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Tuesday, 18 October 1994
Page: 2185


Mr BILNEY (Minister for Development Cooperation and Pacific Island Affairs) (2.25 p.m.) —I move:

  That the bill be now read a second time.

The purpose of these bills is to provide for amendments to a number of acts and passage of the Trade Marks Bill 1994 to enable Australia to accept the World Trade Organisation agreement by 1 January 1995. The World Trade Organisation agreement is the outcome of the Uruguay Round of multilateral trade negotiations. The agreement will provide a stimulus to the world economy, as well as a framework for the continuing conduct of international trade on a non-discriminatory and sustainable economic basis. For the first time, trade in agriculture, services and intellectual property has been brought within the framework of GATT disciplines.

  All GATT parties, including developing countries, stand to gain from the Uruguay Round outcomes, which in turn will boost job creation, investment, and economic reform internationally. The Uruguay Round outcomes contain commitments by Australia's major trading partners for substantially improved market access across the key sectors of agriculture, mineral and industrial products. Of special interest to Australia are commitments on beef and sheep meat, dairy, grains, including rice, sugar, horticulture, coal, steel, pharmaceuticals, beer, medical equipment and non-ferrous metals.

  The OECD has estimated that for agricultural and industrial products alone the Uruguay Round outcomes will result in an increase in global economic activity of up to $A418 billion by the year 2002. For Australia, the income gain has been estimated by the OECD at $A2.5 billion per year. Assessments by the Industry Commission suggest that there may be as much as a $5 billion increase in exports and a $A3.7 billion increase in Australian gross domestic product. These estimates include:

.around $A1 billion in increased agricultural exports per year;

.an average cut of more than 50 per cent in tariffs facing Australia's manufactured exports; and

.improved conditions of trade for our mineral exports, especially coal.

To these figures need to be added gains from expanded services exports and increased sales and royalties for Australian know-how.

  I will now outline for honourable members the benefits for Australia in each of the major categories of the Uruguay Round outcomes on agriculture, tariff reductions, intellectual property and services. In doing so, I will explain the legislative action necessary to give effect to Australia's commitments in each of these categories, which is in the bills before honourable members.

Agriculture

In the Uruguay Round, Australia took on the daunting task of bringing agriculture more fully into the international trading regime. Reform of the global agricultural system was, and still is, a top priority for Australia. It is an indication of the determination and solidarity of Australia and the Cairns Group—which Australia founded and chairs—that the round negotiations included a comprehensive mandate on agriculture, which led to a genuinely trade liberalising outcome. The negotiations have broken new ground by extending fully the rules and disciplines of the GATT to trade in agriculture.

  The benefits will flow from reform commitments on a formula basis to world agricultural trade in three major areas: market access, domestic support and export subsidies. As a result of improved market access, the Australian Bureau of Agricultural and Research Economics, ABARE, has estimated that Australia can expect by the end of the implementation period to export annually an extra $A330 million in beef, $A210 million in dairy products, $A320 million in wheat, $A50 million in coarse grains, $A30 million in rice and $A10 million in sugar. Over the next six years, there will be a major reduction in the level of trade distorting export subsidies. They are to be cut by 36 per cent in value and by 21 per cent in volume. Domestic support will be cut by 20 per cent.

  The agreement on the application of sanitary and phytosanitary measures—the SPS agreement—will also assist Australian exporters in ensuring that such measures are only maintained to the extent necessary to protect human, animal or plant life or health, and are scientifically justifiable.

  Neither the SPS agreement nor the agreement on technical barriers to trade, the revised standards code, will alter Australia's ability to maintain more stringent measures than provided for in international standards if this is appropriate to our requirements. Australia could, however, be called upon to demonstrate that any more stringent standards do not unjustifiably restrict trade or discriminate between countries.

  With our Cairns Group members, we will need to work to ensure that the round commitments are implemented fully and promptly. With regard to measures required by Australia on agriculture, amendments are required to the current support arrangements for the dairy industry and to the tariff measures applicable to cheese and tobacco. Amendments are also required to tariffs on a small number of processed agricultural products to conform with the Uruguay Round agricultural tariff reduction formula.

DAIRY PRODUCE (WORLD TRADE ORGANIZATION AMENDMENTS) BILL 1994

The purpose of this bill is to amend the Dairy Produce Act 1986 by terminating market support payments to the Australian dairy industry for exports beyond 30 June 1995. The current dairy market support payments, which were introduced in the 1986 dairy plan, are classified as an export subsidy under the Uruguay Round agreement. Australia is committed to reduce export subsidies over the period 1995-96 to 2000-01 by 36 per cent in expenditure terms and by 21 per cent in volume from the base period of 1986-90.

  As the current market support payments are not constructed in a manner which enables the volume of supported exports to be reduced, a revised approach is necessary. The government and the dairy industry have agreed to a two-stage approach. The first stage comprises the amendments of this bill to terminate market support payments for the Australian dairy industry for exports beyond 30 June 1995, thereby satisfying Australia's commitments on subsidies by removing the export subsidy. In the event of the WTO agreement not coming into force until after 1 July 1995, provision is made for the termination of the market support payment scheme to be delayed until the first day of the next financial year after the financial year when the agreement enters into force.

  The second stage will involve the introduction of legislation in the autumn sittings next year, amending the Dairy Produce Act 1986 to enable the implementation of a new domestic market support mechanism to apply from 1 July 1995 until 30 June 2000. The government has committed itself to deliver the same level of support as applied under the existing scheme.

Tariff reductions

  The second major category of Uruguay Round outcomes is tariff reductions. The Uruguay Round achieved the biggest market access tariff reductions package ever in GATT negotiations. Overall, tariffs facing Australia's exports will be cut on average by around 50 per cent on a trade weighted basis. More than 86 per cent of Australia's exports will now enjoy predictable market access through bound tariff commitments by most of our major trading partners. The average bound tariff rate facing Australian exports of industrial products will be less than two per cent on a trade weighted basis while nearly 50 per cent of Australia's exports will enjoy duty-free access to significant markets.

  Australia will meet virtually all of its commitments within the framework of the government's current program of phased tariff reductions. While more than 95 per cent of Australia's tariffs will be bound, in general these commitments will be at levels above the current applied tariff rates or the rate which will apply when the current program of tariff reductions has been fully implemented. Based on Industry Commission analysis, the export gains for industrial products will be about $3 billion per annum when the majority of the cuts are implemented by 1 January 1999.

CUSTOMS TARIFF (WORLD TRADE ORGANIZATION AMENDMENTS) BILL 1994

  This bill amends the Customs Tariff Act 1987 to give effect to Australia's tariff binding commitments arising from the Uruguay Round negotiations. As a result of the government's domestic economic reform program there will be only a very limited number of minor adjustments to the tariff reduction program announced in the March 1991 industry statement.

  On light beer and some medical equipment items tariff phasing will continue beyond 1996 levels. On these lines the tariffs will phase to zero by 1999. In both cases, there is industry support for Australia's participation in these sectoral arrangements which will result in most major markets also reducing tariffs to zero.

  For a few motor vehicle parts, some technical adjustments will be made to bring certain tariff lines into conformity with our GATT obligations. These products—which include clutches and gaskets, air conditioning components, electric motors and electrical components—are part of a larger group of products that were recently restored to the motor vehicle plan. As a consequence, the tariffs were temporarily raised to 15 per cent, consistent with the industry rate for this sector. The tariffs on the 12 lines affected will be phased down to the bound rates negotiated in the round. In all cases the final tariff level will remain at or above rates which have applied in recent years.

  For a small number of agricultural products, some modest additional tariff cuts will also be required beyond the government's tariff reduction program. These adjustments will be necessary in order for Australia to comply with the minimum 15 per cent cut per tariff line on the base rates required by the agriculture agreement. This bill also introduces the changes necessary to give effect to Australia's Uruguay Round obligations applying to cheese and tobacco.

Differential sales tax on fruit juices

  One of the fundamental pillars of the GATT is the principle of national treatment in which each country gives the products of all other countries treatment no less favourable in their market than that given to like domestic products in terms of internal rules, regulations, taxes and other charges.

  The differential in taxes between fruit juice which has 25 per cent or more Australian content and other juices is not consistent with this principle. However, Australia has been able to retain this tax arrangement because of the `grandfather' clause allowing countries joining the GATT to apply the multilateral rules to the fullest extent not inconsistent with their own legislation existing when they joined. The establishment of the World Trade Organisation involves the removal of the `grandfather' provision and, hence, the removal of the GATT coverage provided to the Australian local content sales tax arrangement on fruit juice.

  The requirement to change GATT inconsistent measures maintained under the `grandfather' clause applies to all of the 123 member countries of the GATT-WTO which have unfair and discriminatory trade practices under this provision. As an export dependent country, Australia stands to benefit from the removal of discriminatory barriers to trade which other countries may have maintained under the `grandfather' clause.

SALES TAX (WORLD TRADE ORGANIZATION AMENDMENT) BILL 1994

  This bill will amend the Sales Tax (Exemptions and Classifications) Act 1992. Under the existing sales tax law, particular juice products are taxed at a concessional rate—currently 11 per cent—if they are made with fruit or vegetables grown in Australia, New Zealand or Papua New Guinea, and meet certain conditions. Very broadly, the products which are covered are non-alcoholic drinks, concentrates and cordials for making non-alcoholic drinks, and food flavourings. Non-alcoholic carbonated beverages must consist wholly of juices from fruit or vegetables grown in Australia, New Zealand or Papua New Guinea for the concessional rate to apply. Juice products made from juices of fruits or vegetables grown in other countries, or which have less than 25 per cent by volume of fruit or vegetable juice, are taxed at the general rate—currently 21 per cent.

  As a result of this amendment, the distinction between juice products made from Australian, New Zealand or Papua New Guinean fruit or vegetables and juice products made from fruit or vegetables from other countries will be removed. The concessional rate—11 per cent—will apply to the same range of juice products which fall within the current concession, but without the requirement that the fruit or vegetables used in making them be grown in Australia, New Zealand or Papua New Guinea. The requirements as to the minimum percentage of fruit or vegetable juices in the goods which qualify for the concession will not be changed. The amendment will come into effect on either 1 January 1995, or the date the World Trade Organisation comes into force for Australia, whichever is the later.

Intellectual property

  Australian exports with an intellectual property content contribute billions of dollars in revenue to Australia. These include industries that rely on copyright law, such as film-making, music recording, computer software engineering, and the publishing industry, high value manufactures such as telecommunications, chemicals, pharmaceuticals and advanced technology products, and wines, whose distinct geographical indications are used as a marketing tool.

  The agreement on trade related aspects of intellectual property rights—the TRIPS agreement—will significantly assist the development of our cultural and knowledge industries. It will provide a single multilateral framework of principles, rules and disciplines dealing with a broad range of intellectual property including trade marks, patents, copyright, integrated circuits, geographical indications, plant variety rights and confidential information. It also provides procedures for consultation and dispute settlement, for border controls and criminal procedures for the enforcement and deterrence of piracy and counterfeiting.

  There are three bills before the House dealing with Australia's TRIPS obligations: the Copyright (World Trade Organization Amendments) Bill 1994, the Patents (World Trade Organization Amendments) Bill 1994 and the Trade Marks Bill 1994.

COPYRIGHT (WORLD TRADE ORGANIZATION AMENDMENTS) BILL 1994

  As Australia is a member of the Berne Convention for the Protection of Literary and Artistic Works, our law already complies with most of the copyright obligations in the TRIPS agreement. However, three changes to the Copyright Act 1968 are necessary to comply fully with the TRIPS provisions.

These changes are:

.to grant rental rights in relation to computer software and sound recordings;

.to extend the scope of performers' protection; and

.to expand the border enforcement provisions in the act.

  To provide a reasonable opportunity for transition for affected businesses, advantage will be taken of the implementation period allowed by the TRIPS agreement and therefore will not enter into effect until later in 1995.

PATENTS (WORLD TRADE ORGANIZATION AMENDMENTS) BILL 1994

  Australia's patent law, by and large, accords with the minimum standards and principles set by the TRIPS agreement. However, the Patents (World Trade Organization Amendments) Bill 1994 proposes that the Patents Act be amended in four areas in order that our patents legislation is fully consistent with the TRIPS agreement.

  First, the term of a standard patent will be increased from 16 years to 20 years. This will apply to every patent whose 16th anniversary falls on or after 1 July next year. This change will subsume the special provisions for extending the term of pharmaceutical patents to 20 years. The government nevertheless remains committed to providing an effective 15-year term for those patents and is working closely with industry to that end.

  Second, in certain infringement proceedings, it will be over to the defendant to prove that his or her product was obtained by a process other than the patented process. This will be where the product is identical with those obtained by the patented process; the court considers infringement very likely; and the patentee has taken reasonable steps to establish, without success, the process actually used by the defendant. This will remedy, to a large extent, a difficulty with the present system in successfully bringing infringement proceedings in respect of a process patent.

  Third, the conditions under which compulsory licences to work a patented invention are granted by a court will be extended to take account of the economic requirements of both the patentee and the person wishing to work the patented invention. And fourth, the conditions under which the Commonwealth or a state can use a patented invention without the authorisation of a patentee will be brought into line with internationally accepted norms.

  The transitional provisions will help ensure that persons who might find themselves at a sudden commercial disadvantage in the short term because of the increased patent term will have adequate recourse to remedies.

TRADE MARKS BILL 1994

  Since the Commonwealth first legislated in trade marks matters in 1905, there have been three significant reviews. The first two, in 1938 and 1954, resulted in the existing Trade Marks Act 1955. The third, which stems from a desire to streamline the trade marks registration system, is under way right now. This review takes account of Australia's TRIPS obligations. It also reflects the government's commitment to having in place the best possible registered trade marks system for Australian industry.

  The Trade Marks Bill 1994 was introduced in the Senate as an exposure draft earlier this year by the Minister for Small Business, Customs and Construction (Senator Schacht) who sought comments on it until 31 August. Those comments are at present receiving consideration. The bill now before the House is, for all intents and purposes, the same bill as that introduced. It differs only in relation to minor TRIPS specific details.

  The key changes required to make the existing trade marks law consistent with the requirements of the TRIPS agreement relate to the definition of a trade mark, and the tests for registrability and infringement. As public comment had already been sought on the Trade Marks Bill at the time of the Marrakesh ministerial conference in April, and as amendment to current legislation and administrative procedures would be complex, it is expedient to proceed with passage of the Trade Marks Bill to enable Australia to accept the WTO agreement.

  To the extent that the bill does go further than what is required in relation to our TRIPS obligations, the government will be taking account of comments received during the public exposure period and will make any necessary changes. It is proposed to introduce an amending bill early in the Autumn sittings of 1995.

Services

  The fourth major category of Uruguay outcomes is services. The main outcome for Australia in respect of trade in services was the achievement of clear framework rules which can apply to all service sectors. The other main outcome—country market access commitments—will set the world on the course of services trade liberalisation, although there will need to be future rounds of negotiations to match what has been achieved in goods.

  By removing discrimination and adopting clear rules and disciplines, the General Agreement on Trade in Services—the GATS—will assist Australian services exporters to overcome trade barriers. It will produce export and investment opportunities in the telecommunications, banking, insurance, professional and business service sectors.

  A sample of tangible benefits to Australia's services exporters from the GATS includes:

.  more liberal access to Japan's legal services sector;

.enhanced access to Japan's insurance market—cross-border freight;

.Thailand is phasing out preferential access for United States professional service providers over a 10-year period;

.Korea has committed to eliminate discrimination in favour of United States insurance providers;

.Korea has begun to open its financial sector to foreign competition;

.many countries have made commitments on movement of personnel, a key factor in exporting professional and business services, and further work is slated for this area commencing next year; and

.all the developed countries, most ASEAN countries, Korea and Japan have made commitments on value-added telecommunications services—this includes data transmission, facsimile, private leased services, on-line information, data processing, and so on.

  Australia only undertook commitments that reflect the current situation for those services included in its schedule, and it took out exemptions to cover two minor pre-existing MFN inconsistent measures. States agreed to the commitments listed in the Australian schedule. No legislative changes will be required to implement the GATS undertakings made by Australia.

  Beyond the trade deals I have just outlined, the Uruguay Round was beneficial for Australia in other ways. The World Trade Organisation agreement provides for improved arrangements for managing the implementation of the Uruguay Round agreements through the establishment of the World Trade Organisation, the WTO.

  The WTO will administer all the agreements on goods, services and intellectual property, and will manage operations such as the trade policy review mechanism and the integrated dispute settlement system. The WTO will also provide a forum for maintaining the momentum for freer and more open trade.

  The Uruguay Round outcomes also include agreements which will improve the effectiveness and transparency of mechanisms for addressing difficulties which inevitably arise in international trade—for example, the agreements relating to anti-dumping and subsidies and countervailing.

Anti-dumping/Countervailing

The arrangements concluded under the Uruguay Round relating to anti-dumping and countervailing, formally titled the agreement on implementation of Article VI of the General Agreement on Tariffs and Trade and the Agreement on Subsidies and Countervailing Measures, provide for greater precision and predictability in procedures for the application of anti-dumping and countervailing measures by all countries. In this respect, however, the WTO agreements will require no fundamental change to Australia's present approach on anti-dumping and countervailing.

  Under the new WTO agreement on anti-dumping there are more specific requirements on when and how anti-dumping action can be taken, and the methodologies to be used by authorities in the conduct of investigations—including for determining dumping and injury—are set out in greater detail. The agreement introduces disciplines to ensure investigations do not proceed where dumping margins are very small or the alleged dumped imports are only a very small proportion of total imports.

  With regard to subsidies and countervailing measures, the WTO agreement introduces a definition of a subsidy and also defines categories of subsidies that are prohibited, actionable and non-actionable respectively. This categorisation addresses a number of grey areas, while establishing limits on the extent to which measures can be countervailed. The agreement also contains clearer and more detailed provisions on the procedural and methodological requirements for the application of countervailing duty measures against subsidised, injurious imports.

  The common procedural and methodological aspects of the anti-dumping agreement and the subsidies and countervailing measures agreement have been largely harmonised. Both agreements provide for enhanced dispute settlement procedures.

  Australia's export composition is rapidly changing towards more elaborately transformed manufactures directed increasingly to the newly industrialising economies. These countries are moving towards more open regimes, replacing non-tariff barriers with tariff-only regimes and, at the same time, reducing the level of protection provided through tariffs. These countries are looking increasingly at introducing anti-dumping laws. It is in Australia's interest that international rules on dumping be as transparent as possible. To implement the provisions of the WTO agreements on anti-dumping and subsidies and countervailing, the following two bills are before the House:

CUSTOMS LEGISLATION (WORLD TRADE ORGANIZATION AMENDMENTS) BILL 1994

This bill will amend the Customs Act 1901 and the Anti-Dumping Authority Act 1988 to bring Australia's anti-dumping and countervailing regimes into conformity with the standards and principles arising from the Uruguay Round agreements. The major amendments can be summarised as follows:

.in addition to the current arrangements for determining dumping margins based on a comparison of individual export prices to Australia with individual domestic selling prices—normal values—in the country of export, the Customs Act 1901 will allow for the comparison of a weighted average of the export prices to a weighted average of normal values, as well as an option for comparing individual export prices with a weighted average based normal value. This means that where there are price variations for the same product within a market, a weighted average can be used to assess a representative value;

.the minister will be required to reject an application, or terminate an investigation, where dumping margins or levels of subsidisation are de minimis or there are negligible volumes of dumped or subsidised imports. Quantified thresholds for each of these concepts have been included;

.applications for an investigation to be initiated must be supported by a major proportion, as defined, of the total Australian industry and there is greater definition of the requirements of an application;

.the procedures for duty imposition have a clear emphasis on company specific rates rather than broad country measures, and provision for residual rates to apply for exporters other than those specified is introduced;

.the normal time limit of holding dumping securities for four months has been extended to six months—the corresponding provision for countervailing duties remains at four months;

.there is comprehensive guidance on identifying forms of subsidies and calculating the levels of subsidisation;

.inclusion of provision for preferential treatment for developing countries in countervailing investigations, essentially via less stringent benchmarks for establishing de minimis subsidy levels and negligible volumes of exports for termination purposes.

CUSTOMS TARIFF (ANTI-DUMPING) (WORLD TRADE ORGANIZATION AMENDMENTS) BILL 1994

  The main effect of this bill is in regard to the level of any duty payable for the period prior to the date of the final decision to impose duties. The current practice of limiting these earlier duties to the level of any security has now been formalised.

Conclusion

  At the Marrakesh ministerial meeting in April 1994, trade ministers of over 100 countries agreed to give high priority to completing legislative processes according to their respective constitutional requirements so as to be able to agree to the entry into force of the World Trade Organisation on 1 January 1995. The major trading nations, particularly the United States, Japan and the European Community, are working to this goal. Despite the delay in the United States vote, the government remains confident that the majors and a large number of our other trading partners will be in a position to agree to the entry into force of the WTO on 1 January 1995.

  To receive the benefits of the Uruguay Round agreements from the time our major trading partners start to implement their commitments, it is essential Australia be in a position to accept the World Trade Organisation agreement from the target date of 1 January 1995. For Australia, acceptance of the WTO means much more than acceptance of the trade deals in individual sectors. It means continuing to be an influential member of a comprehensive and dynamic multilateral agreement which is vital to Australia's trade and economic interests.  I commend the bills to honourable members.