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Thursday, 24 June 2004
Page: 31481


Mr MARTYN EVANS (11:20 AM) —I think it is very important in the initial stages of my remarks this morning to clear up a number of issues which the government has sought to put before the parliament and the public in relation to this very important debate on the US Free Trade Agreement Implementation Bill 2004 and theUS Free Trade Agreement Implementation (Customs Tariff) Bill 2004. This issue of a free trade agreement with the United States is perhaps one of the most important economic measures which has come before the parliament in recent times. It has received detailed scrutiny in this parliament before the Joint Standing Committee on Treaties and is also receiving ongoing scrutiny in the Senate Select Committee on the Free Trade Agreement between Australia and the United States. As I understand it, the Senate committee is preparing an interim report and a final report, which will be tabled when the House resumes in August, if that is indeed the case. That scrutiny necessarily must be very detailed, given the enormous import of a free trade agreement of this magnitude.

The parliament has undertaken, on behalf of the nation, free trade agreements with a number of other countries. Singapore immediately comes to mind, and the treaties committee undertook scrutiny of that agreement as well, prior to recommending ratification. Of course, the United States also has free trade agreements with a number of other countries.

Australia also has another free trade agreement—that is, the closer economic relations agreement which we have had with New Zealand for some 20 years. It is very instructive to look back on the history of that agreement at the way that it has developed over two decades. Indeed, it evolved from the frustration which the then trade minister, Doug Anthony, experienced in trying to negotiate a detailed package with the New Zealand government in those days which only dealt with relatively trivial matters of trade: specifications which covered individual items of trade, very small topics, minor adjustments to tariffs—as he would have characterised them 20 years ago—and not worthy of the sweeping kinds of economic reforms which both countries would have had to enter into to make changes which could have a significant impact on both economies and indeed move them both forward.

The governments of Australia and New Zealand two decades ago were brave enough to enter into an agreement which would set the course of economic reform over the next two decades. I think most people would now agree that the agreement has had a very beneficial impact on reforming the economies of both countries to some degree—improving bilateral trade between our two countries and enhancing economic opportunities for both Australians and New Zealanders, in the context that we have seen that economic relationship expand and improve. That relationship still has a way to go; we have not strengthened it to the degree that we could. There are many opportunities which can still evolve through that relationship. It is a living agreement. We have recently taken on board ways in which therapeutic goods, for example, can be incorporated into that kind of relationship. There is a joint agreement to approve drugs and related therapeutic standards between our two countries which the treaties committee is examining at the moment. There are other areas still in investment and services where the agreement can be expanded.

People criticised the agreement at the time and raised any number of areas where they felt it would damage the interests of particular groups in both our countries. Those areas have gradually been overcome, and I think most people would now welcome it. The question we now have to turn to when examining this agreement is whether those issues would arise in relation to the Australia-US free trade agreement. I think most members of this House and many people in Australia naturally appreciate that trade is good for a country like Australia. Free trade is better; the freer the trade, the better we are as a world and the better Australia is as an economy. The question is whether our trading partners enter into this on the same basis as we do as a country. Do they also approach this with the same kind of bona fides as Australia? Would nation-states like those in Europe and the EU or a country like America set aside their subsidies, as we have done in the agricultural area, and approach this with the same kind of bona fides as Australia? We must ensure that free trade actually prevails, that there is a reasoned approach to trade so that we can approach this on an equal basis and ensure that, in fact, Australia obtains a good deal out of this free trade deal with the United States. That is the question which the treaties committee sought to answer and which the Senate committee is still considering as we speak. Many of my constituents have that kind of question. It is not an unreasonable question for the Labor Party to seek to address.

This government has sought to link this issue with the ongoing security relationship with the United States. This is a very bad way to approach public policy. It is very wrong to link trade with security when you are dealing with an ongoing strong relationship, which this country has had with the United States and which everyone I think in this parliament, certainly from the two major political parties, would want to see continue. It was the Labor Party, as I am sure you would acknowledge, Mr Deputy Speaker Adams, that established the firm relationship with the United States many decades ago in relation to security. We have always sought to maintain that strong relationship with the United States in security and we will continue to do so. I support that strong alliance in security, and I know my colleagues do as well. We do not link that to trade, and I think it is very bad public policy to seek to do that. I know the United States do not do that; they do not put their friendship on the line in relation to security matters by linking them in Australia's interests with trade. That is not a good way to proceed in this area. We can discuss trade issues with our friends across the Pacific without linking them to our security interests.

In relation to trade, we approach that as a different question. We say, `Is a trade agreement in our national interest?' The United States does that too. The question is a very reasonable one. In my electorate we have many of the industries which are at stake in this trade agreement, including the motor vehicle industry, the wine industry and many other related areas. People in my electorate—for example, at the Holden plant—very reasonably say, `What will be the outcome of this if we sign up to it?' Domestic legislation of course is critical in these areas. How will this agreement impact on the lives of people in my electorate and on Australians generally? We will not know from reading the treaty itself, which is a very substantial document, because it does not actually go to the way in which this free trade agreement will be implemented in domestic law—that in itself is a very critical component of this. When you read the agreement, you see that most of it deals simply with eliminating tariffs or phasing them out over a period of time—perhaps up to 18 years for the beef industry and a lesser time in other areas and so on. Those things are relatively easy to grasp. In other areas, there are more complex arrangements—for example, with copyright and so on. I will come to those in a minute. In other cases, we simply have to look to domestic law to determine the actual impact on the Australian electorate. That is what the legislation before the House now deals with.

We cannot assess the totality of the impact of the free trade agreement unless we also go to the domestic law, and that is what the minority report of the treaties committee sought to address. Normally, a treaty can be assessed on the basis of its own impact, on the face of the treaty, so you can determine what the impact on Australia will be. In the case of a complex treaty like this, especially given its terms, we have to understand the domestic law implications as well. That is, of course, what the government have not allowed for in this case. They have not given the Australian people the opportunity to assess the impact of the domestic law—some of which is before us today, but not all.

In the case of the PBS, for example, the appeal mechanism and the precise terms of that appeal mechanism are absolutely vital in understanding whether there will be an adverse impact on domestic drug prices arising from the treaty itself. The treaty does not determine whether that will be the case. The treaty requires that there be an appeal mechanism. On its face, that is not necessarily adverse. It may be good; it may be bad; but it is not necessarily adverse of itself. In fact, in principle it sounds quite reasonable. But whether the adverse impact will arise is determined by the way in which the government implements that in our domestic arrangements. We have not yet seen that in its terms. The health minister more or less dismissed that as an administrative arrangement. Until the parliament have seen those details, we will not be in a position to determine whether that arrangement will have an adverse impact.

The PBS is a very significant part of our health arrangements in this country and has a very significant impact on the lives of all of our constituents. In determining the actual national interest outcome of this treaty, until we see the totality of the treaty and the domestic arrangements which this government puts in place, we will not actually know whether this treaty is in the national interest of Australians. It may well be the case that the PBS arrangements are perfectly satisfactory, but we will only know that when we see the totality of the arrangements.

In respect of the other parts of the treaty dealing with, for example, the copyright and patent law arrangements and the impact on software, including the areas of non-commercial software and open source software, the treaties committee received a lot of evidence, as has the Senate committee. We received a lot of evidence on the impact of copyright law on universities and educational institutions—the extension from 50 years to 70 years. All of these areas will depend a great deal on the ultimate impact of the way in which this is implemented in domestic law. If, for example, we move to an area—as the treaties committee has recommended—of US style `fair use' rather than the more restrictive Australian interpretations, then this would have much less impact on domestic libraries, on educational and academic institutions and on the students who study at those institutions.

The way in which we implement this in domestic patent law would have much less impact on our open source software industry than it might otherwise under the terms of the treaty itself, depending on the precise terms of the amendments to the Patents Act. The reality is that the exact terms of our domestic law implementation will determine the outcomes for our national interest of the combination of the treaty and domestic law. The treaty might well be totally benign in terms of its impact on those institutions if the totality of the two taken together is properly drafted. That is the outcome we need to assess, which is why the minority report of the treaties committee recommended that we could only draw that final conclusion when we actually saw the two taken together and not just the one on its own.

If the government does not draft the domestic law properly as a result of the free trade agreement implementation, then of course this could have a very adverse impact. But if the domestic law arrangements are taken properly then I think the treaty could have a favourable impact on our economic situation in this country. Obviously, as someone who has supported an increased trade arrangement and free trade agreement—as many of my colleagues have on both sides of this House—I can see enhanced economic benefits arising from any free trade agreement and particularly one from such a substantial trading nation as the United States. But that will only be the case if the government safeguards the arrangements in this country with a proper domestic law implementation.

Many people in this country have been concerned about provisions of the treaty which may in fact not be of such concern at all. For example, the NAFTA agreement between the United States, Canada and Mexico contains provisions called the investor state provisions, which were of substantial concern to many people in Canada and Mexico because of the way in which those legal provisions have been used against corporations and governments in Canada and Mexico by companies in the United States. Because of the legal arrangements and the rule of law in Australia, while the United States originally lobbied strongly for such a term in the free trade agreement with Australia, the end result was that no such provision was incorporated in the treaty which is now before the parliament. The reality is that that makes a very substantial difference to the kind of treaty we have before us. There is no investor state provision in this treaty, and that really does make quite a difference to the way in which we consider this treaty. Not having an investor state provision does make a real difference to us. If there were an investor state provision in this treaty, I would have a very different view of it. Not having it here is a real difference and should allay some concerns people have.

I have received a lot of representations during the course of the treaties committee hearings about the lack of travel provisions in this treaty. Other treaties that the United States has recently negotiated have contained provisions which freed up the travel arrangements between those countries and the United States. They may well not be agreed to ultimately by the US Congress, but it is a real gap in our consideration here. If we are to have enhanced trading opportunities with the United States, the government needs to use other measures to ensure that those provisions are negotiated separately and in parallel with this treaty if it is to really move forward. Improving travel rights to the United States, especially in a post 9-11 world, is a very significant means of improving business and communication between our two countries. Without that, the treaty will have far less economic value to our country. There are significant travel barriers now for business and other professional people moving between the two countries—not so for tourists, but certainly for business and professional people—and they need to be addressed separately.

Mutual recognition of professional qualifications and other trade qualifications is also a significant problem. If you are an Australian lawyer and you have the right to practise in the United States, that will be gained in one state and one state only. If you need to practise in another state, you will have to sit a separate bar admission exam—and again and again in each of the states of the United States. That is an enormous impediment to qualifying to practise in the United States. The same is true in all of the other professions, and that is an enormous barrier to practising in the United States in any of those professional areas. It is an enormous barrier within the United States itself; it does not just apply to foreign applicants like Australians. Indeed, the United States could benefit its own microeconomic reform process by tackling these areas. Far be it from me or Australians to give the United States advice on microeconomic reform, but it would be of enormous benefit were it to tackle this. In terms of mutual recognition, as we have it in the treaty, that would be a significant area for the government to press the United States on.

I think we need to bear in mind that many Australians feel that the effect on the manufacturing industry, like the motor vehicle manufacturers in my own electorate, will be significant. The lowering of tariff barriers in this area does have an impact on people's lives. When these motor vehicle tariff areas are adjusted, the government needs to take into account that the United States, while it still has agricultural subsidies, also has a number of those in relation to the manufacturing industry. It has significant support structures for the manufacturing industry in the United States which, while not being subsidies, are certainly support structures for research and development. It has contracts with defence industries which provide significant support for manufacturing through the defence contracting support structures. So there are hidden subsidies in the United States which do not go directly to the manufacturing industry by way of support but are indirect support structures. Those need to be taken into account.

When assessing this treaty, I do not think we should jump to a government imposed, election-viewed deadline to this. It is an important treaty, one which could have significant benefits for Australia but which can only be taken into account as part of our national interest when we look at the whole of the treaty and the domestic underpinning legislation. So let us not do this in a rush; let us not do it overnight. Let us do it in a proper and mature and reflective way when we have all of the evidence to hand. That will be here in early August. Let us do it in a proper and mature way when we know whether or not it is in the national interest. Only then can we decide what the outcome ought to be.

Debate (on motion by Mr Ruddock) adjourned.