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Wednesday, 23 June 2004
Page: 31369


Mr DANBY (6:54 PM) —The introduction of the US Free Trade Agreement Implementation Bill 2004 into the parliament today, only a few months or weeks before a federal election and before the Senate select committee on this bill has completed its deliberations on the agreement, is yet another sign that the government is preparing for an election based on parliamentary stunts and electoral scare campaigns. We have had the stunt of the Marriage Legislation Amendment Bill 2004, with its so-called defence of the family against the threat of same-sex marriage. We have had the crude attempt by the Minister for Education, Science and Training to scare the parents of students at schools, including schools in my electorate, with the false allegation that a Labor government will take away their funding. Now we have this attempt to portray the Labor Party as anti-American and anti free trade, by stampeding this bill through the parliament on the eve of an election campaign.

The opposition has taken a consistent position on the US free trade agreement. It is a trade agreement, and a very important one—an agreement with the world's largest economy and a major trading partner. But it is not a defining issue of our relationship with the United States. It is not an agreement on which the US alliance hangs. It is a commercial agreement—no more and no less—and that is how it should be assessed. That is certainly how the US Congress will be assessing it, as they should.

The stand that this parliament takes on the agreement must be based on commercial judgment and not political or strategic considerations. All Australian governments have kept US-Australian strategic considerations and commercial issues separate, as the shadow trade minister pointed out on AM the other day. There will always be trade disputes between Australia and the US—the Deputy Speaker's political party is often very interested in Australia prosecuting those disputes with great vigour—since trade lobbies and exporting industries in both countries frequently have conflicting interests. But these should not be allowed to jeopardise our strategic relationship, which is based on shared values, shared history and common strategic interests, particularly in the troubled international era that we are in at the moment.

But now this government is trying to bundle up a trade agreement with the US alliance, alleging that anyone who questions the value of the agreement to Australia and Australian industries is somehow putting the alliance at risk and is therefore an enemy of Australia's security. This, of course, is not the view of the United States. It is a peculiar invention of this government. In my view, if anyone is risking damage to the US alliance in this debate, it is this cynical and opportunist government, which is linking trade and strategic interests in a way that is potentially very harmful to Australia's national interests. Instead of trying to ensure that there is bipartisan support for this trade agreement after a proper Senate investigation, this government is simply trying to ram it through before proper consideration has been given.

Labor is a free trade party and has been so ever since Gough Whitlam and Frank Crean broke with Labor's earlier protectionist traditions and sharply reduced tariffs across the board in 1973. After the years of wasted opportunity during the Fraser government, Labor, under Bob Hawke, Paul Keating and John Button, again took the initiative—for which it was widely hailed all around Australia—to liberalise and internationalise the Australian economy in the 1980s. Fairness dictates that I acknowledge that the Liberal Party supported those measures. There is only one protectionist party in this House, and that is The Nationals—and I am not sure about the honourable member for Cunningham's party. Labor has made it clear that it supports the principles of free trade and of bilateral trade agreements. Labor's platform says:

Labor will continue to pursue sensible trade liberalisation through effective multilateral strategies ...

It reinforces this by saying:

Labor remains firmly committed to realising our free trade objectives, through negotiations at the World Trade Organisation (WTO) and the Asia Pacific Economic Cooperation (APEC) forum, regional free trade agreements and bilateral market opening.

Last year the six Labor state premiers signed a joint statement supporting a US-Australia trade agreement, although not of course endorsing the details of the agreement, which were not known at that time. The NSW Premier, Bob Carr, said recently:

It is in Australia's interests to link ourselves with the world's most dynamic and creative economy. It's about more than trade, it is about more than investment, and it doesn't rule out Australia's growing economic relationship with East Asia.

Queensland's Premier Peter Beattie said:

I would expect the free trade agreement currently being negotiated between Australia and the United States to give added impetus to our trading relationship.

He went on:

While this is a matter for the Australian Government, I support a robust and successful agreement wholeheartedly.

We need to be clear, however, that this is not a free trade agreement; it is an agreement which appears, on the basis of what we know so far, to liberalise trade in certain goods and services but not in others. It is a selective trade agreement, and its selectivity is based on politics. It is American politics, for instance, which has dictated that sugar is not included in the agreement. This House should remember that Australia's real national interest is in global free trade—being an efficient economy in practically all sectors. No bilateral agreement can be a substitute for progress in multilateral free trade through the Doha Round under the World Trade Organisation. The Minister for Trade has not mentioned the Doha Round in this House since February, and even then only in response to a motion moved by the honourable member for Rankin.

Under this government we have lost the leadership position on global free trade which we gained under the Hawke government when we took the lead, by establishing the Cairns Group as a multilateral lobbying group for global free trade. Instead, this government has placed its faith in bilateral trade agreements. The opposition is not opposed to bilateral agreements. The Hawke government signed Australia's first bilateral agreement with New Zealand in 1983. Bilateral trade agreements have their limits, however, which is why the Hawke government decided not to pursue a US trade agreement in 1985. We can see the limits of bilateral agreements in the present situation, when we have a potential conflict between our bilateral agreements with New Zealand, Thailand and Singapore on the one hand and the proposed US agreement on the other. Australian clothing manufacturers can import materials from those countries, but they will not be able to include them in finished goods to be exported to the US, because this will violate the rules of origin provisions in the proposed agreement.

It is my privilege to represent in this House an electorate which is home to some of Australia's most important export industries, including the automotive industry, but also the fast-growing information technology, arts, higher education and media industries. All these industries have grown and flourished under the freer trade environment created by the economic reforms of the Hawke government. As many writers have noted, it is one of the great ironies of Australian politics that the Howard government is campaigning for re-election on the back of the sustained growth of the Australian economy which is mainly the result of Labor's economic reforms.

The automotive industry is a major source of employment in my electorate. Fishermans Bend in Melbourne Ports is the headquarters of General Motors Holden and its engine manufacturing operations in Australia. It is also the centre of Holden Innovation, which identifies future consumer needs and develops products, technologies and skills for Holden to compete in global markets. This plant directly employs 3,500 people and indirectly supports the employment of many more. The four-cylinder engine plant at Fishermans Bend exports 150,000 engines a year. Holden has now opened a plant which will export six-cylinder engines to the United States. Those engines will be put into American Pontiacs. This underlines the fact that the Australian automobile industry is now an export oriented industry.

Despite many predictions of doom over the last 20 years, the automotive industry in my electorate has not only survived but grown and prospered under the Button car plan introduced in the Hawke years. Some share of the domestic market has been lost to imports as tariffs have fallen, but this has been more than compensated for by the overall growth of the market as car prices have fallen in real terms and also by the expanded exports made possible through the greater efficiency stimulated by increased competition.

What effect will a US-Australia trade agreement have on Australia's automotive industry and particularly on automotive exports? Some people have suggested recently that an agreement could lead to job losses in Australia because car manufacturers will be able to import more components from the US, rather than have them manufactured here in Australia. The possibility of loss of employment in car manufacturing is one that I would view with great concern, so it is important to know whether this concern is shared by the Australian automotive industry itself. Perhaps we will know authoritatively only when the Senate Select Committee on the Free Trade Agreement between Australia and the United States of America reports.

In a letter this month to the Senate select committee, Alison Terry from General Motors Holden said:

While the agreement provides immediate benefit in terms of the elimination of tariffs on components, it is only one of the many factors that are considered in sourcing decisions ... the industry operates with long lead times for product development, which also impacts planning and implementation activities with respect to potential new manufacturing sources. It is unlikely that the agreement will have an immediate impact on such decisions, but the benefits provided by the agreement will certainly form part of future considerations.

I interpret that to mean that, while a US-Australia trade agreement will not lead to any immediate increase in component imports, in the longer term Holden and other Australian manufacturers might well decide to import more components, with a possible impact on employment.

That would concern me, but of course that is not the whole picture. The economic impact of any agreement to liberalise trade has to be seen as a total picture. As Alison Terry continued in her submission:

In Holden's view, the Australian economy will benefit from increased growth and dynamism through access to the large US market, particularly if the US service industry enters the Australian services market and raises prevailing standards of performance.

Consequently, the flow-on effects from stronger economic growth will in our view benefit the entire automotive industry and drive competition in the marketplace, thereby enhancing vehicle and component trade. In turn, this is likely to strengthen the competitive position of Holden's operations and their continued sustainability, which is an encouraging outcome with respect to future employment opportunities.

In other words, although there might be some loss of market share for local component manufacturers as a result of cheaper component imports, this would be more than offset by an increased demand for Australian cars, both in Australia and in our export markets. We should also remember that the trade in car components goes both ways. There are many efficient and innovative car component manufacturers in Melbourne who will have improved access to the US market under a free trade agreement. The possible loss of market to imported components can therefore be offset by gains through component exports.

Knowing how this will affect the automotive industry and other industries is one of the reasons we need to wait until the Senate select committee reports. While I accept some of the benefits, I point out that this is exactly what happened to the automotive industry following the tariff reductions during the Hawke government. Increased competition from imports did not send Australian car manufacturers out of business. In fact, it led to increased sales, increased exports and thus to continued employment opportunities for Australian workers.

When the government announced earlier this year that it had completed the trade agreement negotiations, the Senate established a select committee to examine the detail of the agreement. As the shadow minister for trade, Senator Conroy, has pointed out, the US Congress is now taking at least three months to consider the agreement. I do not think I have to advise any of the members in here that the congress will be making some very tough and detailed assessments as to the effect of that agreement on the interests of various American industry groups concerned. Notwithstanding the great friendship Australia and the United States share and the recent welcome formation by representative Cal Dooley and other friendly American congressmen of an Australian congressional caucus, I think that the American congress, like we should, must consider agreements like this from the point of view of national commercial self-interest. If these commercial self-interests happen to coincide—as would be established by the Senate select committee—all the better.

This parliament should do no less than the American congress. It would be an abdication of our duty to safeguard Australia's national interest to have this bill rammed through before the Senate select committee had completed its work. The government's desire to use this issue as yet another political wedge against the opposition is, in my view, the very political force that is putting Australia's bipartisan interests in this particular treaty at risk. This is why Labor are taking the position that we are taking today in relation to this bill. We will not be opposing the bill in the House, because we are in favour of free trade. We are in favour of a trade agreement with the United States, and we hope that the agreement that the government has negotiated will turn out to be in Australia's interests.

There are still many questions to be asked and answered. The most important of these relates to the Pharmaceutical Benefits Scheme. The PBS, established by the Chifley government, is one of the pillars of Australia's system of social equity, and the opposition treasure that particular pillar of Australian social equity. We have said that we will not support an agreement which undermines the PBS. There are also concerns expressed by people in my electorate about the impact of the agreement on some other sections of the arts industry in relation to Australian content provisions in radio and television, particularly in new forms of media into the future. I think it is absolutely proper that we wait for the full report of the Senate select committee until we take a final position. There is no reason why this decision has to be made now. After all, the US Congress will not conclude its deliberations on the agreement until the end of July.

In conclusion, since the government is trying to pre-empt the work of the Senate select committee, we cannot yet know with any certainty what effect the agreement will have on Australian industries and Australian jobs. We on this side are committed to free trade and to the opening up of the Australian economy, for which former Prime Minister Keating and former Prime Minister Hawke received due credit. We support a free trade agreement with the United States, but that does not mean we are bound to support any agreement this government negotiates. We reserve our right to make a final determination on the agreement when we see the report of the committee and we will vote in the Senate on the basis of that determination.