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Wednesday, 4 August 2004
Page: 25691

Senator WATSON (6:22 PM) —This evening I rise to speak in favour of the free trade agreement between Australia and the United States of America, especially as it relates to my home state of Tasmania. This agreement, concluded in February this year, will immediately remove all tariffs from 97 per cent of non-farm exports to the United States and 66 per cent of agricultural exports. Tariffs will be removed from an additional nine per cent of exports within four years, and the process of tariff removal and improved access to the United States market will be locked in for the next 18 years, leaving an opportunity for market growth and employment opportunities far beyond the life of this parliament. The annual benefits to the Australian economy are estimated to be in excess of $6 billion over this period.

For Tasmania, this could equate to a $50 million annual bonanza and 5,300 new jobs, according to a University of Tasmania economics professor, Dr Bruce Felmingham. These figures are based on economic modelling undertaken by the Centre for International Economics. In fact, Dr Felmingham is quoted as saying that it is a lot better than he thought it was going to be. The dairy industry will be one of the real beneficiaries in the Tasmanian farming sector. The Chief Executive of the Tasmanian Farmers and Graziers Association, Greg Bradfield, said:

The deal will treble the Australian Dairy industry's quota access into the world's second largest dairy market. The dairy industry's initial estimate suggests access will increase by around $56 million in 2005 and increase by about 5 per cent each year thereafter.

Tasmania produces some of the finest and best-known brands of cheese and dairy products, including the famous King Island brand. These are the quality products which stand to benefit from increased quotas and the removal of tariffs in the US market. All tariffs have been removed from horticultural products, opening the way for new markets for Tasmanian fresh fruit and vegetables, particularly strawberries and cherries, as well as cut flowers.

Tasmania, as we know, is a prime producer of fine wool for export. Tariffs will be removed progressively on all wool products. This will assist the ongoing viability and sustainability of this vital and traditional Tasmanian industry. The immediate removal of all tariffs from sheepmeat and lamb is estimated to reduce costs to the industry by $1.5 million annually, assisting both farmers and abattoirs to maintain and grow their exports, with flow-on benefits to workers in these industries.

The immediate removal of all tariffs from seafood exports to the United States will not have an immediate impact on the Tasmanian industry, but as prices decline in Asian markets for Tasmanian crayfish and abalone, as has been the case during the past two years, the opportunity to diversify into new markets will become increasingly important for local producers.

The forest industries in Tasmania contribute over $1.1 billion to the Tasmanian economy. An important part of this industry is the production of high-quality timber, veneers, doors and furniture. With the removal of all tariffs from the timber industry, this high-value end of the market will be encouraged to expand exports to the United States. This will increase employment in the forest industry and ensure that Tasmania's unique timbers are value added and directed to the markets where they can maximise their contribution both economically and environmentally.

The manufacturing sector in Tasmania contributes $2.6 billion per annum to the state's economy. Many of these manufacturers currently export to the United States. These include export oriented businesses such as INCAT Australia, ACL Bearings in Launceston, TEMCO ferro-alloys and Tasmanian Alkaloids. For these businesses, the effect on market access is difficult to assess, but all will benefit from lower costs when investing in the United States machinery and electronic equipment to maintain competitiveness and to expand production. Small business will also be the winner, with lower costs for plants and equipment purchased from the United States as a result of import duties being removed.

In summary, Tasmania has positioned itself as a producer of high-quality products and services, produced by a large number of small to medium enterprises and a few large manufacturers. During the year to June 2004, this resulted in a 20 per cent increase in export sales to the United States to $275 million, or 12 per cent of the total Tasmanian exports. That is not a bad result.

While there has been some scaremongering about the effects that the free trade agreement will have on the health system, I believe that it will provide for a more transparent, accessible and efficient Pharmaceutical Benefits Scheme. For example, it has been suggested by some that drug prices could significantly increase as a result of the free trade agreement. This fallacy or suggestion has shown a complete lack of understanding as to who really decides the costs of medicines and the costs to consumers. At the moment, the government cannot even get a $1 increase, which has been blocked by the Senate. So you can hardly think that suggested price hikes will get through easily, particularly through this Senate.

A further suggestion has been that the free trade agreement will lead to the delayed entry of generic medicines and dramatically increase the running costs of the PBS. The relevant provisions merely reinforce the existing patent laws. What they do is clarify that a generic medicine cannot be marketed while there is a current patent, thereby adding to the element of transparency. The free trade agreement with the United States will result in lower manufacturing costs in Australia and improved access to the world's largest and most sophisticated market, and there will be an immediate benefit to Tasmania which will continue to grow in importance over the next few years.