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Wednesday, 4 August 2004
Page: 25575


Senator SANDY MACDONALD (10:45 AM) —I am very pleased to have the opportunity to join in the debate on the US Free Trade Agreement Implementation Bill 2004 and the US Free Trade Agreement Implementation (Customs Tariff) Bill 2004. I note that we are on broadcast, so to those listening let me explain that this is the federal government's discussion of the implementation bills necessary for the FTA with the United States to be agreed to. It is particularly timely: earlier this day, our time, President Bush signed off on the US counterpart agreement. Overnight we have had the opportunity to come to understand the attempt by the opposition, despite saying they will support the FTA, to scuttle it on a furphy of protecting the PBS. The PBS is protected, and that has been part of the fundamental good public policy of our government and our trade negotiator Mark Vaile from day one.

I take issue with almost everything that Senator Harris said. His economic outlook and views do nothing for my blood pressure. One thing he said that was wrong, amongst a lot of other things, is that free trade does not work. In agricultural product alone, Australia exports five times more food than we consume. In the case of the United States, we export about $3 billion worth of food product to them and take in return less than $1 billion worth of food into Australia. If there were no commitment to a level of free trade between Australia and the United States, about $2 billion of Australian product would have nowhere to go, because that level of free trade already exists between the United States and Australia. If we were not able to sell that $2 billion worth of food to the United States, we would really be in deep strife.

I want to give a very brief record of the domestic approval process for the Australia-United States free trade agreement because I know that a lot of people who are listening will not understand what the record is. The negotiations on the free trade agreement were concluded in February 2004 by the Minister for Trade, Mark Vaile, and his US counterpart, Bob Zoellick. The draft text of the agreement was released publicly in Australia and the United States in March 2004. Such early publication was a departure from Australia's normal practice, which has been to release the text of the treaty only after signature. That is how important we regard this agreement.

The final text of the agreement was signed by Mark Vaile and Bob Zoellick in Washington in May of this year. While the signature of a treaty establishes an obligation to refrain from acts which would defeat the object and purpose of that treaty, Australia only becomes bound by the particular and exact terms of the treaty upon entry into force of the agreement. The agreement will not enter into force until both parties have successfully concluded their respective domestic approval processes and passed any legislation necessary at federal and state levels for compliance with the agreement. Of course, that is what is going on now. The Americans have passed and signed off on their domestic approval process, and we are doing the same here. I might add that, at the state and territory level, the state Labor premiers are all 100 per cent behind this agreement. I would like to think that our political opponents would take on board the very strong and measured advice of people like Premier Beattie in support of the FTA.

Once the required domestic processes have been completed in both Australia and the United States, the two governments can agree via an exchange of diplomatic notes on the date for entry into force. The date for entry into force is 1 January 2005, and that will be a very exciting day for Australia. This has been one of the most exciting trade and economic developments for Australia during my time in the Senate, and I say that without any reservations at all. I think it is particularly exciting. It is good for Australia and its people.

This FTA builds on the outstanding trade performance of Australia and its trade minister, Mark Vaile, in the last few years. Last year, of course, President Bush visited here, as did President Hu, and they came on consecutive days. In the context of the US free trade agreement, I might say something about our other very important trade engagement—in North Asia. We already have a trade engagement with North Asia that is very strong, and President Hu's visit raised the further potential of an FTA with China.

In 1957 Australia and Japan forged the North Asian relationship through a trade agreement that laid the foundation of Australia's postwar trade expansion into Asia. I remind the Senate that the Australia-Japan trade agreement in 1957 was also opposed by the ALP. That relationship provides around 350,000 Australian jobs, at a minimum, and is a fantastically important relationship. It has improved the living standards of Australia and Japan. Japan became the principal partner in our relationship with North Asia. Japan, China, South Korea and Taiwan comprise about 70 per cent of our trade. Further trade opportunities in Asia have come with FTAs with Singapore and Thailand. Apart from the potential of an FTA with China, other options include an FTA with Malaysia and perhaps even an FTA with APEC.

Now we have the opportunity for a free trade agreement that goes much further, with the world's largest economy—the United States—comprising one-third of the world's GDP. This agreement will become increasingly important as the balance of the world's political and economic power moves inexorably across the Pacific. Australia with 20 million people and the 11th largest economy in the world now has the opportunity to plug into the US economy with our safeguards in place. They include the protection of the PBS and the protection of the single desk for wheat and a number of other agricultural commodities, which was particularly important for Australian farmers. As one commentator said, any other country offered this agreement would not be able to get to the signing table quickly enough—they could not get the pen quickly enough to sign on the dotted line—but not the Australian Labor Party.

There remains, sadly and regretfully, an unfortunate undercurrent of anti-Americanism in the ALP. That does not include everybody. I know my friend Senator Forshaw would not include himself in that list. There are some decent people on the other side and I would say he is one of them. Fortunately, this anti-American view is not held by the majority, but in true union fashion, the minority can cause a lot of harm along the way. This minority is causing a lot of harm along the way in the ALP. All the Labor premiers see the advantages of the free trade agreement. They signed off on it a long time ago. I do not know whether the state governments require any enabling legislation, but I am damn sure that, in the case of Queensland, New South Wales or Victoria, any enabling legislation has been signed off quick smart by those Labor premiers and Labor governments. They know what is right. They are not flaky about these issues, and that is what we are talking about here. We are talking about flaky, political opportunism which is pretty un-Australian.

If job losses were a real concern of the freeing up of trade, why did the opposition not speak up when the free trade agreements were negotiated with Singapore and Thailand? Surely these countries are a much greater challenge to the security of employment for our work force and offer a much smaller potential market than does the United States for manufactured goods and agricultural products. Arguably the opposition could have spoken up then, but we did not hear anything from the ALP and you have to ask why. It is because the ALP are taking this opportunity to seek some appeasement of the anti-American element within their ranks.

The signing of this agreement will bring huge benefit to Australian agricultural and manufacturing industries, as well as to Australian exporters. As I said, the United States is the world's largest economy and topped the list of Australia's two-way trading partners for 2003 and for a number of years before that. A study by the Centre for International Economics commissioned by the Australian Department of Foreign Affairs and Trade forecast that the FTA will stimulate strong growth in two-way trade with an expected $3 billion annual growth in Australian exports to the US. According to the modelling done by the centre, the FTA could result in Australia's annual GDP increasing by around $6 billion within 10 years of the agreement coming into effect. This will lead to an increase over a 20-year period of around $60 billion, although that is probably being quite conservative. The potential realised from trade agreements in the past has been much greater than that.

The FTA will mean that many Australian exporting companies will now have free and open access to markets in the United States and agricultural producers will see the majority of tariffs reduced to zero immediately and the rest over time. These are just too good to miss. There are long-term benefits for the Australian economy which will boost agriculture, manufacturing and other Australian industries. New jobs will be created and our economy will continue to grow steadily.

I would like to focus on the benefits of the FTA for agriculture. The Free Trade Agreement between Australia and the United States of America will provide considerable potential for further growth of Australian agricultural exports to the United States—presently very much in our favour. Australia currently exports around $3 billion worth of agricultural products to the United States, while importing only $842 million worth of product from the US. The National Farmers Federation supports the Free Trade Agreement between Australia and the United States of America and believes that, on balance, the market access benefits to the bulk of Australian agricultural producers will be significant.

The tariffs placed on the bulk of Australian primary industry products, including most sheepmeat exports—the export lamb market has been highly successful—horticultural products, cut flowers and cottonseeds, will be reduced to zero as soon as this agreement comes into effect. Most remaining tariffs will be eliminated over succeeding years. Beef is Australia's number one export to the United States. In time, the industry will achieve completely free trade with the United States. The in-quota tariff on the 378,000 tonnes presently exported will be eliminated immediately, saving around $16 million in tariff revenue from day one. This in itself is significant for beef producers because Australian beef is incredibly and increasingly highly regarded in the United States. Australia has become renowned for its disease-free status and our geographical isolation from the rest of the world has aided this. We are obviously determined that that remain the case.

In other areas, such as dairy, Australian producers will be able to send nearly three times as much of current tariff quota product to the United States from year one of this agreement. This will be worth around $60 million in the FTA's first year. Very importantly, Australia's single desk arrangement for wheat marketing will remain unchanged, as will the arrangements for single desk marketing of sugar, rice and barley. Sugar has certainly been one of the contentious issues of this agreement. Labor would have you believe that the sugar industry will be damaged by this agreement, but essentially the industry will be no worse off under the FTA and has had a generous package provided by the government in lieu of inclusion in the FTA—about $400 million. Australia already has limited access for sugar into the US. The US is also a large producer of sugar and also heavily subsidises its own sugar producers. We do not like that, but that is the United States's decision and we respect it.

Delay or denial of this FTA legislation will not simply defer the opportunity. To think that a Labor government headed by Mr Latham could renegotiate this agreement is just fanciful. To imagine for one moment that the United States would wish to sit down with Mr Latham to talk about the niceties and refining of an FTA—


Senator Forshaw —John Kerry will—`President John Kerry'.


Senator SANDY MACDONALD —John Kerry has to get there yet; he is not elected yet. John Kerry is about as persuasive and convincing as Mr Latham. By the time the election comes, people might see through Mr Kerry as they see through Mr Latham. Put simply, today, the day President Bush signed this document, we are debating a delicately balanced set of undertakings between three extremely close strategic and economic allies that also happen to be among the world's most sophisticated and open economies.

That is the case with Australia and the United States: we have a very sophisticated relationship with the United States in terms of both our economic relationship and our trade relationship. Much to the chagrin of our political opponents, we now have a strategic relationship that is closer than ever. It is in Australia's interest to have that as we develop our trade relationships in northern Asia and given the problems that are occurring there. It is very important that we build on our relationship with the United States. We do not want to leave one stone unturned or leave one day standing when it comes to improving that relationship. Neither country achieved all that it might have wanted out of these negotiations—far from it. Certainly, on balance, we have a relationship and a trade arrangement that is very strong and potentially of great benefit to both countries.

Australia has not compromised the elements vital to the wellbeing of Australia or Australians. It was a fantastic effort by Mark Vaile. He was given the riding instructions by the government—I am sure by cabinet—to go in and fight for the best agreement he could win. He played his hand extremely well—much better than Mr Latham has played his hand over the FTA in the last little while. The government preserved our best-practice regime for Australian quarantine, which is so important to preserving our clean and green island nation status. We preserved the PBS. We also preserved the right to ensure local content in Australian broadcasting and audiovisual services. To not sign this FTA will damage Australia because it will erode Australia's competitive position in the United States market over time—as our competitors in the US will obviously be able to negotiate trade access, which will impact adversely on us. To stand still is to go backwards.

This is an opportunity timed to perfection and too good to miss. It is good for Australia, it is good for the citizens of Australia and it builds on the opportunities available to us and our children. It is an exciting opportunity—the most exciting opportunity, as I have said, I have seen during my time in the Senate. We should seize that opportunity. It will not come again, and it certainly will not come with a Latham Labor government.