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Wednesday, 23 June 2004
Page: 31310


Mr CREAN (4:55 PM) —The US Free Trade Agreement Implementation Bill 2004 and the US Free Trade Agreement Implementation (Customs Tariff) Bill 2004 are important bills before the chamber today, but what is more important is to ensure that the parliament gets its response to them right. Labor is not opposed at this point to the free trade agreement with the United States, but we are not convinced that the assertions just repeated by the member for Cook actually bear out. If they do not bear out, if the national interest is not being served in the way in which he asserted—indeed, if the national interest is being eroded—then not only do the Australian people deserve to know but we need to consider how amendments or corrections in relation to those concerns can be addressed.

The truth is that this legislation is premature, and it is premature not because there has been an agreement struck with the United States but because the parliament has established a process to determine the benefits or otherwise to this country—a process agreed to by both sides of parliament and which has not yet concluded. This legislation today is pre-emptive and premature. The government is pushing these bills through the House, when the Senate Select Committee on the Free Trade Agreement between Australia and the United States of America—a committee agreed to be conducted by both sides of the parliament—has not yet reported. It is due to report by the end of next month or at the beginning of August. It is no different from the parliamentary process in the United States. It is a process for scrutiny, analysis and voting. But what does the government do in this chamber? It brings on the vote before the process is concluded. That is our concern.

It may well be that the benefits that are talked of do exist. But the sorts of assertions made by the member for Cook have been discredited to some great extent in the Senate inquiry process. Professor Garnaut, whom the member for Cook simply wants to dismiss because he happened to work at some stage for Prime Minister Hawke, said that the economic modelling upon which the government relied did not pass the laugh test. I think when someone who has done analysis and who comes and presents evidence before a parliamentary committee inquiry says something like that, we should take some notice. Maybe he is wrong but, if he is right and the government's assertions in relation to this deal do not stack up, Australia could be the worse off for it.

This legislation came into this chamber not 60 minutes after the Joint Standing Committee on Treaties reported on the agreement. That was another mechanism put in place to report to the House. Within an hour of that committee reporting, in which a number of people said that they wanted more time for the Senate process to conclude, the government said: `Ignore that. We'll bring the legislation on immediately.' This is a government calling for a vote before all the review processes have been adequately considered. It is, in effect, a political stunt. There has not been a careful and measured approach in considering the national interest, which Labor always said should be the test for this agreement. It is grandstanding in the lead-up to an election. I said before that the United States still have not concluded their deliberations, and we all know they have an election coming up too. If it is good enough for the United States to subject it to proper scrutiny and to a course of action, why not Australia? Why not do it here in this parliament as well?

It is not just the process of bringing this legislation before the parliament that is flawed; the process that the government adopted in relation to this agreement has been flawed from the beginning. If you are going to get these things up you need to try and get bipartisan support, because of the many different facets involved. This government rejected Labor's open and bipartisan approach to trying to get agreement in relation to this FTA.

When work began on the trade agreement, Labor sought to be part of the discussion and play a constructive and bipartisan role. The US trade representative who has carriage of this, Mr Bob Zoellick, publicly commented in March 2001 that he hoped that the agreement could be approached in a bipartisan way. Labor had its trade spokesman meet with Mr Zoellick and Mr Vaile to explore the bipartisan approach further. When I was opposition leader I met with Mr Zoellick in 2002. But the promise of the bipartisan approach has never been acted upon by the Howard government. As soon as the negotiations began, the government stopped any bipartisan cooperation. They said they supported the words, but they did not follow them up with the actions. They cut Labor out of the negotiations.

We said from the beginning in relation to this agreement that the test that had to be met was twofold. First of all, the agreement had to be comprehensive. It had to be consistent with the international approach that we had been adopting—the multilateral approach to openness in our trading circumstances. That was the first test. Yes, the agreement should be bilateral, but it had to be consistent with further opening-up in terms of the multilateral circumstances and the multilateral framework. The second test was that it had to be good for the country. It had to be in our national interest. If it was in the national interest then Labor would support it. That is what we have said from day one. We were prepared to be bipartisan in approach and involved in the process and negotiations, but, in the end, we would vote for it if it was good for the country and if what it did was consistent with advancing our interests in the WTO rounds.

But this deal leaves many issues unresolved. It is why the parliament called for a Senate committee—a process which even the Americans are pursuing. There are mechanisms available to deal with the valid concerns that get raised without rejecting the whole agreement or entering into significant renegotiations. What the government should be doing is siding with Labor and ensuring that unresolved questions are thoroughly considered in the parliamentary review processes. If there are concerns, let us try to address them. It is not a question of throwing the baby out with the bathwater; it is a case of genuine scrutiny and analysis. If there are problems, let us try and deal with them. Let us try and get agreement about them.

This FTA contains unresolved concerns in relation to the Pharmaceutical Benefits Scheme. We need to be sure that the so-called independent review, the mechanism for the Pharmaceutical Benefits Advisory Council, will not undermine this vital Pharmaceutical Benefits Scheme. The government needs to clarify the nature of the review. There is no good in the member for Cook coming in and asserting that there is no problem. There are many problems, and people who have come along and presented evidence before the Senate committee have pointed to them. We need proper clarification on those points. The Australian people do. What is wrong with getting it? This is not a block; this is some genuine scrutiny in an attempt to preserve the PBS.

We also need to be sure that the procompetitive role of the generic drugs sector is not threatened. The member for Cook again says that this issue is clarified. But, when patents expire, generic drug producers can enter the market. That is the importance of it. That brings the prices down and it helps to keep the cost of the PBS down. So this is important for us as a nation in terms of keeping control of the cost of the PBS. But the patent holders can stop this by continual litigation. It is a process called evergreening and it is a major problem in Canada. What we want the government to do is ensure that the agreement does not provide for evergreening. If we are going to let the generics in, and if that is a good thing and we say that by agreement, then do not undermine the agreement by letting this evergreening occur in the courts. That is what we are saying. We want some undertakings in that regard.

Our concern in relation to the Pharmaceutical Benefits Scheme is the same on the international front as it is on the domestic front. We have to balance the imperative to put the PBS on a sustainable footing, one that we can afford over time as the demands on it grow, while ensuring that we meet the needs of Australian families. That is why, after two years of putting forward constructive proposals to reduce the cost of the PBS, including a further proposal that we put to the government as recently as two weeks ago, Labor took a decision that, in the event of the government rejecting our solutions, we would pass the PBS bill. The choice facing families is clear. If re-elected, the Howard-Costello government would put up the PBS by 30 per cent and then some. If elected, Labor would put in place our reforms, which the government has refused to countenance and refused to respond to. We would put in place those reforms which will allow us to better meet the needs of Australian families without the Howard-Costello 30 per cent solution. Our concerns with the PBS in this FTA are the same. We do not want the free trade agreement to undermine the PBS by simply creating a mechanism which slugs our families.

It is very interesting that this agreement also contains a most favoured nation clause on investment and services, but it does not include a most favoured nation clause on agriculture. Why not? If it is possible to negotiate one for the services and investment sector with the United States, why not one for agriculture? I will give you an example of why this is important. You know the sugar farmers were dudded in this agreement. They got no improved access. But after we signed off with no deal for the sugar growers, in December last year the US then negotiated an agreement with Central American nations—CAFTA. This provided access for them into the US sugar market. The special relationship John Howard has in being able to pick up the phone to George Bush did not work. But if we had negotiated a most favoured nation provision—such that if the US gave another country a better go we are entitled to come in on it—then our sugar farmers would have benefited.

Why is it that we have a most favoured nation provision on investment and services but not on agriculture? The Nationals should hang their heads in shame in allowing this agreement, particularly in the absence of such a provision. We can still seek a side letter for Australia to ensure most favoured nation status across all sectors, and that is what we should be doing. We should be doing it for our farmers—it is a better deal. They have a dud deal in many respects and they should be getting more. We believe this approach could do that.

As proof that the Prime Minister had negotiated an incomplete deal, he rushed out to compensate the sugar families that he had dudded. But there are other sectors that are also going to be adversely affected by this agreement. We believe that the government needs to consider offering adjustment packages to those sectors affected by this agreement. There are concerns about the possibility of job losses in the motor vehicles, TCF and metalworking sectors. Why are we only looking to adjustment packages, as a consequence of this agreement, for sugar farmers and not others that will be affected?

Faced with a deal that was not what the Prime Minister had hoped for after staking his reputation on that special relationship with President Bush, the Prime Minister needed a diversion. He then said it was important to get it up because it was important to secure the Australia-US alliance. What nonsense. The Prime Minister has tried to link the US alliance to this free trade agreement. He sees that Australia's commitment to ratifying this agreement is central to the alliance, but that is clearly not the case. Free trade agreements are about market access. They are economic agreements and they need to be evaluated in economic terms. Assessment of this free trade agreement should be based solely on whether it is a good deal for Australia, its industries, its capacity to grow and its capacity to get access to those overseas markets. It has always been the test that Labor has wanted to apply to this agreement.

This FTA also needs to be seen as part of a wider trade reform strategy and consistent with further reform in the World Trade Organisation. It has always been Labor's emphasis, and it should have been the focus for this government. This is an area where Labor has made great achievements but, quite frankly, the government's achievements are poor. Labor was the party that took the hard decisions to lower trade barriers and open up the country to competition. It has led to substantial productivity gains. It was Labor that brought together the Cairns Group and took the fight to the US and the EU and, importantly, succeeded in the Uruguay Round. It is that leadership that is really needed today, but the World Trade Organisation round has stalled.

Australia does not play the leading role it used to under Labor governments. We made significant achievements in opening up these markets, and then we built that momentum by pushing for it in the region. The Keating government was absolutely pivotal in establishing APEC, laying down the most ambitious trade reform deals ever seen. The Bogor declaration was largely a result of Labor's ambitious and steadfast commitment to free trade. Again, the reforms were not selective. They were not preferential but were built upon access to all nations on a most favoured nation basis—the point I was making before. Australia's trade policy reputation was at its peak. We were a major force for reform and it promised extraordinary benefits to both rich and poor nations alike. But it is a momentum that has stalled, and this agreement does not significantly advance it.

The government could have done more to support multilateral trade liberalisation. It should have used the strength of its position with the US to do just that. It should have put the US in the frame for securing a bilateral agreement so that we could go forward together, building momentum for the multilateral round. But whilst the Minister for Trade was devoting all his attention to the sacred cow of the free trade agreement, the government took its eye off the ball of the multilateral round. It neglected the responsibilities as leader of the Cairns Group and sidelined the ministerial meeting at Cancun. The gains that had been made before were squandered.

Trade policy is important to advance in a multilateral sense. Australia led the way for a group that was a third force. Previously, we were played at a break between the Europeans and the US and dealt out of it, but the third force, the Cairns Group, was really pivotal for opening up the trade policy and opportunities for further advancement and further market access. That is the sort of special relationship that we should have built on with our association with the United States. That is why we say that this has to be judged by the test of whether it is good for Australia and what it does in advancing openness in trade and better access for our markets in a world trading environment not a limited trading environment. Look at the opportunities in China. Look at the growth markets around the country. Why restrict the approach simply to the United States?

The member for Rankin has identified at greater length our other concerns with this agreement. We say: let us resolve them. We can resolve them with goodwill, but we want the process concluded in the Senate. We want the process of scrutiny and analysis to determine whether this agreement meets the test of what is good for this country. If it is good for this country Labor will pass it. But we should not be rushing through now, headlong and without the proper scrutiny. The government should not treat the parliament like this. It should allow the scrutiny and then come back and make the decision as to what is in the national interest. That is the way we advance the country, and that is what Labor will do.