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Tuesday, 27 November 2012
Page: 13600


Mrs ELLIOT (RichmondParliamentary Secretary for Trade) (17:26): I am very pleased to rise to be speaking in support of the Customs Amendment (Malaysia-Australia Free Trade Agreement Implementation and Other Measures) Bill 2012 and the cognate bill. MAFTA is a very high-quality free trade agreement. It reflects the deep commitment of both Australia and Malaysia to trade liberalisation. It adds a new dimension to our bilateral relationship, and it is a tangible recognition of the strength of our existing trading relationship. It also builds on the agreement we already have with Malaysia through our FTA with the ASEAN countries and New Zealand. In the broader sense, it contributes to the future we share in our dynamic region in the Asian century.

This agreement is an early demonstration of Australia's commitment to the Asian century as we enter a new phase of deeper and broader engagement. The Minister for Trade and Competitiveness signed MAFTA on behalf of the Australian government on 22 May 2012 in Kuala Lumpur, along with his Malaysian counterpart, Mustapa Mohamed, Minister of International Trade and Industry. Negotiations started in May 2005 but were put on hold at the end of 2006 to allow both sides to focus on concluding the agreement establishing the ASEAN Australia-New Zealand free trade area. After the signing of the AANZFTA, our bilateral negotiations recommenced in 2009 and concluded in March 2012. This was following the instruction of Prime Minister Gillard and Malaysian Prime Minister Najib to work to conclude MAFTA negotiations within a year in March 2011. On entry into force, MAFTA would open new avenues for Australian goods and service exports. Like all of Australia's high-quality FTAs, MAFTA would open new opportunities for business, trade, job creation and economic ties between our countries.

Malaysia is one of Australia's most important economic partners and regional neighbours. It is Australia's third largest trading partner in ASEAN and 10th largest trading partner overall, with bilateral trade worth $16 billion in 2011. And Australia has a diverse range of trade and investment interests in Malaysia, including in agriculture, manufacturing, resources, education, telecommunications and financial services. Around 3,500 Australian companies export to Malaysia each year, and Austrade estimates there are around 250 Australian companies represented in Malaysia. Indeed, Malaysia is an export orientated economy, with a plan to achieve developed economy status by 2020. Malaysia's trade with Australia has almost doubled in the past decade, growing at an average rate of 8.2 per cent year on year, and Malaysia is one of the region's most dynamic economies.

The entry into force of the AANZFTA in 2010 was a boost to our already close bilateral trade relationship. MAFTA would strengthen further our relationship and would be an asset to both our countries as we continue to negotiate in the Trans-Pacific Partnership Agreement. Australian and Malaysian business is well placed to benefit from the vigorous economic growth in both countries. Of course, MAFTA would provide for commercially meaningful improvements to Australia's market access to Malaysia and new trade disciplines that build on Malaysia's commitments under the AANZFTA. From MAFTA's entry into force, tariff-free access would apply to 97.6 per cent of 2009 to 2011 average imports into Malaysia from Australia, increasing to 98.9 per cent in 2016 and 99 per cent in 2017.

Important outcomes for the automotive industry include the elimination of all tariffs on large cars and virtually all tariffs on auto parts on entry into force of the agreement, with tariffs on smaller cars eliminated by 2016 and removal of quantitive restrictions on motor vehicle imports from Australia.

There will be tariff-free treatment for 94.6 per cent of recent iron and steel imports into Malaysia from Australia by 2016 rising to 99.9 per cent by 2017 and 100 per cent by 2020. There will be elimination of virtually all tariffs from entry into force on plastics, chemicals, a range of processed foods and manufactured products. Australian milk exporters will have access to additional quota and access for higher-value retail products. Australian rice exporters will have open access from 2023 and complete elimination of all tariffs by 2026.

MAFTA has business-friendly rules of origin positions including a mechanism to allow goods exported from Australia to claim MAFTA tariff treatment solely on the basis of a declaration of origin by the exporter. For a wide range of service sectors, Australian entities will be able to acquire majority ownership in companies supplying services in Malaysia. This would include 70 per cent ownership in higher education services provided by privately funded institutions increasing to 100 per cent by 2015, and 70 per cent ownership in a range of other very important education services.

Investment banking, telecommunications and direct insurance providers will be able to hold 70 per cent ownership. In addition accounting, auditing, book keeping services and management consulting service providers will be allowed to have 100 per cent ownership in Malaysia. MAFTA also provides the right to majority ownership for mining related services, taxation services, tourism and travel related services, and research and development services as well.

The reality is that MAFTA will make it a lot easier for Australians to do business in Malaysia. More Australian business executives and senior managers will be permitted to work in Malaysia and they will be able to stay for longer periods. It will also benefit families by improving access to visas for spouses and dependants of Australians working in Malaysia as well. MAFTA would also provide stronger protection for our intellectual property rights and establish a framework for mutual recognition of qualification and licensing requirements for professionals and also to facilitate electronic commerce as well.

MAFTA has identified five priority areas for economic and technical cooperation. Projects in these areas would build on existing links and strengthen bilateral relations between a range of Malaysian and Australian organisations. In return, Australia would lock in faster tariff-free entry for Malaysian goods into Australia provided for under the AANZFTA, putting Malaysia on a par with Singapore. MAFTA would bring forward Australia's AANZFTA commitment to eliminate all our tariffs on entry into force now rather than in 2020 under the AANZFTA. This would accelerate tariff elimination for products such as automotive vehicles, textiles and clothing, and some manufactured goods as well. Malaysia is not a major supplier of these products within the Australian market.

We would make some limited AANZFTA-plus service commitments. Specifically, Malaysian investment in private hospital services would be covered by our obligations under MAFTA. Malaysian investors will be allowed to fully own research and development services, technical testing and analysis services, and some of the preceding works that occur at construction sites as well. Importantly, MAFTA does not include provision for investor-state dispute settlement. Overall, there would be little if any negative impact for Australian industry.

This agreement is primarily about opening the markets and that is the main force behind it. But it will also do more than that. Australia has agreed to provide a three-year package of up to 21 short- and long-term scholarships, fellowships, awards and exchanges to support Malaysia's economic reform efforts. This complements existing exchanges between Australia and Malaysia on public sector and economic governance, including through the Endeavour Awards.

The agreement will also provide for mutually beneficial economic and technical cooperation covering automotive, agricultural, tourism, clean coal technology and electronic commerce industries. An important element of this improved cooperation has already been achieved with the signing of a memorandum of understanding between Australia's autoCRC and the Malaysian automotive institute. This memorandum of understanding is a first step in the greater collaboration between the Malaysian and Australian automotive industries that the agreement should promote. It will strengthen the economic relationship and reinforce what is already a very solid bilateral relationship as well.

Upon entry into force, MAFTA will reflect Australia's very close bilateral trade and economic, political and strategic relationship with Malaysia, and will enhance Australia's engagement in the region as we work together with Malaysia on issues of mutual interest. It will be an important part of the network of free trade agreements within our region that Australia is pursuing to advance our trade interests in the Asian century. The scale and pace of Asia's transformation has profound implications for Australia and for our bilateral and multilateral relationships.

Ultimately, Australia's objective in pursuing FTAs is to increase the prosperity of all Australians. We achieve this through negotiating genuinely liberalising agreements that eliminate or substantially reduce barriers to trade for the mutual benefit of the parties. I think everyone would agree that MAFTA meets this objective very well. Trade liberalisation under MAFTA could be expected to increase two-way trade between Australia and Malaysia, and boost real GDP for both our countries. Australians should welcome this agreement. MAFTA will deepen an effective economic integration between Australia and Malaysia. It will leave Australia well positioned and, in some cases, even better positioned in the Malaysian market as one of Malaysia's closest trading partners in ASEAN. The government is keen to ensure this groundbreaking agreement can enter into force as soon as it is possible to allow Australians to benefit from the improved opportunities for two-way trade and investment between our two countries. I commend this agreement. I also commend this legislation to the parliament and the many opportunities that it provides.