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Monday, 15 September 2003
Page: 19989


Mr HUNT (1:10 PM) —I move:

That this House:

(1) supports the development of bilateral free trade agreements with both China and Japan;

(2) acknowledges the close partnership that Australia has developed with both Japan and China;

(3) notes the importance of trade with Japan, Australia's principal trading partner;

(4) notes the importance of rapidly growing trade with China which has a real annual growth rate of 7 per cent;

(5) acknowledges the massive economic and social benefits of a genuine free trade agreement with both China and Japan to all parties;

(6) realises that the ASEAN Free Trade Area, the proposed China-ASEAN FTA and Japan's proposal for a comprehensive regional economic partnership reflect the fact that China and Japan recognise that free and open trade is the best guarantee of economic prosperity and growth;

(7) commits to an international free trade agenda understanding that bilateral free trade agree-ments can complement and encourage wider free trade objectives in APEC and the WTO;

(8) forcefully supports an international free trade agenda as a driver for global economic pros-perity, improved living standards and greater opportunities for the developing world; and

(9) commends the efforts of Japan and China to enhance global free trade, in particular, China's efforts to reduce average tariff rates from 40 per cent a decade ago to 11.5 per cent today.

The concept of free trade with Japan and with China is about two very simple things. Firstly, it is about jobs—jobs for companies such as Braemar Manufacturing in Koo Wee Rup; Sealite navigation beacons in Somerville; BHP Steel in Hastings, the largest employer in the electorate of Flinders; and Enviro-Mulch in Rosebud—and, secondly, it is about better living standards for families in Cowes, Lang Lang, Dromana, Rye and Mount Martha.

In addressing this motion, I wish to proceed in three stages. Firstly, I want to answer these questions: what are the benefits of free trade; what are the reasons we pursue free trade; and why is it in Australia's interests? Secondly, I want to look at how exactly Australia is pursuing those interests and making Australia a more open society and part of a more open international trading economy. Thirdly, I want to address the specific question of the benefits that would flow to Australia—and to China and Japan—from free trade agreements with each of those two countries.

Let us turn first to the question of the benefits of free trade. The theory is very simple. The theory is about comparative advantage and that is about two things: firstly, that nations and regions are able to specialise in those things in which they are most capable; and, secondly, that we expand our market from being a nation with a trading range of 19 million to 20 million people to being a nation with a trading range of hundreds of millions of people. That is commonsense. In that context, the notion of paying out subsidies to our own businesses is counterproductive. It takes away the standards which ordinary Australians aspire to by taking money out of their pockets to subsidise businesses which are ultimately unproductive. In my maiden speech I made the point that I was for moving towards zero tariffs in Australia; nineteen months later I reaffirm that commitment.

But why does it matter? It is very simple. One in five Australian jobs relies on exports. A 10 per cent increase in exports would lead to an increase of 70,000 new jobs for Australians—real jobs, which would have an impact on people. And not just any jobs. The average job in a firm which is involved in export pays approximately $17,500 per annum more than the average non export related job in Australia—and that matters. In addition, trade gives ordinary families access to a wider range of products at lower prices. Those are real benefits for real families—and they matter.

In rural and regional Australia—in areas such as Lang Lang, Kooweerup, Cowes and San Remo in the electorate of Flinders—one in four jobs comes from exporting. If we can expand our opportunities for export and the range of possible destinations then we will provide all Australians with an opportunity for an improved living standard. A very simple example is that in 2002 Australian goods and services that were exported were valued at $151 billion—and $151 billion is an extraordinary part of the gross domestic product of Australia. It represents income which would not otherwise be available to Australian families, Australian workers and Australian producers—income as a real result of our trade.

In my own electorate of Flinders, I note that Australia has rapidly become the fourth largest exporter of wine after France, Italy and Spain, and that those exports topped $2 billion in 2002. Again, this leads to jobs and to rising living standards and has an impact on people's lives. In that context, Australia is pursuing a three-tiered approach to trade: at the multilateral level through the World Trade Organisation—and we see from Cancun that this is a difficult and slow road; at the regional level through APEC and through closer economic partnership with ASEAN; and bilaterally through free trade negotiations with Singapore, Thailand and the United States. It is estimated that annually the value of a free trade agreement with the United States is $4 billion to Australia, or over $200 to every Australian man, woman and child—and that matters; that makes a real difference to people's lives.

I raise the question of trade with Japan and China, as they are two enormous markets with extraordinary potential for Australia. They will have a significant impact on the way we will be able to produce, create jobs and provide opportunities. Australia is already giving high priority to negotiations with Japan. In 2002 the Prime Minister, in discussions with the Japanese Prime Minister, Mr Koizumi, established the basis for a trade and economic framework agreement with Japan. Japan is the destination for over $25 billion worth of our goods and service exports and it is our single biggest export market. Opportunities exist for our exporters—whether it be our rice producers or our steelmakers such as BHP Steel in Hastings, which employs over 1,400 workers—to export their products to Japan. These exports are, at the moment, less than they should otherwise be. Increasing exports is a good thing; it creates jobs and provides opportunities.

Whilst the framework agreement is not in itself a free trade agreement, it does lay the foundation, the way forward. This, in turn, gives a direct and immediate benefit to Australia and a new standard for the process of multilateral trade negotiation. Multilateral trade negotiation is a very difficult process. The risk that we frequently face is that we will follow the path of the lowest common denominator, because there are multiple countries with multiple interests and to find agreement can be very difficult. Japan has recently established a free trade agreement with Singapore and is in the process of establishing agreements with other countries within the ASEAN region. China is also doing the same thing. China has, not surprisingly, recently concluded a free trade agreement with Hong Kong and, importantly, is negotiating a free trade agreement with ASEAN. If we do not participate in this bilateral approach to free trade agreements, companies such as Braemar in Koo Wee Rup or Sealite in Somerville risk being excluded. In participating in this bilateral approach to free trade agreements, there is a positive benefit for Australia, there is a positive benefit for international markets in creating an international environment for freer trade, and there is also a defensive role—that is, to ensure that we are part of a process which is occurring in any event.

We cannot hide from the process of globalisation and we cannot hide from the fact that there is an increasingly open international trading environment. The effect of this is good, but not just for Australia. Oxfam recently prepared a paper which showed that the single greatest impact on the quality of life and living standards in the developing world is not aid—although that plays an important role—but the promulgation of genuinely open markets. Europe and the United States have, to a certain extent, played a role in closing off those markets. If we can open up that environment and those markets, we will be doing something to help deal with issues of underprivilege, underdevelopment and poverty within that part of the world which cannot yet claim to be fully developed. That is a very important humanitarian step as well as sound economics.

The Prime Minister, in his recent meeting with the former Chinese Premier Zhu Rongji in May 2002, developed the basis for a free trade agreement by moving towards a framework agreement, and this was played through in his most recent meeting with Hu Jintao, the Chinese leader. They have set themselves on a long-term path for an agreement between the two countries. I welcome our progress with Japan and China. I make this point: these free trade agreements will bring benefits and jobs for Australian families and improve the living standards of families throughout Flinders. (Time expired)


The DEPUTY SPEAKER (Hon. I.R. Causley)—Is the motion seconded?


Mr Johnson —I second the motion and reserve my right to speak.