specific rules are included in the free trade agreement. Each agreement has a separate PSR system based on the harmonised commodity description and coding system which is used by more than 200 countries.

Labor's amendment to this bill is simple. We would give the Senate more power to scrutinise the way in which those PSRs are updated. There is a balance between efficiency and scrutiny in the way that our legislation oversees trade agreements, and this bill goes too far in delegating authority and in the parliament abrogating its responsibility to effectively monitor what is absolutely in the interests of Australian firms and Australian workers, particularly in the regions. Like in so many other areas on trade, the government has given the game away.

While the bill relates to a technical matter within trade, it reflects a larger problem with the Morrison government's trade agenda. Put simply: it is all announcement and no delivery. The government loves announcing big trade deals, loves cutting the ribbon on a trade agreement and likes a signing ceremony, but they are never there for the hard work of compliance and delivery and supporting Australian exporters.

We've heard the government talk about trade diversification recently as if it's a new conversion and a new problem that nobody had ever thought about before, but what we see is a paltry commitment—a too-little-too-late commitment—to trade diversification. And, of course, in the Morrison government's mind supporting our exporters is all about free trade agreements and nothing else. When it comes to supporting Australian exporters, to backing them and to shifting Australian exports up the value chain to where the good and real jobs are, the Morrison government is nowhere to be found.

Australia has continued to retreat and has continued to decline global value chains. Our exports have become less and less complex. We've become more of a farm and more of a quarry and less of a manufacturer and less of a sophisticated goods and services exporter. The Morrison government's only response is a free trade agreement fetish. The law of diminishing returns in this area has left us desperately trying to draw up agreements with countries as small as Uruguay. Now, I love Uruguay, and people in this parliament would have a great regard for Uruguay—we've got a great history—but why was so much emphasis put into a free trade agreement with Uruguay? Our highest trade volumes with Uruguay over the course of the last decade has been about $24 million, with saddle soap and plastic plates. Why has so much emphasis been put on ribbon cutting for the free trade agreement with Uruguay? It's because it's all about announcement and not about real delivery. The people who understand this best are located in the regions and in the suburbs.

I read, with interest, the National Party's contribution. Remember that the National Party's history in this area has been about being the big supporters of free trade for Australian agricultural exports. They were there when the Cairns agreement was signed. National Party MPs were lining up to support free trade agreements. But we've seen a change of heart from what remains of the bunyip aristocracy that runs the National Party in Australia. They released, to no acclaim and no applause, by way of a brief little skirmish in The Australian newspaper, their manufacturing 2035 plan this week. It's not a surprise that it sunk without trace. If ever the National Party was put in charge of a response to Australian manufacturing, that would be the end of Australian manufacturing. Their approach to manufacturing, their slogans, their bright ideas—to the extent that there's anything good in this document—have been pinched off the Australian Manufacturing Workers Union. To the extent that there's anything good in it, they are ideas that have been taken from others. The National Party pretend they haven't been around for the last seven years of government.

It's been obvious, hasn't it, that the manufacturing industry hasn't benefited from the National Party's role in government. The National Party are in a sort of dreamland, as if they haven't been around not just for the last seven years but for the Howard years. And what have we seen over the course of that period? We've seen a shallow and weak commitment from the Howard government, and then the Abbott-Turnbull-Morrison government, to supporting Australian exporters, an approach that's all about free trade agreements that have prioritised the interests of farmers and miners over the interests of manufacturers. They've put commodities first and dragged us back down the global value chain. We've seen governments that have presided over the closing of the Australian car industry—but there's a lot about cars in the National Party's publication, as if they had nothing to do with the closure of the Australian car industry! There's a lot in the National Party's document about fabrics and textiles. Every wool scouring plant in Australia has closed. Every single one is on the way out. In Wagga, not too far away from where Senator Davey lives, Riverina Wool Combing closed many years ago under the Howard government. The Australian textiles industry is almost gone, and the National Party never raised a finger as Australian wool processing was sent offshore, mostly to China, with some going to Italy. There was never a peep from the National Party over the course of the last two decades, but suddenly now they're interested.

I think that a feigned interest from the National Party in the interests of regional manufacturing is a bit like Idi Amin expressing an interest in human rights or Margaret Thatcher suddenly being excited about the rights and welfare of coalmining workers. Maybe that's a little bit closer to where the National Party are today. Extraordinarily, in this document, which probably won't see the light of day for most Australians, it says, 'Adding to these pressures, Australian manufacturers are paying 91 per cent more for electricity and 48 per cent more for gas over the last decade.' Well, that's right. That's absolutely right. But where have the National Party been on these questions? They couldn't fight their way out of a wet paper bag. What they have been doing is focusing upon one job—not on the jobs of rural Australians, not on the future of regional industries, but on one job: who is going to be the leader of the National Party in the House of Representatives. They've been squabbling over the spoils in Canberra but they're in a dreamland when it comes to the future of regional industry and regional jobs. Not only do they forget their own role in sending all these jobs overseas; the only plan they've really got is to make electricity more expensive for Australian manufacturers—to throw more public resources behind making energy more expensive and consigning more of Australian manufacturing to the dustbin. (Time expired)

Tony Sheldon (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to add my voice in opposition to the Customs Amendment (Product Specific Rule Modernisation) Bill 2019. The bill removes critically important parliamentary oversight of our laws which prevent the dumping of goods in Australia. We hear a lot about companies that deliberately move their profits around globally to avoid paying tax. Well, there are also organisations that move goods around the world under so-called transshipment arrangements to avoid antidumping or countervailing duties on their products. They do this by abusing the rules-of-origin regime, which is part of a robust, rules-abiding international trade system. Payment of these antidumping and countervailing duties based on rules of origin is what protects Australian companies and Australian workers who are producing goods here. These rules also allow us to give preferential treatment to goods coming from specific countries—for example, our Pacific neighbours.

These are important rules for our trading system. We should be strengthening these rules and should not permit them to be watered down or easily avoided. This customs bill, if passed, would actually dilute the oversight and policing of dodgy operators, who often use highly sophisticated schemes to get around these laws. If passed, this bill will undermine Australian jobs and Australian businesses during a global pandemic, a time when we should be building our sovereign capacity and growing our jobs at home. Let's be clear about what we're dealing with here. These schemes include moving goods through one or more third countries to disguise their origin. These operators undermine Australian companies and the working conditions of Australian workers, who are forced to compete with goods that bear unfair and artificially lowered price tags.

Since 2013 Australia has had an anti-circumvention framework designed to prevent this kind of law-breaking. In 2015 it was expanded, and for good reason. I think the Australian people would be genuinely shocked to know what lengths some unscrupulous companies are going to in order to avoid Australian antidumping laws. The law is complex, but it has to be, to catch up with all the tricks companies use. Just some of the schemes that are used by exporting companies bringing goods into Australia are: avoiding duties by importing parts into Australia, which are then passed off as Australian made; not paying duties by assembling parts in a third country and shipping it via a country that has preferential arrangements with Australia; avoiding the higher rate of duty by making an arrangement with another exporter that has more favourable rates in order to bring those goods in; not increasing the price of the goods with the duties payable by law, so as to undercut local competitors; and avoiding paying duties by slightly modifying goods in an attempt to classify them as outside the antidumping rules.

This bill is also an example of a more general trend that we're seeing from the government. I am talking about the volume of laws that did not get adequate scrutiny by parliament. There is no reason that our product-specific rules-of-origin annexures in trade agreements cannot be updated when the international rules change. Our laws may of course need to reflect those changes in order for the law to be fit for purpose for protecting Australian companies and workers from unfair competition from imports. But this bill also allows for new, updated annexures to our trade agreements to be automatically recognised. These changes will be brought into effect without allowing the parliament to scrutinise them and have the option to vote against them. That's because this bill would drastically diminish the current level of parliamentary scrutiny. It will reduce the scrutiny from a disallowable regulation to the mere requirement that the Joint Standing Committee on Treaties hold an inquiry. The JSCOT has government, opposition and crossbench members, of course, but it's dominated by the government, so its inquiries are unlikely to contradict either the minister or the government. Last year JSCOT held an inquiry into the contents of this bill, and Labor produced a minority report laying out our concerns.

In its submission to that inquiry the Australian Border Force suggested that Australia's existing domestic treaty-making process already allows for parliamentary scrutiny by JSCOT. However, we should be clear that this scrutiny does not mean there will be a vote in parliament. In fact, even if the government's own committee members had a serious reservations about a treaty, an inquiry report that challenged the government's view is advisory only and has no legislative power.

This is highly problematic because Australia's negotiations in trade agreements are largely in secret. There is very little opportunity for stakeholders to be part of the process. That means that workers, unions defending the rights of workers, NGOs defending the state of the environment and those speaking up for health, government procurement and use of local content laws of a sovereign nation are already largely shut out of discussions when the terms of these deals are being thrashed out. In fact, stakeholders in Europe and in the US have more access to trade negotiations and the process of decision-making than we do. In the United States, of course, the congress has to vote to pass trade deals.

In my view, we need more, not less, ability for the Australian parliament to weigh in on the deals we sign with other countries. Of course, this bill goes in the opposite direction. So if our government, behind closed doors, develops an annexure to a trade agreement and the changes are deemed to be technical in nature and don't alter the commitments made in the treaty itself then parliament will have zero ability to disallow these new rules. It's important to understand that this inability to disallow new trade deal rules will apply even if these new laws create the risk that Australian jobs and Australian companies will be undermined by the abuse of the rules-of-origin framework.

We know that abuse of the rules of origin is a growing problem. The latest evidence we have from the Australian Border Force is from a report in April 2019, and it does not make for reassuring reading. In the antidumping countervailing part of this compliance report, Australian Border Force revealed that in the year to March 2019 more than 34 per cent of shipments they inspected that were subject to antidumping duties were found not to be compliant. These goods were misclassified, but the report does not reveal what the reasons for misclassification were. They could have been using dumping duty exemptions illegally, or there could have been a misdeclaration of country of origin or illegal transhipment.

Meanwhile, Border Force busted a large shipment of aluminium from China in 2019. The importers had attempted to tranship the aluminium to Australia via third countries such as Indonesia and Singapore to avoid the significant duties that would have applied. In addition, Capital Aluminium ran an anticircumvention inquiry into extrusions transhipped from China to avoid duties. The Anti-Dumping Commissioner made findings in relation to aluminium extrusion exported by Zinaco Industrial and Hardware Industries Ltd from Thailand and Yun Sin Enterprise Co. Ltd from Taiwan, and, by following the exporters from Thailand, Bay Enterprise Co. Ltd, Siam Industrial Supplies Ltd and V-Power Biotech Limited Partnership.

Last year, Australia's Anti-Dumping Commissioner also found that aluminium extrusion which originated in China and which was manufactured by Foshan ZP Aluminium Co. of China were exporters to Australia, except that it was deliberately shipped via Malaysia and Thailand. The commission concluded that this constituted circumvention activities.

Also last year, in a Senate estimates hearing, My colleague Senator Carr questioned the Anti-Dumping Commissioner, Dale Seymour, on efforts to try to catch companies avoiding antidumping duties. Mr Seymour said:

The problem with anti-circumvention is that once the tax has been imposed it's almost guaranteed that businesses will try and limit their exposure to those obligations. You'd like to think they'd do that legally and, obviously, many of them might think they're doing it legally but they're actually in breach of Australian customs law.

He went on to say:

What's really interesting is the emergence of what I call 'intermediaries' who are neither technically the importer nor the exporter but seek to be a mid-point trader who speculates—takes a certain level of risk in buying and selling in the international market, clips the ticket, if you like, and takes the cut on the way through—and who openly advertise circumvention services on the internet—

not the dark web, the internet—

and specifically say that they will ensure that the Australian duties on this product will not need to be paid through their actions to circumvent and tranship those products.

When asked if this was legal, Mr Seymour said:

No, I don't believe it's legal. It's contrary to an obligation that an importer would have to pay a duty on a product that is subject to a measure. So, in that sense, it's in contravention of the Customs Act. We have the ability now—the legislation was amended a couple of years ago—to run our own investigations on those transhipped products. We did so with aluminium, and the minister agreed with my recommendation, and we altered the notice and we named a number of foreign actors in the space who were clearly circumventing. The ones that we weren't able to capture, however, were these intermediaries who, under the current law, I'm unable to name on the notice. I think, going forward, I would be talking to my colleagues on the policy side about how we might be able to provide some disincentives to stop that practice occurring, but it is extremely challenging and difficult.

What's quite clear with this legislation is that we have to have a robust system for oversighting circumvention and the actions by various corporations around the world, such as those companies that I have named within this speech. They are just a few of the examples of the challenges that we have.

What is also critical is that there isn't a simple decision made by departmental advice from the minister and the government on matters of grave economic importance to this country. It's critical these matters aren't simply handed over to a well-meaning bureaucrat who can't be oversighted appropriately and properly by parliament and by an area of trade, an area of responsibility that's important for this particular parliament and this Senate.

It's incredibly important that we have a robust system that makes sure that those avoiding duties by importing parts into Australia and then assembling them here and passing them off as Australian made are held to account. We have to make sure that we don't just simply leave someone to come up with a view about what should be changed, or set a ministerial precedent that can't be overturned, even under necessity and with the will of parliament. Not paying duties by assembling parts in a third country is a critical issue that we need to concentrate our efforts on. We need to be aware of those who are avoiding the higher rate of duty by making an arrangement with another exporter with more favourable rates to bring those goods in, the issues that come up with not increasing the price of goods commensurate with duties payable by law so as to undercut local competitors, and, of course, those who are avoiding paying duties by slightly modifying goods in an attempt to classify them as outside the antidumping rules. Mr Seymour went through a long list of the challenges that are within his purview. He's done an exceptionally sterling job in taking up those challenges.

So there you have it: what we need in Australia, according to our own expert officials, is a more robust antidumping regime, not the weakened one the government is proposing. (Time expired)

Matt O'Sullivan (WA, Liberal Party) Share this | Link to this | Hansard source

I rise to speak this afternoon on this important bill, the Customs Amendment (Product Specific Rule Modernisation) Bill 2019. This bill will allow for the removal of almost 3,000 pages of regulation. It will enable exporters, those involved in trade across the world, to streamline their processes. These changes will make it simpler for Australian businesses to identify the tariff benefits that they can access under the free trade agreements as they look for opportunities especially—

Debate interrupted.