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Wednesday, 6 July 2011
Page: 7743


Mr KEENAN (Stirling) (11:53): I rise to speak on the Customs Amendment (New Zealand Rules of Origin) Bill 2011. Whilst this is a relatively dry bill—just updating some definitions within the framework of the free trade agreement that we have with our very good partner New Zealand—I think it is a reasonable time for us to think about the success of that free trade agreement. It was Australia's first free trade agreement. It was negotiated in the early 1980s and implemented in 1983, at a time when free trade was probably less fashionable than it is now. You will obviously still hear arguments for and against free trade now and those arguments have been ongoing literally for centuries within the political sphere. But this agreement has done a lot to advance the economic interests of Australia and the economic interests of our partner New Zealand. Although this is a relatively dry bill, it is important for us as a parliament to reflect on the success of that free trade agreement and about how it was a precursor for future free trade agreements that we negotiated with other partners.

I always like to refer back to Adam Smith when we look at economic issues. Although he wrote many centuries ago, his insights into the way an economy works are still relevant today. On trade, he said:

It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. ... If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.

Essentially he was talking about the economic law of comparative advantage—though he would not have called it this at the time—which was developed slightly later by another British economist. But the words that Adam Smith wrote in his classic book The Wealth of Nations are still very relevant to us today, and a great reminder about how important free trade is and about how politicians constantly get people arguing with us about why free trade is not that important. The way those arguments are put to us varies greatly. In the old days, there were mercantile arguments between free traders and protectionists, about why it was in the national interest not to trade freely with other countries. Now these arguments come to us in different ways. They come to us in possibly more sophisticated ways. They come to us in ways in relation to industry policy or in the guise of fair trade, which is a term which I do not think is necessarily very well understood.

I see the member for Brand at the table. I am sure his father-in-law would have agreed with what I am saying. If the Labor Party still had men of that calibre, I suspect they would not be having the political problems they are having today.

Mr Gray: I have never mentioned my father-in-law.

Mr KEENAN: I am happy to acknowledge that interjection, so it is on the record and can be raised at the minister's next family Christmas!

This bill really just updates some definitions and some other nomenclature issues within the closer economic relation­ship framework that we have with our brothers in New Zealand. Whilst this bill is rather technical in nature, it is timely that the parliament discusses it in the wake of the visit and the historic address to this parliament by the Prime Minister of New Zealand, the Rt Hon. John Key. Australia's economic relationship with New Zealand is one of the most diverse and comprehensive we have with any country. Australia is New Zealand's largest export market. Prime Minister Key made that point when he addressed the parliament. More than half of direct foreign investment in New Zealand, around $50 billion, comes from Australia. Last year, Australian exports to New Zealand totalled just over $8 billion, which is actually not far from the $9 billion that we exported to the United States. That gives you some idea about the vital importance of the economic relationship that we share with New Zealand.

There is no doubt that Australia and New Zealand share a unique relationship nurtured by a number of factors: geographic prox­imity, obviously; shared histories as members of the British Commonwealth; a shared culture; and a shared Anzac tradition. This relationship has led to arrangements that enable citizens of Australia and New Zealand to migrate freely between the two countries. Over recent decades, the most significant trans-Tasman movements have been of New Zealanders moving to Australia, with the movements generally reflecting the economic conditions and opportunities within our two countries. There are presently over half a million New Zealanders living in Australia.

Our two countries also have very close military ties going back to the First World War where soldiers of both countries were formed into the Australia and New Zealand Army Corps. Together Australia and New Zealand saw their first major military action at the Battle of Gallipoli. Today our military ties continue with a combined effort in the maintenance of peace and stability in East Timor. The combined force in East Timor, which is entitled the International Stabilis­ation Force, has developed over time and presently consists of approximately 460 personnel with the Australian Defence Force contributing 390 of those and the New Zealand Defence Force contributing 70. Our two countries' forces are complementary in equipment and in culture. We work well together in East Timor and also in other battlefields and other conflicts around the world. We have a tremendous history together. The bond between our defence forces remains incredibly strong with a high degree of common purpose.

This common purpose also forms the cornerstone of our trade and economic relationships in the Australia New Zealand Closer Economic Relations Trade Agree­ment, which came into effect on 1 January 1983 and is, as I have mentioned, one of Australia's most important economic treaties. The agreement is comprehensive and wide ranging and provides New Zealand and Australia with liberal access to each others goods, services and investment markets. As noted on the DFAT website, the objectives of the Closer Economic Relations Trade Agreement are to strengthen the broad relationship between Australia and New Zealand, to develop closer economic relations between member states through a mutually beneficial expansion of free trade between New Zealand and Australia, to eliminate barriers to trade between Australia and New Zealand in a gradual and progres­sive manner under an agreed timetable and within minimum disruption, and to develop trade between Australia and New Zealand under conditions of fair competition. The agreement reaffirms the close relationship between Australia and New Zealand. On 1 January 2007 the agreement rules of origin provision underwent significant change to allow both the change in tariff classification method and the regional value content method to be used to establish whether goods are New Zealand-originating goods.

As part of the 2007 amendments to the agreement both parties also agreed to perform a review of the new rules of origin within three years of these new rules taking effect. This review, which was commenced in late 2008 and completed in March of last year, resulted in amendments to the text of article 3, rules of origin, and related product specific rules in annex G to the agreement. The modifications to the agreement will lessen the administrative burden on business and will assist the eligibility for duty-free entry of goods into both markets. The amendments will also provide greater consistency between the rules of origin in the agreement and those in other free trade agreements entered into by Australia. That obviously came to pass as this agreement is approaching its 30th anniversary and over time the definitions that are used within international free trade agreements change, and this bill reflects those more modern terminologies.

The purpose of this bill is to amend the Customs Act 1901 to implement amend­ments to the rules of origin requirements under the Australia New Zealand Closer Economic Relations Trade Agreement and amend definitions within the act. These requirements are outlined in article 3 and annex G of the agreement. The amendments to the Customs Act implements the amendments to article 3 of the agreement. Amendments to the Customs (New Zealand Rules of Origin) Regulations 2006 will implement the amendment at annex G of the agreement. As has been noted in this bill's explanatory memorandum, the bill will amend division 1E of part VIII of the Customs Act to insert a new definition of 'aquaculture', to amend the definition of 'manufacture', to amend the definition of 'produce', to amend the provisions dealing with wholly obtained goods, to amend the provisions dealing with eligibility based on the last process of manufacture, to insert a new section to provide that goods are not New Zealand originating goods merely because of the certain operations, and make consequential amendments to the verification powers in division 4D of part VI of the Customs Act.

The practical effects of this bill are relatively limited; it is not just a definitional bill. It is, as I said at the outset, a timely reminder to this parliament about the importance of the trade agreement we have with New Zealand. This is a pretty unique agreement in the world. It is underpinned by free movement of people between two countries. There are very few pairs of nations around the world that have such a close economic relationship as Australia and New Zealand. In fact, there are very few nations around the world that have such close political and defence ties. Indeed, New Zealand is actually mentioned as one of the possible constituent parts of the Common­wealth of Australia in our Constitution; my home state of Western Australia is not. This just shows you the way that history has developed between our two countries and about how important it is to both countries.

I acknowledge the fact that former Prime Minister John Howard and former Minister for Foreign Affairs Alexander Downer were pivotal during their years in office in advancing economic and cultural relation­ships with New Zealand. On this side of the House, as indeed on the other side of the House, the relationship is valued and we value our partnership with our brother country, New Zealand. It is a partnership that has just been highlighted again by the visit of the New Zealand Prime Minister and his historic address to this parliament. The opposition supports the passage of this bill and we support the strengthening of our economic, political and cultural ties with our fellow brother country, New Zealand.

Debate adjourned.