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Wednesday, 25 June 1997
Page: 6288

Mr PROSSER (Minister for Small Business and Consumer Affairs)(4.27 p.m.) —I move:

That the bill be now read a second time.

The Customs Tariff Amendment Bill (No. 2) 1997, which is now before the House, contains a number of amendments to the Customs Tariff Act 1995. Most of the amendments have already been introduced in this House as customs tariff proposals. I will briefly outline the changes of substance.

The amendments contained in schedule 2 of this bill abolish the Canadian margin of preference on certain petrochemical products of chapter 39 of the customs tariff. These changes took effect from 1 January 1997. Concerns have been expressed for some time regarding the overall balance of benefits under the Canada-Australia Trade Agreement, CANATA. CANATA provides for the exchange of tariff preferences on a range of products traded between the two countries.

Most significantly, in 1995 Canada proposed the extension to several of its developing country trading partners preferential tariff treatment for raw sugar which would have been equivalent to that enjoyed by Australia under CANATA. Because of the significance of sugar in our overall exports to Canada, accounting for 20 per cent in 1995, such a decision would have had the impact of substantially eroding the overall value of CANATA preferences to Australia and shifting the balance of benefits under the agreement decisively in favour of Canada. In addition, elements of the Australian manufacturing community have also registered some concern at the benefits accruing to Canadian exporters under CANATA.

Following consideration of these and other related issues, the Minister for Trade (Mr Fischer) advised the Canadian Minister for International Trade in 1995 of Australia's intention to remove CANATA preferential rates of duty from Canadian imports of certain petrochemical products, specifically polystyrene, polyvinyl chloride and polyvinyl esters.

Following a review of the situation by the incoming government and action by Canada to extend preferences on raw sugar, the Minister for Trade and the Minister for Industry, Science and Tourism (Mr Moore) decided to implement the withdrawal of the preferences on these petrochemical products. Trade in these products is currently at relatively low levels, amounting to only $1.6 million in 1995-96. Moreover, the phase-in general rate of duty on 1 July 1996 to five per cent has meant that the possible impact on downstream users will be minimised.

Schedule 3 of this bill accords developing country preferences, under the Australian system of tariff preferences (ASTP), to imports from the territories administered by the Palestinian authority. This action was operative from 10 March 1997.

Honourable members will be aware of the Middle East peace process started in Madrid in October 1991 and the Oslo declaration of principles whereby Israel is transferring to the Palestinian council powers and responsibilities for certain areas formerly administered by the Israeli military government. The Australian government fully supports the peace process and the implementation of these agreements.

The extension of ASTP concessions to the Palestinian territories will assist their economy to transform itself to an exporter of products made in newly established industrial enterprises. It will also enhance bilateral trade with Australia.

Schedule 4 of this bill will operate from 1 July 1997. It contains amendments which will abolish customs duty on imported sugar and certain sugar by-products and implements Australia's tariff obligations under the Information Technology Agreement (ITA).

In respect of the changes of duty on sugar, on 4 March this year my colleague the Minister for Primary Industries and Energy, the Hon. John Anderson MP, announced that the recommendations of the joint industry and government sugar industry review working party had been accepted by the Commonwealth government. These recommendations provide an integral package of reforms designed to promote a sustainable and internationally competitive sugar industry and provide for the removal of the customs rate of duty of $55 per tonne from sugar and certain sugar by-products. The recommendations have also been endorsed by the Queensland government and have the unanimous support of industry leaders on the working party. The recommendations in regard to customs tariff rates of duty are implemented in this schedule.

In respect of the ITA, in Singapore, on 13 December 1996, the Deputy Prime Minister, the Hon. Tim Fischer MP, signed on behalf of Australia the Ministerial Declaration on Trade in Information Technology Products—the Information Technology Agreement. ITA represents a package of sectoral liberalisation which, in combination with the agreement on basic telecommunications, establishes the trading framework which will underpin the continuing rapid growth of global information and communications infrastructure. The agreement seeks the elimination of tariffs on technology and telecommunications products by the year 2000.

When negotiations were completed on 26 March this year, the ITA had 41 member countries including our major APEC trading partners, the European Union, other European countries and India. The signatories account for 92 per cent of the $750 billion in world trade in these products. Each participant agreed to undertake the necessary domestic procedures to meet their commitments for the ITA to come into force on 1 July 1997.

During the negotiations, Australia made clear its requirements for an acceptable and balanced package of liberalisation being achieved and for the participation by a core of our regional trading partners. We ensured that the emerging Asian markets participated in the agreement and that their participation was on a similar basis to that of Australia.

Australia stands to gain substantially from the ITA. The agreement will provide Australian industry with increased export opportunities to help redress the $6.9 billion trade deficit in this sector. Australia could not have secured the market liberalisation achieved under the ITA through direct bilateral negotiations. Working through APEC and the WTO allowed Australia, in coalition with other major economies, to bring our key regional trading partners to the ITA negotiating table. Schedule 4 of this bill also contains amendments to reinstate the intended tariff assistance on surgical drapes and clarify our international tariff obligations in regard to certain types of lamps and power supply units for computers.

The remainder of the amendments in schedules 1 and 5 are of an administrative nature. In the main they close up national seven- and eight-digit tariff splits which were created in the 1980s to apply different rates of duty to certain textile goods. As the tariff phase in regime means the rates of duty will be the same from 1 July 1998, this opportunity has been taken to close up the tariff subheadings, where possible. I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr Stephen Smith) adjourned.