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Wednesday, 23 June 2004
Page: 31326


Mr COX (6:10 PM) —Rushing this legislation through before properly established parliamentary processes are completed is a cynical attempt by this government to avoid proper parliamentary scrutiny of the free trade agreement with the US. The US Free Trade Agreement Implementation Bill 2004 and the US Free Trade Agreement Implementation (Customs Tariff) Bill 2004 are more important than the cheap political games the Howard government is attempting to play. At the time the government announced it had completed negotiations with the US, the Senate established a select committee to examine the FTA in detail. I recall that when this government was first elected it made great play of the need for proper parliamentary scrutiny of the treaty making process. However, when it has suited the government's political or administrative convenience, it has attempted to ignore the treaties committee—


Mr Hockey —Where's Kim Wilkie and Andrew Southcott?


Mr COX —and in this case it is ignoring the Senate select committee.


Mr Hockey —What? We just had a committee investigate it. They reported today.


The DEPUTY SPEAKER (Mr Barresi)—Order!


Mr COX —You put a lot more trust in Andrew Southcott than I do.


Mr Hockey —What about Kim Wilkie?


The DEPUTY SPEAKER —The member for Kingston will ignore the abuse of standing orders by the minister.


Mr COX —You may have noticed that the member for Swan, in fact, was a signatory to a dissenting report. The Senate select committee process was quite properly required by the Senate because of the wide-ranging ramifications of the US FTA. It has implications not just for trade but for foreign investment policy, intellectual property, agriculture, manufacturing, media policy and the delivery of health services in Australia. These impacts require thorough assessment to determine whether the FTA is in Australia's national interest.

The US Congress allowed three months to scrutinise the trade deal. It is only reasonable that the Australian parliament be given a similar opportunity. Such an agreement with the world's largest economy requires close and considerable examination. Rather than allowing that examination to continue, the government are attempting to ramp up the FTA as an election issue. The Australian people are increasingly cynical of this government's political manipulations. Their actions here today show once again that the Howard government are not a government committed to free trade; rather, they are prepared to use free trade as a political football. The Australian people expect more from their government. The government also claim that this agreement is somehow comparable to those signed with Thailand and Singapore. This is ludicrous. The scope and complexity of the agreement and the size of the US economy make the potential impact of this agreement far greater on the Australian economy and community.

This morning the chairman of the Joint Standing Committee on Treaties, the member for Boothby, attempted to use the CER treaty with New Zealand as a precedent for the US FTA. To argue that this parliament should not properly scrutinise such a comprehensive agreement with the world's largest economy indicates the undemocratic tendencies of this government. To insinuate that the Labor Party are being irresponsible is laughable from a government that rushed into signing an agreement with the United States and now want the parliament to rush into ratifying it.

Labor will not oppose the bill today, but continues to reserve its final judgment until the outcome of the Senate inquiry, a position Labor has held since the free trade agreement was announced. The Prime Minister wants to paint Labor as anti-American or anti free trade if it questions the value of the FTA. The Australian Labor Party is the party of free trade, with its tariff reforms of the 1970s, 1980s and 1990s resulting in productivity growth which has grown the Australian economy.



The DEPUTY SPEAKER —Order, Minister! I commend the member for Kingston for his discipline and ask the minister to do the same.


Mr COX —The Australian Labor Party is the party of free trade, with its contribution to the Uruguay world trade round and, in particular, with its leadership of the Cairns Group. The government professes this to be a free trade agreement that will deliver great benefits to the Australian economy. While it is true that multilateral free trade agreements are unambiguously beneficial to the economy as a whole, the same cannot always be said for bilateral agreements. The Labor Party is committed to the multilateral trade processes and takes the view that care should be taken to ensure that bilateral agreements do not undermine them. While multilateral processes take longer, the benefits they provide are superior to those provided by bilateral or regional agreements.



Mr COX —Well, you haven't got them working well.


The DEPUTY SPEAKER —The member for Kingston! The member for Kingston was doing well, not responding to interjections—



Mr COX —You are part of multilateral processes.


The DEPUTY SPEAKER —Minister, you will refrain from interjecting. The member for Kingston will return to the bill.



Mr COX —It is more than a partnership. Where bilateral agreements lead to trade diversion rather than trade creation, any benefits can be reduced and in some cases eradicated altogether. Trade diversion occurs when, instead of trading with nations outside a particular agreement, nations shift their trade to other nations within the trading bloc. Welfare losses result because more efficient producers outside the bilateral agreement are replaced by less efficient producers within the agreement. If rules of origin are also involved, the consequences can be worse. For example, rather than sourcing cheap inputs from other countries, Australian companies may begin to source more expensive products from the United States, just to meet the rules of origin requirements and access the US markets. The result would be to lessen the competitiveness of Australian products in third countries and to increase the cost of products within Australia.

Bilateral or regional agreements are no match for benefits that Australia can secure through the WTO process. Trade negotiation through the WTO gives us the opportunity to pursue market access gains for Australian agriculture, manufacturing and services with all members of the WTO, ensuring trade creation rather than trade diversion. That is the key to multilateral negotiations. Rather than just focusing on one market, all 147 WTO members make offers to open their markets to other countries, thereby opening up the opportunity for massive economic and trade gains for individual members. Complex and overlapping rules of origin distort production decisions and therefore lead to less efficient production and higher costs for consumers.

Members of the WTO are also able to negotiate on an equitable basis. Irrespective of economic size, political muscle or level of development, all WTO members have the opportunity to contribute to the development of a rules based trading system for managing international trade flows. This is essential to maintain the integrity and fairness of the international trading system and to give all countries the opportunity for continued economic growth and development through international trade. In contrast, bilateral trade negotiations between two countries with significantly different sized economies can give rise to a mismatch in negotiating strength and inevitably a mismatch in outcomes.

Such a situation is readily apparent with this free trade agreement. All US agricultural exports to Australia will immediately receive duty-free access, but Australia does not get the same free market access for agriculture products in the US. According to Minister Vaile, Australia was going to get a big market access outcome for agriculture. That is what he promised everyone, including the National Farmers Federation and the sugar industry. Despite all the promises and all the claims that sugar was on the negotiating table, not one extra bag, spoon or grain of Australian sugar will go to the US under this deal. The Minister for Trade was in this place earlier today saying how satisfied he felt the sugar producers in this country were with this arrangement. The only thing that the Australian sugar producers in this country are satisfied with is the electoral sling of money that the government has cast in their direction—



The DEPUTY SPEAKER —The minister will refrain from interjecting!


Mr COX —to compensate them for the failure of this government in the free trade agreement with the US. This government originally said that access to the American sugar market was one of the requirements of this agreement, and that is one of the aspects on which this government has failed.

This deal has been oversold and has failed to deliver for Australia's agricultural sector. This deal has failed to deliver for rural and regional Australia. Minister Vaile let down his National Party constituency—and that seems to be the fate of all National Party ministers in this place. That constituency was effectively sold out by this poor deal for Australian farmers—a deal that did not remove US tariffs on Australian dairy products and which 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 US. That does not sound like a free trade deal to me.

This deal will take 11 years to get the tariffs off Australian wine going into the US market. It failed to have the US geographic indications rules relaxed to accommodate the Australian standard—that is, a maximum of 15 per cent of any wine, labelled as coming from a region, which does not come from within that region. Instead, Australian wineries will have to continue to do separate runs with a maximum of 10 per cent of wine not coming from that region going into those labels for the American market. This agreement also failed to get any improvement in the American rules for blending of wines which require blended wines to come from contiguous regions. That is not something that is required in Australia. It is not necessary in the US market. It is not a major issue, but it is another minor issue on which this government has failed to achieve any progress.

Just because you label something with a free trade tag, it does not mean it really is free trade. For example, changes to intellectual property rules in the agreement may actually lead to less competition, which is not an objective of free trade. This agreement should be properly scrutinised by the parliament to ensure that it really is in Australia's national interest. If it passes that test, Labor will support the agreement. Labor, unlike the coalition, are not only interested in the flashing lights of a free trade agreement with the US; as a party we are actually interested in what it will mean for Australians. For that reason, we have decided to reserve our final judgment until the Senate committee has brought down its findings.