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Tuesday, 3 August 2004
Page: 25330


Senator RIDGEWAY (12:54 PM) —I rise to speak on the US Free Trade Agreement Implementation Bill 2004 and the US Free Trade Agreement Implementation (Customs Tariff) Bill 2004 on behalf of the Australian Democrats. I have to say right from the very start that this is indeed a very sad day for Australia. It is a great shame that we are debating these bills at all, because the FTA is a disaster for Australia. It is very, very disappointing that we have arrived at this point today. The Democrats feel very strongly about this issue and firmly believe that the free trade agreement should never have been signed and certainly should not be supported, particularly when you consider the details of the agreement itself. All along we have been questioning the government's rhetoric about the deal, knowing that they have been so desperate to cash in on their support for the war in Iraq that they would accept anything America offered, even if it caused harm to Australia. It has been more about political expediency than what is in the best interests of Australia as a nation.

What is particularly galling, though, is the decision that has now been made by the Labor Party in opposition to support the deal, because all along I think that the ALP have taken a very reasoned approach to the issue—wanting to analyse the terms of the deal, scrutinise the detail and then make their decision based on the merits of the argument about whether or not this is in the best interests of the country. They have done all of that. They have read the same text that we have. They have sat on the same inquiries. They have heard the same evidence from the various witnesses that have come before us at more than a dozen hearings held across the country. They know that this is a substandard deal. How they could support this is beyond me. Even from their own statements—when they talk about the agreement `on balance'—if the deal is so good, why would they qualify it not just once, not twice, but 43 times? Did it ever occur to the ALP that the 43 arguments that have been presented are 43 reasons why the free trade agreement is flawed and it ought not to be supported in the first instance?

I want to put on the record that the Australian Democrats support fair trade that is in the national interest. In our opinion, the free trade agreement that the government have negotiated with the United States could never, ever be described as achieving this. Keen to try to cash in on their support for the Bush administration's policies in other areas, the Howard government have accepted a substandard deal that will do more harm than good to Australia's future. I want to make a statement that I have already made on many occasions about this issue. That statement is about the question of what the national interest is, because I think in many respects it is much more than just looking at the basic economic bottom line. It includes looking at social outcomes, labour standards, the preservation and improvement of our environment and our national cultural identity. All of these factors have to be taken into consideration in any trade decisions, so it is critical that the terms of the agreement do not affect our ability to regulate freely in the national interest in the future. What we have done is effectively sign away our domestic capacity and our sovereignty to regulate on these issues. It is no surprise that the Labor Party qualify it 43 times, because they know that they have to try to regulate before the agreement comes into existence on 1 January next year. How far it goes depends on their capacity to keep in line with the terms and conditions of the agreement itself.

We supported the establishment of the select committee that looked at the free trade agreement. Given that the government has the power to enter into this agreement without the involvement of the parliament in any way whatsoever, it was extremely important that the Senate, as the house of review, was given the opportunity to carefully scrutinise and analyse the terms of the deal to determine whether or not it really was in Australia's interest. I think the inquiry has been extensive in conducting its analysis of that particular question. From the various views that were put forward on this agreement, I do not think anyone could say that, on balance, the evidence would justify the need to support what we are debating here today. I want to pause for a moment and thank the committee secretariat staff, who are to be commended for their incredible work and diligence throughout this process.

The government has based most of its sales pitch relating to the FTA on the assumption that it will bring significant economic benefit to Australia. While the Democrats believe that wide-ranging trade agreements of this nature should be assessed according to a broader set of criteria than just mere economics, it is also useful to look at the vastly divergent views about whether the government's loudly proclaimed benefit is ever likely to eventuate. We recognise that economic modelling in and of itself is an inexact science and that a range of different assumptions can be used to produce remarkably different results. We also believe that the government has deliberately misled the Australian people with respect to the benefit of the deal, and it has done so according to results from its own economic modelling study. Why is it that the government did not engage the Productivity Commission in undertaking a national interest assessment? That is a legitimate question that all Australians should ask and deserve to have an answer to.

The government, of course, commissioned the Centre for International Economics to model the impact of the FTA—the same organisation that predicted the FTA would be worth $4 billion if it got rid of all trade restrictions between the two nations. This time, the CIE told the government exactly what it wanted to hear and in fact decided that even though the deal left many trade barriers in place the projected benefits of the deal had ballooned out to $6 billion a year. What an extraordinary statement: a $4 billion benefit to the country with no trade barriers but a $6 billion benefit with trade barriers remaining in place. I do not know how they arrived at that sort of conclusion, but it is the sort of argument the government has been running out there to say that this is a great windfall for the country.

The CIE report has been criticised for using grossly overstated estimates and unrealistic assumptions. Dr Philippa Dee of the ANU was commissioned by the Senate select committee to conduct alternative economic modelling of her own. She came up with the far more realistic figure of $53 million a year. As Dr Dee herself describes:

This is a tiny harvest from a major political and bureaucratic endeavour.

Dr Dee's report also demonstrated how this agreement sets a precedent in a couple of significant ways. I think that this debate is worthy of noting what these issues are. First, Australia has accepted this agreement, even though it did not contain any access to the US sugar market, but rejected the EU-US proposal on agriculture in Cancun in Mexico last year, which, while not ideal, could have provided greater benefits for Australian farmers, because at least proposals back in Cancun in Mexico last year started to address the fundamental problem of a free trade agreement with the United States—that is, the question of US domestic agricultural subsidies.

This FTA sets precedents with respect to tailoring rules of origin based on tariff classification. In the past, all rules of origin were based on a relatively simple rule for regional value content of goods. The tailor-made rules that we have come up with have been criticised as being the result of protectionist lobbying by producer interests, and Australia can now rightly be said to be condoning such an approach right across the world. The fact that we have accepted such wide-ranging safeguard measures, especially for beef and textiles, is a step backward from the WTO practice. Of course, our extensive intellectual property commitments will also set a precedent for Australia's approach to IP regulation in the future.

One of the key examples made by Dr Dee about the overinflated assumptions used by CIE in their analysis related to the government procurement provisions of the agreement. The benefit to be gained from these types of opportunities depends on whether Australian businesses are able to take advantage of them. The CIE study considers that Australia might be able to achieve 30 per cent as much market penetration as Canada. However, Dr Dee also argues that this is doubtful given that Canada is a much bigger country and it is much closer to the United States than Australia, particularly given that 90 per cent of the Canadian population live within 160 kilometres of the US border, which stretches for over 6,400 kilometres. It highlights the point that the costs or the windfalls that the government so loudly proclaims diminish the further away you are from the marketplace, and Australia is down here in the Southern Hemisphere.

Geography and economy size play a significant role in trade. Trade volumes tend to increase with the size of the importing and exporting countries, and they decrease with the distance between them. Another point that needs to be made here in comparison is that the Canadian economy is almost 70 per cent larger than the Australian economy, and the Australian economy is almost 30 times further away from the United States. Therefore, I think it is more realistic to assume that Australia's trade with the US in government procurement could be expected to be four per cent as large as that of Canada and no more. Dr Dee's revised projections of the benefit, the $53 million likely to be achieved through this deal, reflect adjustments taking into account the rules of origin, trade diversion and the additional costs that were never factored into the CIE report, such as royalty payments resulting from the extension of the copyright term, the cost of administering the agreement and the long-term cost of the sugar package, which was excluded in this particular instance. In the Democrats' view the Dr Dee report demonstrates that the government's rhetoric about the overwhelming economic benefit of the deal cannot be taken that seriously.

In many respects the economic benefit is not the only thing that the government have lied to the Australian people about. They have repeatedly assured the Australian people that the important social policies that they themselves put on the table to be sold away have been protected. This is simply not the case when you look at the details of the agreement. The fact is that America now has a role in determining Australian policy. Even if we accept the government's assertions that they will resist any undue pressure for policy to be changed, the fact that another nation has a voice, a right to be heard, on issues that should be determined by Australians alone is simply unacceptable. Let us look at some of the ways in which our sovereignty has been compromised. My colleagues, in joining in this debate later, will also elaborate on these issues, but I want to touch on some of them very briefly.

I think the most significant goes to the Pharmaceutical Benefits Scheme, because this is one that the Labor Party have hung their hat on all the way through. Perhaps the most controversial aspect of this deal has been the fact that it will affect the way in which the Pharmaceutical Benefits Scheme operates in this country. It is, I think, world's best practice and the United States would not want this system to be replicated in other countries across the world. Why? Because it effectively excludes many of the multinational pharmaceutical companies that operate out of the United States. This agreement sets a precedent in yet another way: it is the first trade agreement anywhere in the world that interferes with a nation's health system. It is a matter of national shame that we have gone down this path by allowing a trade agreement of this sort to set a precedent and allowing one country to interfere in the social policies of another nation.

The Democrats believe that the Pharmaceutical Benefits Scheme should never have been included in the agreement at all. Good faith notwithstanding, it is unacceptable that US pharmaceutical companies should have a voice in Australia's health policy making processes. Given the fact that no real detail has been provided about how the new working group and the review mechanism will operate, it is unacceptable that the parliament should be asked to endorse the deal without receiving those answers. How can we take their assurances seriously? First, there was the lie about whether or not it would be included in the first place. Then they secretly sold it away, then they tried to fob us off with empty promises and then they provided no details as to how it would work in practice. And the Labor Party, which knows all of this, has decided on balance to support it, although qualifying it 43 times.

The issue of quarantine under this agreement also gives rise to significant concern. The signing of the free trade agreement is bad news for Australian farmers, who want to see Australia's rigorous, science based quarantine system protected. The agreement will, in effect, increase the pressure on Biosecurity Australia to water down Australia's tough stance against possible plant and animal diseases by allowing US trade officials to have a say in the import risk assessment processes.

The committee report outlined the concerns that have been raised about the new consultative committee on SPS issues that has been agreed through the FTA, especially pertaining to the apparently different interpretations of what the role of the committee will be according to the United States Trade Representative and DFAT-published material and statements. They do not say the same things. In some instances, they contradict each other. While the government maintains that there is no evidence to suggest that this deal will make Australia's quarantine system vulnerable to US pressure, concerns have been raised about the mere existence of a forum that will be used by the US to try and advance its trading interests at the expense of Australian environmental protection. We believe that the whole approach of making quarantine decisions on any criteria other than the best available science is unacceptable and grants a voice to US trade interests, again, against the interests of developing Australian environmental policy.

Later in the debate, I want to talk about the issue of intellectual property, but it is important to note that this trade agreement, unlike others, goes a lot further than just dealing with the question of trade between nations; it goes to the question of providing an entire chapter on intellectual property. This is significant in this agreement because it either pre-empts or directly contradicts the current Australian debate about appropriate reform to our copyright law. Some of the changes to the law in this bill go even further than the free trade agreement itself and further than current US copyright law. This government is changing Australian law through a trade agreement, which is completely unacceptable in terms of what those outcomes are going to be.

I have mentioned time and time again the question of the extension of copyright by an additional 20 years, because Australia, being a large importer of copyright material, will have to pay the cost of those additional 20 years of being able to access information that otherwise would have been freely available in the public domain after 50 years. The community consequences of the trade arrangement may essentially mean that our schools, libraries and all of those institutions involved in education and accessing information will have to pay copyright over an additional 20 years. That was never taken into account in the government's own analysis by the Centre for International Economics. Over the long term, it compounds the problem as far as social and education policy goes in terms of our young people and certainly our institutions of higher learning being able to access the information, which was always thought to be free in the public domain once it got there. Overall, when you couple all of this with the long-term damage that is being done to Australia's sovereignty and the ability of future Australian governments to set quotas for content levels in media or invest in the domestic film industry, the damage that has been done as a result of this deal will never end. We cannot go back once we put it in train.

I want to finish by saying that, whilst we regard the deal as riddled with contradictions and devils in the detail, in the committee stage of this debate I do not believe anyone should take the government's rhetoric seriously. I think the ALP needed to show some nerve here at this crucial time and, quite frankly, they have let the country down. We will do all that we can to ensure that the impact of the FTA is limited as much as possible and that future generations do not pay the price of the major parties' desperation and political expediency in an election year. It should have been a decision based on what is in Australia's national interest, not putting the interests of American companies before the Australian people and certainly before this country. That is the only thing that should have been answered in this agreement, and that is what should have been stood up for.