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Wednesday, 23 June 2004
Page: 31258


Dr EMERSON (1:24 PM) —Labor is not opposing passage of the FTA-enabling legislation through the House, but Labor is reserving its position in the Senate. Labor has not made a decision to support this legislation in the Senate, nor has it made a decision to oppose it. When we say we are reserving our position, we mean it. The reasons for Labor's stance on the FTA are set out, in part, in the second reading amendment, which will read as follows:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the Bill a second reading, the House:

(a) notes that in response to the Government's announcement that it had completed negotiations on a free trade agreement (FTA) with the United States the Senate established a Select Committee to examine the FTA in its entirety;

(b) condemns the Government for bringing on debate on this Bill before the Senate Select Committee on the FTA has reported and only one hour after the Joint Standing Committee on Treaties has reported; and

(c) notes the wide ranging ramifications of the FTA and its implications for many aspects of Australia's economic, trade, foreign, health—particularly the pharmaceutical benefits scheme, copyright, intellectual property, manufacturing, audio-visual and media policies require it to be thoroughly assessed to determine it is in Australia's national interest”.

Labor has been obliged to limit the length of the second reading amendment out of parliamentary necessity, but Labor's concerns go further, so we ask that the House:

(d) notes the US Congress is given the opportunity to scrutinise the text of the FTA and it is only fair and reasonable that the Australian Parliament also be given the opportunity to thoroughly examine the text of the deal;

(e) notes the US Congress will not be likely voting on the FTA until the middle of July;

(f) notes that through their deliberations the Joint Standing Committee on Treaties and the Senate Select Committee on the FTA have become aware of major community concerns arising in regard to many elements of the FTA. In particular, concern extends to:

(i) the potential for the FTA to undermine the pharmaceutical benefits scheme (PBS) and lead to an increase in the price of drugs via the establishment of a `review mechanism', the details of which are not yet available;

(ii) changes to the Therapeutic Goods Act, that may lead to a delay in the introduction of generic drugs onto the PBS;

(iii) possible changes to the current arrangements for the supply of blood fractionation services.

(g) Other concerns about the FTA extend but are not limited to:

(i) the potential impact on Australia's credibility in the WTO, our leadership of the Cairns Group, reputation in APEC and commitment to genuine free trade;

(ii) uncertainty surrounding the modelling results commissioned by the Government and other parties and the Government's refusal to have the Productivity Commission assess the deal;

(iii) the exclusion of sugar, long phase-ins for other agricultural products, establishment of a new Sanitary and Phytosanitary (SPS) committee, and failure to get a most favoured nation provision (MFN) in the agreement on agriculture, similar to that achieved for services and investment, to capture benefits the US may provide in other FTAs it negotiates;

(iv) changes to Australia's Copyright Act 1968 and intellectual property laws including but not limited to copyright term extension, internet service provider liability, software patents, circumvention devices and the commercialisation of publicly funded Research and Development; and

(v) uncertainty surrounding the capacity of future Australian Governments to regulate for local Australian content on future audio-visual mechanisms; and whether the term `interactive audio and/or video services' is broad enough to capture future developments in this area.

You can see from the length of our concerns that Labor will not be in a position to support this legislation through the parliament, nor should we be pressured into such a position. The decision on whether or not to support this so-called free trade agreement is a huge issue for the Australian parliament. It requires careful consideration based on facts, not myths or preconceptions. Labor will not be intimidated into a position on the FTA by the government's grotesque attempts to portray Labor as anti-American if we do not support the FTA.

The government and its cheer squad in the media were demanding that Labor support the FTA before it was even negotiated. We well recall the high farce of the government screaming that Labor were anti-American and un-Australian if we did not vote for a deal that we had not even seen. Remember the 1,000-page document that was to be released but was held up while the lawyers scrubbed it. This is a document that at that time was not available to the parliament and yet, at that time, the government was demanding that we agree to it sight unseen. Two parliamentary committees have been scrutinising that 1,000-page document, as they properly should. They have been taking evidence and allowing Australians to appear to express their views, and they have been conducting economic analysis.

What has happened to the work of these committees? The Joint Standing Committee on Treaties reported just a couple of hours ago, and the Senate Select Committee on the Free Trade Agreement between Australia and the United States of America has not yet reported. It is due to report on 12 August, with an interim report due out tomorrow. However, such is the contempt with which the government holds parliament and its committees that it is forcing a vote on the free trade agreement today. This is outrageous. The United States has much more transparent, consultative and accountable processes for evaluating trade deals. The work of its committees is taken seriously by the US Congress and that is why the congress is not expected to vote on the FTA until the middle of July. Yet, this government expects the Australian parliament to vote on it today. If it is good enough for a great democracy like the United States to take the time needed to assess whether a trade deal is in America's national interest, why is it not good enough for our great democracy to take the necessary time to determine whether this deal is in Australia's national interest? Why is the government afraid of this trade deal being subjected to proper scrutiny?

The parliament would do well to recall attempts by the government to suppress the results of economic modelling that it commissioned which were unfavourable to the trade deal. I had to pursue that particular report through FOI legislation when the government point-blank refused to release the report through the Senate estimates process. The report to which I refer is the report of ACIL Tasman, which—when we did finally get our hands on that document through FOI processes—concluded from its modelling:

... an FTA with the US, even if fully achieved, would ... leave Australians as a whole worse off.

The Productivity Commission found that 12 out of 18 bilateral trade agreements diverted more trade than they created—that is, they cost more than they gained for those countries. Of course, we do not hear the government promoting that Productivity Commission report at all. The only report the government promotes is a report prepared by the Centre for International Economics. The original CIE report was prepared well before the trade negotiations had been completed. It concluded that a pure free trade deal could generate benefits to Australia of up to $4 billion a year. However, that report and the modelling assumed full free trade and the total abolition of the Foreign Investment Review Board.

The same outfit, the CIE, then modelled the actual deal as it was negotiated, because it was commissioned by the government to do it. Let us recall that the actual deal contains no improved access for sugar, it contains a slow phase-in for beef and other agricultural products and it involves not the abolition of the Foreign Investment Review Board but a lifting of the threshold on non-sensitive investments from the United States from $50 million to $800 million. Clearly, the actual deal is a much lesser trade and investment liberalisation deal than that which was assumed in the original CIE study. Yet, rather than the benefits to Australia being smaller, magically, according to the CIE, they are much larger—not at $4 billion, but at $6 billion. It is like the magic pudding: the less there is in the trade deal, the greater the benefits to Australia. If we take that to its logical extension, if we were left with only a cover page on the agreement, the benefits to Australia would be massive! The smaller the liberalisation, the greater the benefits to Australia—so absurd is the modelling on which the government has relied and which it promotes so mindlessly and energetically, as the minister did today. Professor Ross Garnaut, author of Australia and the Northeast Asian Ascendancy, has described this modelling work as failing to pass the laugh test—and it is laughable. Yet the government promotes it as if Australia would get benefits of $6 billion.

The Senate select committee commissioned Dr Philippa Dee, who came up with her modelling results of a much smaller amount—a trivially small amount—of just $53 million per annum. Dr Philippa Dee's report says:

On a strict cost-benefit calculation, the agreement is of marginal benefit to Australia, and possibly of negative benefit given some of the pernicious but unquantifiable elements in the intellectual property chapter.

So that is some dispassionate analysis by a former member or contributor to the Productivity Commission, Dr Philippa Dee. But the government has steadfastly refused to send this trade deal to the Productivity Commission for assessment. The reason is that it is terrified about the possible results of such an inquiry by the Productivity Commission, which would be capable of looking at this objectively and would have the resources to do the modelling properly.

An area of great community concern relates to the implications of the FTA for Australia's Pharmaceutical Benefits Scheme. A range of medical experts have raised legitimate issues about the potential for the FTA to undermine the Pharmaceutical Benefits Scheme or lead to an increase in the cost of prescription medicines to Australia. Under the FTA, a review mechanism will be established to allow drug companies to have an unsuccessful drug listing application reviewed by a new committee. Despite repeated questioning of officials, the government has not been able to advise who will sit on the committee, who will determine its agenda and how it will interact with the Pharmaceutical Benefits Advisory Committee. It is simply not acceptable that the parliament is being forced to vote on this bill when all of the details required to make a proper assessment of the impact of the FTA on the PBS are not yet available.

There is also valid community concern that changes to the Therapeutic Goods Act arising from the FTA may give rise to delays in generic drugs coming onto the market. Under the FTA, generic drug companies must notify an innovator drug company if they want to challenge the validity of a drug patent. The Australian community deserves the assurance that this change to the Therapeutic Goods Act will not lead to a delay in the introduction of generic drugs onto the PBS. Any delay in the introduction of generic drugs onto the Pharmaceutical Benefits Scheme has the potential to undermine the financial viability of the PBS. Labor have made it abundantly clear that we will not support the FTA if there is any possibility it will undermine the PBS or increase the price of drugs in Australia.

Concern has also been expressed about the arrangements entered into by the government for the supply of blood fractionation services. The scientific integrity of blood plasma products produced in Australia is of paramount importance in maintaining confidence in the safety of these products. Any future changes to blood fractionation arrangements arising from the FTA must be conducted in full consultation with all parties associated with this important service. Health and safety considerations must also be paramount in determining any new arrangements that may be put in place.

I now turn to agriculture. Under the deal, all US agricultural exports to Australia will receive duty-free access, but Australia never gets free market access for agricultural products to the United States. Despite all the promises, commitments and claims that sugar was on the negotiating table and despite the Deputy Prime Minister saying that it would be un-Australian if sugar were not in the deal, not one extra grain of Australian sugar will go to the United States from Australia under this deal.

The deal does not remove US tariffs on Australian dairy products and maintains US tariffs on Australian beef exports for 18 years. Australian beef will also be subject to ongoing price safeguards that can be invoked if the price of beef falls in the United States. Australian horticultural exports, such as tomatoes, onions, garlic and orange and other fruit juices, will also be subject to onerous price safeguards in the event that the prices of these products fall in the United States. The imposition of these safeguards is completely against the spirit of the deal and undermines yet again the ridiculous claim that this is a free trade agreement.

Quarantine issues are also an extremely sensitive aspect of the FTA that have given rise to legitimate community concerns. Again, the government has not been able to advise the parliament who will sit on a quarantine committee that will be established or how it will interact with our science based quarantine import risk assessments. Despite repeated questioning of government officials, it is not yet clear who will determine the composition of the quarantine committee, who will be appointed to the committee, what committee members' qualifications will be, who will determine the committee's agenda and, most importantly, how the committee will interact with Australia's science based quarantine import risk assessments. There is already a great deal of anger in Australia's rural and regional areas about the government's handling of import risk assessments released this year on pork, apples and bananas. It is of paramount importance that the government does not further undermine confidence in the integrity of our quarantine arrangements by introducing new processes via the FTA that undermine our science based approach.

The government has failed to get most favoured nation treatment on agriculture, which is important in preventing the negotiation by the United States of other trade deals that would discriminate against Australian agricultural exporters. Impacts on the Australian manufacturing sector are highly uncertain, and grave concerns have been expressed—for example, in respect of the automotive industry. Will the rules of origin restrict motor vehicle exports to the United States? This is something that deserves proper scrutiny. Certainly the rules of origin in this deal will prevent extra textiles and clothing exports being able to enter the United States duty free.

I turn now to copyright. There is the so-called mickey mouse clause that would extend copyright protection from 50 to 70 years. Philippa Dee of the Australian National University has estimated that this would cost Australia $88 million a year, or $700 million, in net present value terms. There are other legitimate concerns in respect of the commercialisation of publicly funded research and development, and there are restrictions on the capacity of Australian governments in the future to regulate local content.

We have a number of actors and directors in the parliament at the moment, such as Geoffrey Rush, Sigrid Thornton, David Wenham and Toni Collette, just to name a few. Government ministers allege that anyone who questions the merits of the free trade agreement is somehow anti-American, implying that we are not patriotic, that we are not good Australians. Certainly the Minister for Foreign Affairs likes to say that people are anti-American if they do not support this deal. When I pressed the Minister for Trade on this, after he had said similar things—that our strategic alliance with the United States and the FTA were inextricably bound up—he denied it and said on 26 March 2003:

It is absolutely clear there is no ambiguity about our position that these two policy settings, in terms of the strategic security policy and our economic and trade policy, are clearly separate and heading in a particular direction and are absolutely based on the merits.

Tell that to Tony Abbott, the Minister for Health and Ageing, who said just last week on the Sunday program hosted by Laurie Oakes:

... the big question, Laurie, is does the Labor Party support the US free trade agreement. They say they support the alliance, but it's hard to see how they can support the alliance if they don't support the free trade agreement.

How outrageous is that? What a slur on the Australian Labor Party and on any Australian who happens to question the merits of the FTA to say that in some way that means we are questioning the alliance with the United States. Is Geoffrey Rush anti-American? Is Sigrid Thornton anti-American? Is David Wenham anti-American? Is Toni Collette anti-American? Are Gillian Armstrong, Phillip Noyce and Ray Lawrence anti-American because they have the temerity to question whether this trade deal might affect the ability of a future Australian government to regulate local content? This is an outrageous slur from the minister for health, and he should come into this parliament and apologise. It is typical of this government to try to run a political argument against anyone who happens to question the merits or any aspect of the trade agreement by suggesting or asserting that they are anti-American for doing so and that they do not support the alliance. It is an outrageous slur.

I turn now to global trade liberalisation. The proliferation of preferential free trade agreements, which are not free trade agreements at all, is dealing a severe blow to the global round of multilateral trade negotiations. This proliferation is so damaging, in our region and beyond, that the continued viability of the WTO is being undermined. Certainly, the negotiations for the Doha Round of multilateral trade negotiations are being put in jeopardy by the focus on bilateral, preferential deals. China, for example, has observed this proliferation of preferential trade deals and, partly in response, has already agreed to an early harvest for Thailand in a preferential trade deal that it is negotiating, such that Thailand will have preferential access to the Chinese market that will not be enjoyed by Australia. We do not want to see this sort of thing repeated. The problem with this proliferation of bilateral trade deals is that it can lead to tragic results for the prosperity of everyone on this earth.

No modelling can capture the losses from the disintegration of the global trading system in which the Australian government is playing a willing part. The fact is that this government has blinked and it has undermined our credibility in the global trade negotiations. It has effectively told the WTO negotiators and countries in the global trade negotiations that we are willing to exclude sugar from any global trade negotiations. It has told those negotiators and those countries that the Australian government is weak on other agricultural products and it is prepared to abandon sugar and to be weak on other agricultural products. This government has blinked.

Professor Ross Garnaut, whom I mentioned earlier, author of Australia and the Northeast Asian Ascendency and one of the architects of the 1980s trade liberalisation program under Labor—which, along with other economic reforms, has led to record productivity growth in this country—is, to put it mildly, very critical of this trade deal. He has indicated that the Centre for International Economics modelling, which was commissioned by the government, fails to pass the laugh test. Another good Australian, a patriotic Australian, Professor Peter Drysdale provided a submission to the Senate select committee. Professor Drysdale said:

On balance the Agreement negotiated is likely to divert as much trade as it creates ...

He went on to say:

On the evidence of the Government's own study, this is an Agreement the direct trade effects of which appear likely to damage Australia's economic interests. An important element in the calculation of the direct costs and benefits of the trade effects of the USFTA suggest that income losses through trade diversion will exceed income gains from trade creation by a small but significant margin.

And he refers to table 7.1 on page 83 of the CIE report. So Professor Garnaut is highly critical and Professor Drysdale is highly critical. On behalf of the Labor Party I say: let the Senate select committee complete its work so the Australian parliament can make an informed judgment on whether this deal is in the national interest. As far as Labor is concerned, the deal must be in Australia's national interest.

The government should be condemned for repeatedly claiming that Labor is anti-American for not immediately agreeing to this trade deal. Labor is not anti-American; Labor is pro-Australian. The test must always be whether this trade deal is in Australia's national interest. That is the test that Labor will apply after the Senate inquiry has been completed. We will not be railroaded, we will not be intimidated and we will not be bullied into making a decision on this trade deal before it has received proper scrutiny from the Senate select committee. We will not be intimidated by outrageous slurs about our patriotism. We will not be intimidated into signing up to a deal that has not been properly assessed by the Australian parliament on behalf of our great country. We will make sure that that assessment is completed, and we will then make our decisions on the merits of the case. We will not be bullied or intimidated by a government that called for Labor to sign up to this deal before we had even seen the deal—a 1,000 page document, a very complex document—and then said, `If you don't sign this deal you're anti-American.' That is absolutely outrageous.


Mrs De-Anne Kelly —You are—just listen to your leader.


Dr EMERSON —We have just heard the member for Dawson repeat that outrageous slur. The fact is that the Australian Labor Party, as it does with all matters, will assess whether the US-Australia trade agreement is in Australia's national interest. The Australian people should expect no less of the Australian Labor Party. But the Australian people are getting much less from the coalition government, because the coalition government was committed to this deal before the ink had even dried on the agreement. The government was committed to this deal before it had been scrubbed by the lawyers. Even at that time, the government was already screaming that Labor must sign up to this agreement. We will not be railroaded. We will not be intimidated. We will allow the Senate select committee to complete its work. Once that work is completed and we have made an assessment of the work of the Senate select committee, we will make an objective decision on the merits of the trade deal between Australia and the United States. I formally move the second reading amendment:

That all words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the bill a second reading, the House:

(a) notes that in response to the Government's announcement that it had completed negotiations on a free trade agreement (FTA) with the United States the Senate established a Select Committee to examine the FTA in its entirety;

(b) condemns the Government for bringing on debate on this bill before the Senate Select Committee on the FTA has reported and only one hour after the Joint Standing Committee on Treaties has reported;

(c) notes the wide ranging ramifications of the FTA and its implications for many aspects of Australia's economic, trade, foreign, health - particularly the pharmaceutical benefits scheme, copyright, intellectual property, manufacturing, audio-visual and media policies require it to be thoroughly assessed to determine it is in Australia's national interest”.


The DEPUTY SPEAKER (Mr Jenkins)—Is the amendment seconded?


Mr Zahra —I second the amendment.