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Tuesday, 3 August 2004
Page: 25422


Senator BOSWELL (Leader of The Nationals in the Senate) (5:40 PM) —That was certainly a Jeremiah type speech—a prophecy of doom. The Nationals are quite excited about the prospect of our being a major trading nation. We believe this is an absolutely historic achievement—a free trade agreement with the largest economy in the world, getting us into a $300 million market. It is an agreement under which, for example, from day one agriculture tariffs in the US go from 66 per cent to zero. Specifically, in horticulture 99 per cent of current fresh produce exports will immediately be tariff free, up from the two per cent that applies now.

There will also be greater access for two of Australia's key agricultural exports, beef and dairy, including immediate elimination of in-quota tariffs. Importantly, all single-desk arrangements for export marketing of Australian commodities are preserved. For sugar, rice, wheat and barley the single desk remains, and our quarantine and food safety regimes are preserved. The benefit to Australia is estimated to boost the Australian economy by over $6 billion a year a decade after coming into force, with more than 30,000 extra jobs created. You can see why The Nationals are excited at these prospects.

In the words of my Queensland Labor Premier, Peter Beattie, `The free trade agreement is our best once-in-a-lifetime opportunity to get jobs for Queensland—the best opportunity we've have for more than 100 years to expand into new markets.' His research shows improved export values for Queensland across beef, peanuts, sheepmeat and some horticultural products; improved demand for manufactured goods and light metals; and new market access for a range of sectors to supply the multibillion-dollar US government procurement market. Victorian Labor Premier Steve Bracks said: `We believe it is in Victoria's and Australia's interests to link ourselves with the biggest and most dynamic economy. We welcome the passage of the FTA through the US Congress and await its ratification in Australia.' Those two Labor premiers can see the obvious benefits of growth and jobs for a nation of 20 million people entering a free trade agreement with a market of 280 million people—unlike their federal leader, Mark Latham, who could not see the ladder of opportunity for all Australians at all and even today is making his approval conditional.

The trade agreement is broad ranging. It eliminates virtually all tariffs on Australian industrial products and it opens large markets for our efficient Australian exporters. To start with agriculture, despite the varying final outcomes all industries—including sugar, which unfortunately was not included in the agreement—praise the Australian government's efforts on their behalf. I take this opportunity to congratulate Mark Vaile for pulling this together and getting an achievement. Cane growers who were there for the negotiations said: `At no stage did we adopt a dog-in-the-manger, “if not sugar then no-one”, approach to the negotiations. We accept that, on balance, the FTA will deliver economic benefits to the nation. As a major foreign income-earning industry exposed to all sorts of distortions of the world market, we believe we are entitled to participate in those gains one way or another.' The government has understood their plight, with a $444 million reform package. Recently they have welcomed the EU announcement of a proposed radical overhaul of the sheltered EU sugar regime.

In their submission to the Senate committee's inquiry, the Cattle Council of Australia said of their participation in Washington:

It is this insight which allows CCA to state that in its opinion, the Australian Trade Minister and the Australian negotiating team worked tirelessly to achieve the best outcome they could for Australian beef producers.

CCA take exception to anyone who would criticise their efforts during the FTA negotiations. It is interesting to note that not one of the groups criticising the FTA was present in Washington during the final round of negotiations. Therefore their comments are not based on first-hand experience, unlike such groups as the Cattle Council of Australia. While CCA remain frustrated with the outcomes of the FTA, this is entirely targeted at the US and its inability to free itself from its protectionist shackles.

With beef, the agreement provides greater access. Our present quota of 379,214 tonnes becomes immediately free of the present 4.4c per kilogram tariff, increasing returns of around $20 million. There is access for an additional 20,000 tonnes in year 3 at the latest, which will increase to 70,000 tonnes in year 18, should we sign on to the free trade agreement. The out of quota tariff will be phased down from years 9 to 18, with an 18.5 per cent increase in quota volume over 18 years. At current prices that is valued at $245 million in the final year. Seeing that we have reached our quota only once or twice, that is a big opening for the cattle industry.

The dairy industry has also applauded the gains. In the Queensland Country Life on 22 July, Queensland Dairyfarmers Organisation President Wes Judd said:

The current US FTA can provide significant, ongoing benefits to dairy producers, manufacturers and distributors across the country.

These stem from the FTA's inclusion of significant, ongoing expansions in dairy quota access for a wide range of dairy products and accompanying duty savings and investment opportunities.

And it will help sustain Australian industry growth and income in coming years. For dairy, there is an immediate increase in annual quotas with ongoing growth at the average yearly rate of five per cent, which should amount to an extra $41 million in additional exports in year 1. I have heard it said that it is worth about $4,000 to every dairy farmer.

Previously excluded products will gain access, such as certain cheeses, butter, milk, cream and ice-cream products. For example, that equates to 7.5 million litres of milk, cream and ice-cream, 2,000 tonnes of European type cheese and 4,000 tonnes of whole milk powder. The Australian Dairy Industry Council urge all members of parliament to support the FTA, citing the industry's export success as being $2.5 billion last year and predicting a growth of $50 million to $60 million in the first year of the US free trade agreement. They also see it as having a social benefit in creating skilled and semiskilled jobs in the regions and elsewhere across Australia. The Murray Goulburn Cooperative, a large exporter, agree with these figures and urge ratification of the agreement because, on a cost-benefit ratio, they rate it as a big step forward for the Australian dairy industry in a market that has been one of the world's most protected.

Fishing and horticulture are pleased with their gains. In fact, the fishing industry think they have won the lottery. The fishing industry will immediately benefit from the elimination of 48 separate tariffs, ranging up to 35 per cent. That is estimated to be an extra $20 million to $30 million in exports in the first year. For example, tuna boat owners in South Australia are pleased that they will see the immediate reduction of the 35 per cent tariff on Australian tuna and the removal of preferential treatment for competitors, which will deliver a level playing field into the US.

Over 99 per cent of horticultural fresh produce exports valued currently at $71.1 million will become tariff free immediately. While pricing safeguards are there for 33 horticultural products, this only represents 2.8 per cent of all horticultural products, for many of which Australia is not a major exporter. Safeguards will only apply once the tariff reaches zero and, even if they are applied, they will be below the duty paid by our competitors who do not enjoy preferential tariff treatment.

New quotas will apply to tobacco, cotton and peanuts, increasing by three per cent per year. Avocados will receive two seasonal quotas from year 2 of 1,500 tonnes from February to mid-September and a further duty-free 2½ thousand tonnes between mid-September and the end of January. The outside quota will be eliminated over 18 years. This negotiated single tariff rate quota is seen as a huge positive for the avocado industry.

The retention of the single desk has worried every farmer who grows wheat, sugar, barley and rice. We have retained the single desk for all industries, which is what the industries wanted. The US wanted the abolition of the single desk along with extensive changes to our PBS. They did not get them—just as we also kept local content rules for Australian television.

The agricultural sector seems assured that there are no concerns with quarantine. Horticulture Australia's submission to the Senate committee said there is no alteration within the FTA to arrangements covering the negotiation of quarantine market access and that determinations will continue to be made strictly on the basis of science alone. On the two committees—the Committee on Sanitary and Phytosanitary Matters and the Standing Working Group on Animal and Plant Health—they state:

There appears to be nothing in this SPS chapter as likely to be of concern to horticulture. To the contrary, improved facilitation of quarantine market access processes will be welcomed by the industry.

The National Farmers Federation believe that the FTA meets the objectives of ensuring Australia's scientific based quarantine system is not undermined by the FTA negotiations. They have no concern with the formation of the two committees, seeing them as developing and formalising closer working relations on SPS related market access issues and saying that `US representation on these committees has no power to undermine Australia's scientific based system or import risk assessment process in particular'.

During the Senate committee hearings there have been concerns expressed, most particularly about our world-leading PBS system and innovative generic drugs industry and patents, local content in the arts, copyright, foreign investment and the overall benefit to our national interests through various modellings. The government and the negotiators have assured us, the members of the committee, that neither our PBS system nor our generic drug industry is under any threat from the free trade agreement. The government has already announced the independent review mechanism for applications to list drugs under the Pharmaceutical Benefits Scheme, which was our commitment under the FTA. It has been developed in consultation with the Pharmaceutical Benefits Advisory Committee. The price of pharmaceuticals will not rise as a result and the PBAC will remain the gatekeeper of the PBS under the review process. Unsuccessful applicants will be able to specify the ground for review. An independent expert reviewer will be appointed and will make comments back to the PBAC, and at all stages information will be made publicly available to explain and justify the recommendations made.

The Australian Medical Association has welcomed the components of the review process and the government assurance that it will not allow the PBS to be threatened by this agreement. The government and the committee have listened to this community concern. The government is confident that the commitment it has made will have no adverse impact on the sustainability of the PBS. The independent review mechanism, together with other transparency measures agreed under the free trade agreement, will deliver improvements in the transparency of the PBS which will be of benefit to the pharmaceutical industry, prescribers, consumers and taxpayers.

The Senate committee has been assured by the chief negotiator that the prices of pharmaceuticals will not increase as a result of the FTA and that those prices will not come under institutionalised pressure from the US government on behalf of the US pharmaceutical lobby. The commitment is to recognise `the value of innovative pharmaceuticals' in the PBS listing and pricing system. Also, the PBAC will remain the sole authority recommending to the Australian government which drugs will be listed. The medicines working group is simply an arena for discussion and has no operative or decision making power. Negotiators also reassured the committee that generic drugs will not be affected or delayed in their introduction, with no threat from patent evergreening. Like all Australians, I was concerned that our PBS system should not be threatened in any way by the FTA. That was given a lot of attention by our committee, which has been assured that the PBS will not be adversely affected by the FTA. In response to the opposition's proposed amendments on the PBS for their political convenience, Minister Abbott told the House today that `no drug can be listed on the PBS without a recommendation from the PBAC'. As the Prime Minister said in relation to these amendments, it is not necessary.

Like the dairy, beef, horticultural and fishing industries and many others, I see this FTA with the US to be a giant next step for our future growth and development through our entry into the largest market in the developed world. Labor has made much of the threat of the FTA to our multilateral trade commitments. This agreement in no way diminishes Australia' s commitment to agricultural trade reform. In fact, the World Trade Organisation continues to be Australia's highest trade priority through Australia's leadership of the influential Cairns Group. In the World Trade Organisation we continue to push for reform for our distorted global agricultural markets and for better access for all our farm products. The proof that the World Trade Organisation negotiations have not been affected lies in the agreement to a framework for a new world trade agreement, reached in Geneva over the weekend. Since this FTA commenced we have signed free trade agreements with Thailand and Singapore. Similar agreements with China and Malaysia are in discussion. Meanwhile, the FTA with the United States is a giant leap forward in opening up trade opportunities with a market approaching 300 million customers—and that is a big market for an ex-salesman like myself—and with the most advanced economy in the world. Many industries, all democratically elected state and territory governments and many Australians have instructed the Senate committee, in their submissions, to ratify the agreement. The United States Congress have now met their legislative requirements and ratified it from their side. These bills being debated today will allow the agreement to be implemented. They are the final step in attaining the Australia-United States free trade agreement. I have the pleasure—and I consider it an honour—to support these bills on this historic event on this historic occasion.