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Wednesday, 21 October 2015
Page: 12116


Mr ZAPPIA (Makin) (21:33): In speaking on the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and cognate bill, I want to begin by making some observations. The first is about the process that has led us to this point. Over the last few months, there has been considerable public discussion about the China-Australia Free Trade Agreement and I detect considerable division without and throughout the community with respect to it. There has been an ongoing media campaign by a number of different parties with respect to it, some arguing for it and some arguing against it, and now we have seen an extension of the parliamentary sitting time in order to accommodate the debate. The negotiations that led to it over the last few days have also been referred to by many speakers.

In my view, it all highlights that the process with respect to the negotiation of trade agreements between Australia and other countries is flawed and needs to be reviewed. We need to come up with a process whereby the parliament is engaged at a much earlier stage in the process and we also need to do away with much of the secrecy that surrounds the drafting of these agreements. Ultimately, the agreements are about what Australia will enter into with another country. It is my view that there is very little good reason as to why the issues that have been negotiated should not form part of the public discussion well and truly before the agreement is finally agreed to. Indeed, I see it as being absolutely wrong that the parliament of Australia only gets to see the agreement after it has been finalised. I believe that is what is wrong with the current process and that is why, under the current circumstances, we have come to the point tonight of having to debate the issue at this late hour.

The second observation I want to make is that the term 'free trade agreement' is in itself a misnomer. The truth of the matter is that under free trade agreements, as they are referred to—I would much prefer them to be referred to as simply preferential or bilateral trade agreements—much greater burdens, obligations and regulations on the parties to those agreements are imposed. Indeed, the agreements in turn put pressures on other matters of government as a result of having been signed. This is not the time for me to go into what some of those concerns are, but I am well aware that many a time there have been suggestions raised by people within this place about changes to our laws and someone says, 'We cannot do that because it breaches one of the free trade agreements that we have entered into with a country somewhere' or 'It breaches our commitments to the World Trade Organisation as part of our participation in their processes.'

Today, China is a very different country to the China of 1971 when Gough Whitlam first publicly recognised the importance of China and Asia to Australia's future. The ascendancy of China over the past four decades and its strategic positioning has changed its place in the world. It is in that context that Australia's partnership with China should be structured.

With all agreements there are winners and there are losers. That certainly appears to be the case with respect to the China-Australia Free Trade Agreement. The question that therefore arises and that should be answered is whether on balance the agreement is good for Australia, bad for Australia, or perhaps neither. The truth is that that question cannot be answered up-front, and it will only be after CHAFTA has been in place for some time that we can truly assess the effects of the agreement.

We have already seen that with respect to other agreements we have signed in the past, be it with the USA, Thailand, or others. All of those agreements at the time were talked up with respect to their benefits to Australia. The truth of the matter is that there is now little or no evidence that those benefits, the expectations that were created at the time, were indeed achieved.

It would also be naive to attribute all growth in trade to free trade agreements and then ignore the advances in internet communications, better transport system, a growing Asian middle class, and, most importantly, changes in Australian currency values. All of these things have had a real impact on trade between Australia and other countries. Indeed, it would seem to me—and I have made this point previously—that the fall in the Australian dollar from over US $1 last year to somewhere around US $0.70 cents to the dollar this year well and truly overshadows any reduction or elimination of tariffs in this agreement. I also note that China, Japan and the USA, all three of whom are major trading partners with Australia, were already major trading partners with Australia before we entered into any free trade agreements with them. Indeed, I have heard members opposite come into the chamber and speak in respect of this bill about the importance of our trade with each of those countries, and in particular with China. They have quite rightly pointed out the significance of that trade. I say to those members: it occurred without a free trade agreement. So, again, let's be realistic about what we can achieve with trade agreements.

It is also the case that the benefits of this agreement have been exaggerated. Many of my colleagues on this side of the House spoke about the exaggeration of the number of people who were going to be employed as a result of this agreement. Many members opposite have put forward what I would call grossly exaggerated new employment figures that will arise from the agreement. The truth of the matter is that we do not know how many jobs will be created. I might come back to that point a bit later on, because I have made the point that there are winners and losers in every agreement, and there are losers in this agreement, and jobs will be lost in some sectors as a result of the agreement. But, of course, they might be offset by those factors that hopefully will grow.

The truth of the matter is that trade, with or without a trade agreement, is driven by demand, supply and by price, and always has been. As an example of that point, in recent times live exports to Vietnam have risen sharply without a free trade agreement. Processed beef sales to China also escalated in recent years and are currently near the quota allowed under the agreement. Again, that all occurred without a free trade agreement.

On that very point I also note that in this agreement there are quotas that apply to some products. Those quotas—at least, those that I have been able to detect—apply to beef, wool, and milk powder, which are three products that members opposite have relied upon to argue the importance of having this agreement in place. With quotas in place, it limits the amount of growth for those sectors, albeit that some of them might still be able to grow in export sales to China. With respect to beef, we are already selling over 160,000 tonnes of beef per year to China, and with a quota of 170,000 tonnes locked in for the next four years, there is little prospect for new beef sales to China on the basis of this agreement. But, nevertheless, I am just pointing that out as a matter of fact.

I am also concerned not so much with quotas as I am with what I would refer to 'behind the border barriers', which I have no doubt will be imposed by the Chinese authorities if it suits their purpose. If it does not, obviously they will not. I also note the emphasis that has been made on the growth opportunities for the services sectors in Australia under this agreement. I quote from an article written by Angus Grigg in The Australian Financial Review of 24 June 2015: 'Telecommunications concessions, which were trumpeted by the government as the most extensive commitments in any agreement to date, were two months later—that is, in January of this year—all given to firms from other countries.' Again, it is one of the concessions supposedly granted to Australia that made this agreement extra-special for us, but two months later all of those concessions were given to other countries. The story also points out that concessions handed to Australian banks around the trading of the yuan were also given to others. In addition, import duties on 14 consumer goods would be cut in half, regardless of which country they were imported from. The point I strongly make about this is that the concessions Australia believed it had won as a result of the negotiations with China over this agreement have already begun to slip through our fingers, because the Chinese are granting those same concessions to other parties and other countries of the world.

I spoke earlier about the exaggerated jobs claims. Again, I simply make this point to those members opposite who have come into the chamber and criticised some of the unions for taking a stand on behalf of jobs and job seekers in this country: the truth of the mater is that it is on those very points that the negotiations took place between the government and the Labor Party. Concession were made, and those concessions are testimony to the fact that the stance taken by the unions, the Labor Party, and others, with respect to standing up for jobs in this country, were valid concerns. I also make this point about the issue of jobs and the ability to bring foreign labour into the country as a result of the agreement.

If the provisions did not mean what we believed them to mean and if there was no risk to Australian jobs at all, why were the provisions written into the agreement in the first place? Why did they appear in this agreement when no similar provisions appeared in any other agreement? That is a question for the government to answer. But the truth of the matter is that when you read the agreement—and it has now been read by several independent experts—there was a risk of Australians losing jobs to foreigners as a result. The point about the $150 million investment project in Australia also needs to be clarified, because the Chinese investment in that program needs to be only 15 per cent—in other words, $22½ million.

I now turn to the three contentious issues that were the subject of the negotiations between the government and the Labor Party. These issues relate to the use of Chinese labour, which I just referred to a moment ago, the recognition of overseas skills and the temporary skilled migration income threshold. On all three of those matters, I believe that progress has been made. Did we go as far as I would have liked to have seen us go? The answer is no. I believe that we could have gone further. The government should have conceded more ground on those issues because there is still considerable uncertainty as a result of the agreement reached. But, nevertheless, I accept that it is progress with respect to the agreement and it does provide a better agreement than the one we were originally presented with.

I also make this point about having any kind of regulation or law entrenched in some piece of legislation. I spoke only last week about the issue of 457 visas, which come in under strict laws, supposedly. The truth of the matter is that, unless those laws are enforced and unless the authority that is tasked with enforcing those laws is adequately resourced, it really does not matter how watertight those provisions are when written into law. They can still be circumvented by shrewd and smart operators—and that is exactly what is already happening. So I simply make the point that I would like to think that, whatever agreement was reached between the government and the opposition on this matter, those provisions will be implemented and enforced and that the departments tasked with enforcing them will be properly resourced.

I close on this point. I have several acquaintances—people I have known for years—who already do business with China and, indeed, with other countries, and who have done so for years. They were never reliant on a free trade agreement. They were reliant on their entrepreneurial skills, their business skills, and on identifying opportunities and making the relevant and necessary contacts that they had to make. This agreement will be useful in assisting people who want to trade with China; but, at the end of the day, it will still be up to each individual who has a product to sell to do their own negotiations and to enter into their own buying and selling arrangements with the Chinese company or entity that they are dealing with. On that note, I conclude my remarks.