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Wednesday, 23 June 2004
Page: 31197


Dr SOUTHCOTT (9:01 AM) —On behalf of the Joint Standing Committee on Treaties, I present the committee's report, incorporating a dissenting report, entitled Report 61: The Australia-United States free trade agreement.

Ordered that the report be printed.


Dr SOUTHCOTT —by leave—Since its establishment in 1996, the Joint Standing Committee on Treaties has reported on all treaties signed by Australia. The free trade agreement with the United States is of unprecedented breadth and complexity. During the course of a three-month inquiry, the committee received 215 submissions and held 11 days of public hearings in seven cities. The committee report has 23 recommendations. The committee believes that the recommendations are consistent with the spirit and text of the agreement and are made in response to suggestions which were made in submissions or by witnesses during the course of the inquiry. The first 22 recommendations were unanimous and were drafted with opposition members on the presumption that opposition members would support ratification of the free trade agreement. The report is almost 300 pages long and we have a one-page dissent, which was received late last night. The dissent does not say `vote it up' and it does not say `vote it down'; all it says is that more time is required.

The committee examined the economic models, especially the report of the Centre for International Economics. The CIE report said that, in 10 years time, the most likely outcome of ratification of this treaty is an increase of $6.1 billion in GDP, or an increase of $5.6 billion in GNP. There is a 95 per cent probability that in 20 years time—using sensitivity analysis—GNP will be between $1.1 billion and $7.4 billion higher. There has been a wide debate on economic models. Economic models depend on their underlying assumptions but the main thing is that this figure is positive. The committee has concluded that Australia will receive a positive economic benefit from the Australia-United States free trade agreement.

In general, the evidence showed a high level of satisfaction with the consultation and the conduct of negotiations by DFAT. While there are some recommendations in this area, the committee heard high praise for the conduct of Australia's negotiators and the consultation they conducted. I would like to praise Mr Stephen Deady for his comprehensive understanding of the agreement and for the two days that he appeared before the committee to, firstly, brief us on it and, secondly, respond to the concerns that we had picked up in evidence.

Some submissions and witnesses raised the issue of multilateral versus bilateral liberalisation. Almost all of the evidence before the committee was that multilateral liberalisation is preferable to bilateral liberalisation. The department said this, but this was not the question. The question was: in the absence of progress in the Doha Round, should Australia be seeking increased access with the United States in a bilateral liberalisation? Australia has a longstanding bilateral free trade agreement. The Australia-New Zealand Closer Economic Relations Trade Agreement has been operating since 1983. In that period we have seen greater integration and a 500 per cent increase in trade between Australia and New Zealand. Over that 21-year period we have seen—as I believe we will see with the US free trade agreement—that it has evolved and that it is very much, in the words of Andrew Stoler, one of the witnesses, `a living agreement'.

The evidence heard by the committee can be categorised into three groups. There were those who supported ratification, and they included Alcoa, the Australian Dairy Industry Council, Medicines Australia, the Australian Information Industry Association, Meat and Livestock Australia, the Peanut Company of Australia, the Ford Motor Company of Australia, Baxter Healthcare, the Business Council of Australia, the Australian Chamber of Commerce and Industry, the Minerals Council of Australia, the Federal Chamber of Automotive Industry, the Australian Medical Association, Holden, the Australian Wine and Brandy Corporation, the National Farmers Federation, the Winemakers Federation of Australia, Horticulture Australia, the Australian Stock Exchange, the Tuna Boat Owners Association, the Distilled Spirits Industry Council of Australia, the Australian Meat Industry Council, the AUSTA Business Group—which is a group of about 50 of Australia's most well known companies—CPA Australia and the South Australian Farmers Federation.

In their submission, the South Australian state government said:

But even with the disappointing outcome in this sector, the South Australian Government considers that the AUSFTA will provide substantial benefits to the South Australian economy and community.

In a letter from the Queensland government, Peter Beattie, the Queensland Premier, said:

I believe that the AUSFTA will deliver important benefits to Queensland and Australia.

I should say he did go on to say:

I also have some concerns about specific aspects of the agreement which I believe should be carefully considered by the committee prior to it reporting to Parliament.

We have done that. Even Queensland Sugar and the Cane Growers Council, who were disappointed that we were not able to gain increased access to the US market, had high praise for the conduct of negotiations, had high praise for the conduct of consultations and did say they did not believe that ratification should be held up because of them.

We had submissions from the ACTU, the AMWU, Dee Margetts and others, AFTINET and so on, and they were opposed to ratification. They were opposed to every chapter; usually they had about 10 reasons why the FTA was bad. It is just not credible to come up with something that is so unbalanced. They seemed to have an unrealistic notion that in a negotiation we would receive 100 per cent of our demands and we would concede nothing in return. They seemed to believe that we had achieved nothing and had conceded 100 per cent. The agreement needs to be seen in toto—but that is just an extreme argument.

Then there was a third group of submissions and evidence before the committee, which was very helpful, from people who focused on specific chapters, whether they were on intellectual property, on the Pharmaceutical Benefits Scheme or on investor-state disputes, and they put their minds to making constructive suggestions to the committee. On the basis of all the evidence, the committee supported ratification. No member of the committee has recommended that we do not ratify. The agreement includes a lot of positives for Australia that will be held back if we do not ratify. There is increased access for beef and there is a tripling of access for dairy. The 35 per cent tariff on canned tuna will fall. The tariffs of the wine industry will be phased out over 11 years. For the first time, Australians will have access to the US federal government procurement program, which is worth $200 billion; this was very positively received. There will be for the first time a framework for progressing the issues of mutual recognition of qualifications and the movement of businesspeople.

But there were some areas that we focused on where concerns were heard and the committee felt it was very important that we examine these concerns in detail. One area that has received a lot of attention is the review mechanism for the Pharmaceutical Benefits Advisory Committee. The important thing to note here is that Australia will shape this, consistent with our commitments under the agreement. There is departmental consultation of stakeholders, which has already begun and will continue. No new legislation is required for this. It is important to remember that the Pharmaceutical Benefits Advisory Committee recommends listings, not prices. The committee did not find that this section would lead to an increase in prices for pharmaceuticals. There is also no review mechanism currently for decisions of the Pharmaceutical Benefits Advisory Committee.

We looked very carefully at intellectual property. Specifically, we had a lot of evidence on the issue of copyright term extension—an extension of copyright from the life of the author plus 50 years to life of the author plus 70 years. We had evidence from the Copyright Agency, who found that the proportion of out-of-copyright material being copied in the educational sector was only 0.3 per cent. The CIE said it was not possible to derive any indication of the cost of the out-of-copyright material; however, the committee has made a number of recommendations which relate to our own copyright law.

On quarantine, we also heard evidence on the SPS committee, which will be a consultative group, and the standing working group on animal and plant health. It would be fair to characterise the evidence in this way: industries which had had a recent risk assessment were concerned about this, but the peak groups, like the National Farmers Federation and the Cattle Council, said that there was nothing in the SPS chapter that caused them concern, and I would concur with that. We also looked at the quotas for local television content, and again the committee were satisfied.

It is the committee's view that ratification of the Australia-US free trade agreement will be in Australia's national interest. I would like to thank all members of the committee for the work that they have put into this report over the last three months. Over the last five sitting days, the committee have spent every spare hour finalising the report. We have probably sat for something like 20 hours since last Tuesday.

Sir Humphrey Appleby famously told his minister in the BBC TV series Yes Minister that an inquiry should never be established before the outcome was known. The only reason we have a Senate select committee on the FTA is so that the outcome is known. The ALP has made an assumption that the outcome of this JSCOT inquiry was a foregone conclusion—but this was not a tick and flick exercise; we looked very carefully at every issue that came before us. The result is a 300-page report with a one-page dissent.

I would like to thank all members of the committee secretariat who worked around the clock to meet this deadline. I would especially like to thank the committee secretary Gillian Gould, the inquiry secretary Julia Morris, Trish Tyson, Geoff Binns, Jenny Cochran, Carolyn Littlefair, Julia Thoener and Frances Wilson. I commend this report to the House.