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Thursday, 24 June 2004
Page: 31606


Mr VAILE (Minister for Trade) (9:47 PM) —in reply—In concluding the debate in the House on the US Free Trade Agreement Implementation Bill 2004 and the US Free Trade Agreement Implementation (Customs Tariff) Bill 2004 that will enable the entry into force of the free trade agreement that has been negotiated with the United States, I would like to thank all the members from both sides of the parliament and the Independent members who have participated in the debate in the parliament on what is quite a historic piece of legislation underpinning a historic agreement that has been struck with the largest and most dynamic economy in the world.

I will take a brief moment to outline some of the background of the objectives of the government in pursuing this from the outset. As is well known within this place and across Australia, historically there has been very strong bipartisan support for the trade policy that we have pursued as a nation, regardless of who has been in power. Overwhelmingly, that policy has been focused on the multilateral system and, as we continue to argue in this place and outside, our policy perspective is still heavily weighted in pursuit of improvements in the multilateral system—that is, the global rules based trading system.

The frustration following the failure of the WTO meeting in Seattle caused a number of countries, including Australia, to rethink that strategy in terms of what could be achieved and what should be pursued in the shorter term in the interests of economic growth and development and economic integration across the world and the way it was globalising, if you want to use that expression. As a government, we took a decision that we would pursue with a number of our major trading partners opportunities, if they presented themselves, that would deliver faster, broader and deeper opportunities for our exporters. We did that with Singapore, we did that with Thailand, and we asked ourselves: why should we not do this with our largest trading partner? Why should we not do this with our second largest export market? Why should we not do this with the largest and most dynamic economy in the world? Why should we not do this with a country we are closely aligned with culturally and in a security sense? Why should we not pursue a better economic relationship with one of our very close allies?

We took that proposition forward from there. Of course, from the outset there has been a lot of opposition, a lot of cynicism and certainly a lot of pessimism about the prospective outcomes of a negotiation with the United States. There has also been a lot of pessimism about the possibility of getting such an agreement through the very complicated political processes in Washington and the United States generally. Guess what? As is often the case with us Australians—whether it is in international affairs like this, whether it is in business negotiations or whether it is in sporting endeavours—we set the bar much higher than we think we can jump but we manage to jump it. And I certainly believe we have done that in this case.

There is no-one in this country who believes that this is the perfect deal that delivers everything, but it is also not a perfect deal that delivers everything to the other side. In my former professional background there was an often-used description of `what is market value?'—that is, when you have a willing buyer and a willing seller but neither is anxious. I applied that principle to a finely balanced, politically and economically, trade agreement that we negotiated with the United States. We embarked upon this exercise with very ambitious and strong offensive positions in the things we were pursuing, as well as a very tight mandate—not just from the executive or the cabinet, but from the Australian people—in terms of the defensive position that we had to take in those very sensitive areas of public policy such as the Pharmaceutical Benefits Scheme, the audiovisual sector, the intellectual property sector and the state-trading enterprises in the agricultural sector. We ran into some very heavy weather in the negotiations in a number of those areas. But we came through that and we succeeded in achieving what we were asked to achieve. We succeeded in delivering what we were asked to deliver in terms of those public policy issues that are so important to the entire Australian nation. At the same time, in so many areas—quite clearly enunciated by the member for Brand—we are going to gain significant new market access where our exporters desperately need it. Whether you argue that it is going to take place over time or not, the facts of the matter are that it is going to take place, we have arrived at that point ahead of our competitors and we have been able to displace them from that market for many years to come.

I can assure all members in this place, as I have done publicly, that there would not be anybody in this nation more disappointed than myself where the outcome for Australia's sugar industry is concerned. We had a realistic look at what might have been possible. Might we have been able to negotiate 50,000 tonnes? Might we have been able to negotiate 100,000 tonnes? What would that be worth to the industry? Would we actually get delivery on that? Would we get an agreement through the US congress that contained sugar? We obviously deliberated at length over those questions. At the end of the day, when the agreement that was to be accepted or rejected was on the table and it did not include sugar—and on the other side there were some things that the Americans had been pursuing vigorously that the agreement did not include either—we had to make a decision in the national interest. As the government we had to make the decision as to whether we walked away and did not pocket the opportunity for so many other industries—be they agriculture, manufacturing or services—or we went ahead to take advantage of those opportunities and open the door for future generations to move into this major market in the world. Of course, in the end, after consideration, we took that decision.

I know there has been debate about the economic modelling and others can get other economic modelling done that might produce different figures. But the modelling that has been done indicates that this is worth $6 billion to the bottom line after the first 10 years of operation. We will know about that—whether it delivers that—after the first 10 years. All we can do is work on the expert advice that we have been given. But there are billions of dollars worth of extra access for beef and dairy producers. There is tariff free access for Australian lamb. There is the removal of the tariffs for the auto sector. There is a tariff free access for all seafood exports. There is a liberalisation of service providers into the market where we get national treatment. That means that our service providers are treated exactly the same as American service providers in the marketplace.

Most importantly, we are given designated country status to be able to compete in the government procurement market in the United States—a $200 billion market federally in the United States, plus another $200 billion from the 27 states that have signed up to the government procurement chapter. We believe that was worth pursuing. We believed it was worth making the commitment to sign up, notwithstanding some of the disappointments that came in this agreement.

No trade deal, whether it be bilateral, regional or multilateral, is ever going to be perfect. We supported the outcome of the Uruguay multilateral round. There were gaps in that and there are things that we are still pursuing out of that round. We knew it was not perfect, but we supported it as opposition parties at the time. We believed it was moving forward. We believed it was giving us an opportunity to go through the next door to pursue that beyond the actual outcome of the agreement at the time.

I will address some of the concerns that have been raised during the debate in a number of areas. Firstly, issues have been raised over the PBS. We have debated this publicly and in this parliament. We have been through that. I know that JSCOT was very forensic in its analysis during three months of deliberations, 11 days of hearings, of over 200 submissions—



Mr VAILE —JSCOT is the representative body within this parliament to analyse what is in this agreement. JSCOT forensically analysed what was in the agreement in regard to the PBS. I want to make one point very clearly on the concerns about what we have agreed to as far as a review mechanism for the PBS is concerned: it does not require any legislative amendment to the PBS. Therefore, it will not open up the PBS. It will not mean that medicines on the PBS are going to cost consumers more. As far as the other side of the debate in pharmaceuticals is concerned—the generics—I can tell the House that we went to great lengths to ensure that nothing in this agreement was going to delay the movement of generic drugs onto the marketplace once patents have expired on the original medicines. We have ensured the future of the generic medicine industry in Australia and its access into the PBS and into the marketplace.

I go to a couple of other points that have been raised along the way. One issue that I know has been debated, and a little confused by some, is the extension of copyright. At one stage in some public comments the extension of copyright was confused with a cost that might be loaded onto the PBS. They are two separate issues. Some have said that the extension of copyright from 50 to 70 years would cost $700 million. Independent reporting suggests there will be no measurable cost to Australia from this change. Copyright value declines over time as newer works overtake older ones. But there is another important point on copyright, and that is that it also protects Australian intellectual property holders and gives them extended value for their work. We should not lose sight of that fact.

One of the members, it might have been the member for Wills, raised the concern about the investor-state dispute mechanism. He asserted that US companies would be able to sue if government decisions reduce their profits in Australia. This is another furphy. This was an issue that was raised by the United States, but we knew if we agreed to it that no state government in Australia would support this agreement. If we had that mechanism in there, it would enable foreign direct investors—if they were aggrieved about a decision taken by a local government body or a state government—to seek a remedy extraterritorially. We do not believe that is necessary in an agreement between two highly developed economies with very transparent legal systems that provide the opportunity for remedy within the state where the dispute may exist, so the investor-state dispute mechanism does not exist in this agreement. It does not apply to Australia and it does not apply to the United States. Therefore, if foreign direct investment coming into this country has a concern about a decision on their investment that has been made by a local government body or a state government body, then they seek remedy within the domestic laws within this country in exactly the same way that Australian companies do. That is something that we very avidly defended and argued from the outset—and, I say again—knowing from the outset from our consultation with the state governments before we entered into these negotiations that that was one of the criteria that they would not agree to having in this agreement, and it is not in this agreement.

Some comments have been made with regard to concerns about scrutiny and the ability to analyse and debate this agreement in this parliament since it was negotiated, I reiterate that I concluded these negotiations in early February this year. We made immediately public the outcome of those negotiations. We then tabled the agreement on 4 March, over three months ago. We tabled it in this parliament; it has been publicly on display on the DFAT web site; it has been available. We provided a national interest analysis which was tabled on 24 March—three months ago—in this place, and it has been readily available.

As I indicated a while ago, the Joint Standing Committee on Treaties—which has been in existence only since 1996—has had over three months of deliberations on this. This is the body that represents every political party and every member of this parliament in both the House of Representatives and the Senate. That is why it is called a Joint Standing Committee on Treaties. It is not a House of Representatives standing committee, it is a Joint Standing Committee on Treaties. It has been working for three months on its deliberations, it has had over 200 submissions, it has had 11 days of hearings and it has tabled its report this week, prior to the debate of this legislation in the parliament.

This parliament, and particularly this House of Representatives, has had ample time to analyse every individual element of this agreement. We have had a massive public debate across Australia about the pros and cons; the advantages and the disadvantages. We have tried to be as totally transparent as we possibly can about getting the Australian nation to understand what was at hand, what we had negotiated and what we as the government are recommending to the Australian people that we should be supporting. Mr Deputy Speaker Causley, I put it to you that we have done that, and we have done that in a very open and transparent manner.

I say again, as is the case with every bilateral, regional and multilateral trade agreement that any nation is likely to negotiate, it is not perfect, but it is well worthwhile supporting in terms of what it will deliver to the Australian economy immediately on entering into force on 1 January 2005 and for every year thereafter to eternity, generating opportunity for Australians and Australian workers in the new Australian jobs as we get into that American market. In relation to some of the comments from the previous speaker, it is not just the here and now. We can quantify the here and now; we can make a decision about the here and now; but we have to cast our minds forward 10 years, 15 years and 20 years, and that is what we are doing. That is what the economic modelling has tried to do in terms of what this delivers to the Australian nation. It does not clear away all the hurdles to getting into the American market, but it does clear away some.

The agreement that we have achieved has been modelled to produce a $6 billion benefit to the bottom line of the Australian economy after 10 years; it has been modelled to produce 30,000 jobs in the Australian economy. The most important element that I ask members to focus on when deliberating how they are going to vote on these bills is the fact that this agreement enters into force on 1 January 2005, and we know exactly what happens then, but that is not the end of a process. That is not the end of the work we have done for the last couple of years. That is not the end of the deliberations here.

That is not the end of the opportunity for the Australian economy and Australian exporters; it is just the beginning, because it opens the door—it opens the door on an annual basis for continual improvement and refinement of the economic relationship between Australia and the United States in exactly the same way as we have used the CER agreement between Australia and New Zealand to refine that relationship over the last 20 years. There is no question that today and for every year into the future beyond implementation, this agreement is in the national interest. It should be supported and I ask this parliament to support this by voting for these bills.

Question put:

That the words proposed to be omitted (Mr Emerson's amendment) stand part of the question.