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Thursday, 29 November 2012
Page: 10400

Senator BRANDIS (QueenslandDeputy Leader of the Opposition in the Senate) (22:23): The coalition supports the free trade agreement, which provides Australia and Malaysia with more liberal access to each other's goods, services and investments markets. We therefore support the Customs Amendment (Malaysia-Australia Free Trade Agreement Implementation and Other Measures) Bill 2012, which gives statutory effect to that free trade agreement. In terms of two-way goods and services trade, Malaysia is Australia's third largest trading partner in ASEAN and our 10th largest partner overall. According to the Department of Foreign Affairs and Trade, in 2011-12 the total merchandise trade between Australia and Malaysia was $14.2 billion, with Australian exports of $5 billion and imports of $9.1 billion.

This agreement comes at a time when total two-way services trade in 2011-12 was $3 billion with Australian exports of $1.6 billion and imports of $1.3 billion. The agreement builds on the ASEAN-Australia-New Zealand Free Trade Agreement and allows for significant gains for services and investment through access to increased foreign ownership in key service sectors where Australia has proven capabilities.

Australia has had a long relationship with Malaysia. It dates from the 19th century when Malays participated in the pearling industry in Australia's northern waters—and I fear I am about to be reading another one of Mr James Lambie's erudite and discursive speeches! Australians fought alongside Malaysians in the 1941-42 Malayan campaign in World War II and assisted the newly independent Malaysia in the 1960s during the Confrontation with Indonesia. Australia was also involved during the time of Malayan independence from Great Britain in 1957. A former Governor-General of Australia, Sir William McKell, helped draft the Malaysian constitution and Australia also sponsored Malaysia's subsequent joining of the United Nations. Malaysian troops have also served alongside Australian Defence Force personnel in East Timor. Since that time Australia and Malaysia have enjoyed an enduring and developing trading relationship, which I will speak about in more detail further in my speech, apparently.

This FTA with Malaysia has been underway since May 2005, when former Howard government trade minister, the Hon. Mark Vaile, commenced negotiations with our Malaysian counterparts. On 22 May 2012, the Malaysia-Australia Free Trade Agreement was signed in Kuala Lumpur with the intention that they would aim for the agreement to enter into force on 1 January 2013. Australia's major merchandise exports to Malaysia include crude petroleum, copper, coal and aluminium. Australia is also one of the major providers of education services to Malaysia. Malaysia is a major exporter of crude petroleum to Australia as well as monitors, projectors, televisions, computers and telecommunications equipment and parts.

Under this agreement, both countries will cut tariffs on a wide range of goods as well as make administration for trade simpler whilst addressing other barriers to trade. Australia will eliminate all tariffs on goods from Malaysia from day one. Malaysia will eliminate tariffs on 97.6 per cent of goods imported from Australia from day one, which will then rise to 99 per cent in 2017.

Many prominent Australian industries are set to benefit from this new trade agreement with Malaysia, including the Australian dairy industry. The Australian dairy industry's current exports to Malaysia are valued at $260 million per year and a liberalised licensing arrangement will allow larger volumes of milk to be exported and, for the first time, the opportunity to export high-value drinking milk in retail packs. In Dairy Australia's annual report for 2011-12 it is stated:

Dairy products have become an increasing part of the consumer's diet in Malaysia. Demand will only grow stronger and Australia is well placed to help meet this growing need.

The Australian automotive industry will see an elimination of all tariffs on large cars and nearly all tariffs on automotive parts imported from Malaysia, with the elimination of all tariffs on small cars by 2016. Malaysia will immediately exempt Australian cars from its global limit on imports. The Australian wine industry will receive a guarantee of the best tariff treatment from Malaysia under the new agreement. Mr Steve Guy from Wine Australia has said:

There were 136 individual Australian wine exporters to that market last year, which sends a message that maybe the small wine producers in Australia can find a niche in Malaysia. Given the proximity of Malaysia to Australia and the overall preference for more expensive red wine, it makes it an attractive market for smaller producers strengthened further by this agreement.

The agricultural industry believes this agreement is a step in the right direction. Currently, Malaysia is Australia's fourth-largest sugar market and fifth-largest wheat export market. National Farmers Federation Vice President Duncan Fraser said the Malaysian market is worth about $1 billion in Australian agricultural exports and that these commodities can be boosted through the free trade agreement. Notably, there will be open access arrangements from 2023 for the rice industry, with all tariffs to be eliminated by 2026. This is a significant development for the Australian rice industry, which has traditionally struggled to get a foothold in Asian markets.

Other industries that stand to benefit include plastics, processed foods, chemicals and a range of manufactured products where all tariffs will be eliminated immediately. Also, tariffs on 96.4 per cent of steel and iron exports to Malaysia will be eliminated by 2016, then 99 per cent by 2017 and 100 per cent by 2020, which, I suppose, is as good as you can get. To implement the agreement in Australia requires amendments to the Customs Act 1901, the Customs Tariff Act 1995 and the Customs Regulation Act and the enactment of a new customs regulation for the product-specific rules set out in annex 2 of the agreement.

I now turn to the content of the two bills. First let me turn to the amendments of the Customs Act. The Customs Amendment (Malaysia-Australia Free Trade Agreement Implementation and Other Measures) Bill 2012 amends the Customs Act 1901 to enact the rules of the Malaysia-Australia Free Trade Agreement. I pause to observe that I believe the Customs Act 1901 was the second piece of legislation ever passed by the Commonwealth parliament after the Service and Execution of Process Act 1901, so it is good to see it being kept up to date.

These rules are essential for determining whether imported goods from Malaysia are eligible for preferential rates of customs duty in accordance with the agreement. These new rules are similar to other FTA arrangements and include provisions as to (1) when goods can be considered wholly obtained or produced (2) when goods are produced entirely from originating materials and (3) when goods are produced from non-originating materials only or from non-originating materials and originating materials. It includes a definition about what counts as a consignment and when goods are either accessories, spare parts, tools or instructional or other informational materials imported with goods.

Let me turn to the amendments to the Customs Tariff Act. The Customs Tariff Amendment (Malaysia-Australia Free Trade Agreement Implementation) Bill 2012 amends the Customs Tariff Act 1995 by (1) providing free rates of customs duty for goods that are Malaysian originating goods in accordance with the new division 1H of part VIII of the Customs Act (2) amending schedule 4 of the Customs Tariff Act to maintain customs duty rates for certain Malaysian originating goods in accordance with the applicable concessional item and (3) inserting a new schedule 9 in the Customs Tariff Act to maintain excise equivalent rates of duty on certain alcohol, tobacco and petroleum products. These rates are equivalent to the rates of excise duty payable on the aforementioned goods when locally manufactured.

In conclusion, the bilateral trade relationship between Australia and Malaysia has reached a significant cornerstone with the signing of this FTA. The agreement will help to diversify the trading relationship by opening up access to markets on both sides. This agreement will strengthen economic links between our two countries, and consumers in both countries will reap the benefits of liberalisation as prices drop and choice expands The coalition welcomes the opportunity to renew our bilateral relationship with Malaysia, and I commend the bills to the Senate.

Before I sit down, may I take this opportunity, since I believe this is the very last piece of legislation which will be considered by the parliament in 2012, to thank you, Madam Acting Deputy President Stephens, and the other acting deputy presidents, the Deputy President, the President and other colleagues for their cooperation and forbearance during 2012, an exciting but difficult year. I wish the compliments of the season to all my senatorial colleagues as well as to the staff. I see the indefatigable Mr Pye sitting at the table as Deputy Clerk: to him and to the Clerk of the Table Office I wish all a very happy Christmas. For some reason I cannot explain, I am reminded at this moment of my favourite children's book, The Little Red Caboose. The Little Red Caboose always came last, but the Little Red Caboose saved the train.