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Tuesday, 11 November 2008
Page: 10587

Ms LEY (4:31 PM) —I rise to speak on the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and the Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008. The coalition government began negotiations with Chile that have now been concluded with a comprehensive free trade agreement. The coalition government intended that the Australia-Chile Free Trade Agreement be an agreement between the governments of Australia and Chile that would remove most barriers to Australia’s export of goods and provide economic integration for markets through commitments in a range of areas, including trade in services, investment, government procurement, intellectual property, electronic commerce and competition policy. Whilst bilateral trade with Chile is modest, involving $856 million in 2007, Australia is the fourth-largest source of foreign investment in Chile, with investments amounting to US$3 billion in 2007.

The Australia-Chile Free Trade Agreement is expected to enter into force on 1 January 2009. In order for the agreement to take effect, both the Customs Act 1901 and the Customs Tariff Act 1995 need to be amended. The Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 contains the necessary amendments to the Customs Act. These amendments provide the rules for determining whether goods originate in Chile and establish powers to allow Customs to obtain manufacturing records from Australian producers and exporters. The amendments in this bill give effect to Australia’s obligations under chapter 4 of the Australia-Chile Free Trade Agreement. Chapter 4 outlines the rules for determining whether goods originate in Chile or Australia. The rules are integral for determining whether imported products from Chile are eligible for preferential customs duty rates under the agreement.

The Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 contains amendments to the Customs Tariff Act 1995 to implement part of the agreement by: providing duty-free access for certain products and preferential rates of customs duties for other goods that originate in Chile; phasing the preferential rates of customs duties for certain products to nought by 2015; and creating a new schedule 7 to the tariff to accommodate those phasing rates of duty. The bill aims to complement the amendments contained in the Customs Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008.

After Brazil, Chile is Australia’s second-largest merchandise export market in South America, with approximately 120 Australian companies actively trading with Chile. In commercial terms, Chile’s importance to Australia derives from our significant investment links. Over 50 Australian companies have registered offices and over $2 billion in direct investment in Chile, including activities by AGL, AMP, BHP, Hoyts and Orica. Major Australian exports to Chile in 2007 were coal, at $A94 million, civil engineering equipment at $21 million, specialised machinery at $7 million and transport vehicles at $6 million. The major Australian imports from Chile in 2007 were copper, $97 million; pulp and wastepaper, $57 million; non-ferrous base metal waste, $43 million; and pig iron $21 million.

The coalition supports the agreement, as I have said. Some of the benefits include the elimination of Chile’s tariffs on 91.9 per cent of lines covering 96.9 per cent of trade; a harmonised and simplified system of customs procedures; a commitment by Chile to maintain an open and non-discriminatory market for Australian service suppliers, including in education, professional services, mining and telecommunications services; non-discriminatory access to Chile’s government procurement market; the right of Australian investors to protect their investments through investor-state dispute settling procedures; and temporary access rights for business visitors to Chile.

This will be Australia’s fifth free trade pact and our first with a Latin American country. Australia has implemented four free trade agreements all of which were initiated by the coalition: the United States, Thailand, Singapore and New Zealand. The coalition government recognised that two-way trade between Australia and Chile is growing fast, up from $574 million in 2006 to $856 million in 2007. Australia is the fourth largest foreign investor in Chile with around $3 billion of direct investment. The coalition understood that a free trade agreement with Chile would offer Australian exporters opportunities across the board which will be particularly valuable in services and investment areas. Other areas will benefit, including energy, agriculture and food and beverages.

I will say a few words on the horticulture industry. Whilst the coalition supports free trade agreements, particularly this agreement, there have been some concerns that are worth noting regarding the horticulture industry. Horticulture Australia’s submission to the Joint Standing Committee on Treaties points out that because Chile and Australia are both in the southern hemisphere they share common seasons. This means that Chilean horticultural products can be imported to Australia at the same time as Australian horticultural products are on the market. Horticulture Australia anticipates that the price of the Chilean products will be less than the Australian products because of the cheaper labour costs in Chile. For example, Mr Peter McPherson from the Australian Blueberry Growers Association advised the Joint Standing Committee on Treaties that Chilean labour costs 40 per cent of Australia’s.

The treaties committee tabled a report on 16 October 2008 in which it recommended that the Department of Foreign Affairs and Trade undertake and publish a review of the operation of the Australia-Chile Free Trade Agreement no later than two years after its commencement in order to assess the ongoing relevance of concerns expressed about the agreement such as the maintenance of sanitary and phytosanitary measures, the impact on the horticulture industries, intellectual property, 457 visas and labour and environmental standards.

In conclusion, the coalition believes that free trade agreements are good for this country. They promote stronger trade and commercial ties between participating countries and they open up opportunities for our exporters and investors to expand into key markets. Free trade agreements help secure Australia’s competitiveness with key trading partners and they significantly enhance Australia’s broader economic, foreign policy and strategic interests. As mentioned previously, our position on these bills is that we support the Australia-Chile Free Trade Agreement as initiated by the coalition government and concluded by the present government and we support the necessary amendments in order to implement the agreement.