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Thursday, 18 November 2004
Page: 9


Senator CONROY (9:56 AM) —I welcome the opportunity to participate in this debate on the Customs Amendment (Thailand-Australia Free Trade Agreement Implementation) Bill 2004 and the Customs Tariff Amendment (Thailand-Australia Free Trade Agreement Implementation) Bill 2004. Whilst this debate is about the Thailand-Australia FTA, it also provides an opportunity to highlight again the flawed trade policy that this government has been pursuing. It is apparent from Australia's disastrous export performance that the Howard government's trade policy has been misdirected. Australia has historically been a key contributor to and a great beneficiary of the multilateral trading system previously known as GATT and now known as the World Trade Organisation.

Incapable of rising to the challenge of multilateral trade negotiations, the Howard government immediately resorted to the suboptimal path of bilateral trade agreements. This has been to the detriment of Australia's trading interests and the future prospects of Australia's export industries. While critical of the direction of the government's trade policy, Labor will support the FTAs if they are shown to be in the national interest and if they do contribute to our multilateral trading objectives. On these two counts, Labor is of the view that the Australia-Thailand free trade agreement is in Australia's national interests.

However, while supporting these bills, Labor is concerned that the government did not take the opportunity provided in the Thai FTA negotiations to raise the issue of labour standards and the environment. Accordingly, I move:

At the end of the motion, add:

“but the Senate notes the Government's failure to include provisions in the Thailand-Australia Free Trade Agreement covering labour and the environment”.

Labor's overriding trade policy priority is the WTO Doha Round of multilateral trade negotiations. This is because the WTO offers the largest potential economic and trade gains for Australia and is the largest potential stimulus for world economic growth. Labor governments have a proud record when it comes to international trade negotiations. Labor established the Cairns Group of agricultural free traders in 1986. The Cairns Group put agriculture on the international trade agenda and has kept it there against strong resistance. Through smart, middle-power diplomacy, Labor governments tackled the difficult issues of international trade negotiations head-on. In contrast, this government has failed in its duty to play a key role in driving the Doha Round as Labor drove the Uruguay Round in the 1980s.

Confronted by the challenges and difficulties of multilateral trade negotiations, this government has chosen the less productive approach of bilateral FTAs. By their nature, FTAs are discriminatory against our other trading partners outside of the deal. They are also unable to tackle agriculture export and domestic subsidies that do so much damage to international markets. Last week, the IMF endorsed Labor's view that bilateral agreements can reduce the political will for unilateral trade liberalisation in the region and dilute efforts to conclude successfully the WTO negotiations. That is the view of the IMF—an organisation not noted for being rampant socialists or opponents of trade. And that is where this government gets it continually wrong.

We are all aware of how dismal the government's achievements have been on the export front. Australian exports of goods and services have fallen over the past three years. Under Labor, average annual export growth was 8.1 per cent. Under this government, export growth is less than half that achieved by Labor at 3.6 per cent. Across the board, exports have plummeted and the government has used every excuse under the sun to try and deflect responsibility for this disastrous outcome. We have all heard that it was the drought or the international economic slowdown or our dollar was too high or our competitor's dollar was too low—all those excuses never stacked up. It has always been clear that this government coasted off the back of a low Australian dollar for too long and never had the strategy to improve our export performance when the dollar strengthened.

Last year, Australia recorded its largest ever trade deficit—a massive $24 billion—and its largest ever current account deficit of $47 billion, which is equivalent to six per cent of GDP. With a huge current account deficit at a time of rising global interest rates, the task of attracting international capital to finance the deficit becomes increasingly harder, placing upward pressure on Australia's interest rates. This is the direct fault of a government that promised to keep interest rates down. It is creating circumstances that will push interest rates up. Despite a stronger international economy, and our terms of trade being at their highest in 28 years, Australia has now recorded 29 monthly trade deficits in a row. So much for the government's record as an economic manager! When the chickens come home to roost and interest rates start rising, the Australian public will know exactly where to put the blame. There will be no ducking, no weaving and nowhere to hide, Senator Minchin.

Australia and Thailand have been developing an increasingly broad based bilateral relationship, building on our mutual interests in a range of areas, particularly in relation to trade and investment. Australia and Thailand have also been working together cooperatively in regional and multilateral fora including APEC, which Thailand hosted very successfully last year, and the Cairns Group of agricultural exporters. The objective of TAFTA is to more closely integrate our two economies and to deepen Australia's trade and investment links with the second largest and fastest-growing economy in South-East Asia.

TAFTA will liberalise two-way trade in goods between our two countries. It will also liberalise investment and services arrangements in a small number of sectors in which Australian business is pursuing opportunities. Labor's assessment is that there are positive benefits in this deal for Australia, and that is why we are supporting these bills. TAFTA is comprehensive in that no traded goods sectors are carved out of the deal—as was the case with the exclusion of sugar in the Australia-US FTA. While TAFTA does not exclude any goods sectors, a great deal of disappointment has been expressed about the length of time it will take to reach free trade in many agricultural products. TAFTA will not achieve free trade in dairy until 2025—20 years down the track. That is an extraordinarily long time for an outcome in a trade deal. That also happens to be five years after the APEC Bogor goals of free trade and investment in the region are to be in place.

Other agricultural products are also subject to very lengthy lead-in periods before Thailand's tariffs will be cut to zero. It will take 15 years to reach free trade in Australian exports of meat, sugar and potatoes. It will take 10 years to achieve free trade in Australian exports to Thailand of fruit, seafood, wine and some industrial products. Other Australian exports will have to wait up to five years before they benefit fully from TAFTA. These include small motor vehicles, textile products, raw materials, pharmaceuticals and rubber products. These are extraordinarily lengthy phase-in periods to which the Minister for Trade agreed to conclude this deal. In contrast, nearly all of Australia's tariffs applying to imports from Thailand will be eliminated on the first day of this agreement entering into force on 1 January next year.

This deal also includes very generous rules of origin arrangements applying to textile, clothing and footwear products arriving from Thailand. These rules will be difficult to enforce and have the potential to give rise to illegal transshipments of textile products through Thailand to Australia. They are a great concern to the Australian TCF industry, which is already under pressure from reductions in Australia's TCF tariffs and greater international competition.

Concern has also been expressed about the potential impact of this deal on Australia's quarantine arrangements. The Australian Chicken Meat Federation is determined to ensure the FTA does not in any way undermine the integrity of Australia's quarantine system. Thailand's recent experience with numerous avian diseases, including avian influenza, highlights the importance of ensuring Australia's quarantine system is not compromised in trade negotiations.

It is disappointing the government did not use the FTA negotiations to raise with Thailand its failure to observe core labour standards. According to the International Confederation of Free Trade Unions, Thailand has not ratified the ILO conventions on the right to organise and collective bargaining, freedom of association, discrimination and minimum age. If it was good enough to include a chapter on labour in the US FTA, TAFTA should also set out the obligations of both parties on labour issues. The environmental obligations of Australia and Thailand are not addressed under TAFTA.

In stark contrast to the US FTA, TAFTA does not include any reference to the concept of sustainable development or the importance of assessing the environmental impact of the agreement. This is another major oversight on the part of Minister Vaile and is an issue that should be addressed further down the track as the bilateral relationship with Thailand continues to develop. In truth, I do not think it was an oversight. This government is not committed to core labour standards or to basic environmental protections. That is why they are not in the agreement—because this government does not care about them.

Concern has also been raised about the inclusion of an investor state dispute settlement mechanism in TAFTA. Investor state dispute settlement is often greatly misunderstood in international trade law. Some in our community see it as a stalking horse to challenge federal, state or local laws on all types of matters which may affect investment decisions, such as environmental, health, human rights and labour laws. It is entirely appropriate that the Australia-US FTA did not include an investor state provision as both parties to that agreement are developed economies with transparent and rigorous systems of law. However, Thailand's status as a developing country necessitates the inclusion of an investor state provision to give certainty to Australian business about its legal rights when investing in Thailand. As a developed economy, Australia has a sound and transparent system of law, greatly reducing the prospect of Thai investors resorting to the investor-state mechanism to seek resolution of any dispute they may have.

I must also note for the record that the Joint Standing Committee on Treaties has not completed its inquiry into the Thai FTA. This is a poor reflection on the government's commitment to transparency in the treaty making process and is indicative of their unwillingness to allow the parliament to undertake full scrutiny of treaties before they take effect. So they are already trampling over their claimed commitment to transparency—and that is before we get to 1 July. We have seen the government's behaviour before 1 July—just walking over parliamentary procedures. Imagine what is going to be happening after 1 July.

Despite numerous problems with the content of the Thai FTA, it does provide benefits for Australian business. TAFTA will liberalise two-way trade in goods and in some important investment and services sectors. The majority of tariffs in both countries will be reduced to zero on implementation of the agreement. The reduction in Thailand's tariffs—some of which are as high as 200 per cent—will provide considerable benefit to Australian industries pursuing business opportunities with Thailand. Under this deal, 49 per cent of tariff lines in Thailand will immediately go to zero and these account for 78 per cent of Thai imports. TAFTA will give Australian business an advantage over their competitors in a market that has traditionally been highly protected. It does not suffer from the exclusion of any sectors—such as the carve-out of sugar in the Australia-US FTA. It is therefore more comprehensive and, from a multilateral trade policy point of view, a better outcome than the US FTA.

The Australian automotive manufacturing industry, in particular, is strongly supportive of this deal and the opportunities it will provide to access the Thai automobile market. Notwithstanding the very long lead times for cuts to some agricultural tariffs, there are benefits in the deal for Australian farmers including in dairy, horticultural and other agricultural products.

It is for these reasons that Labor is supporting these bills. We are concerned about the failure of the agreement to deal properly with labour standards and the environment, and for that reason I will move a second reading amendment. However, the FTA will give rise to greater access for Australian business to the Thai market. It is comprehensive in scope—albeit with long phase-in periods for the abolition of some of Thailand's tariffs. Importantly, it will contribute to trade liberalisation in the Asia-Pacific region and contribute to the advancement of Australia's multilateral trade objectives.