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Thursday, 29 November 2012
Page: 10402


Senator WHISH-WILSON (Tasmania) (22:34): I thank Senator Brandis for his benefits-only analysis of the Malaysia free trade agreement in this debate on the Customs Amendment (Malaysia-Australia Free Trade Agreement Implementation and Other Measures) Bill 2012 and the related bill—a hard act to follow, and I probably need some time to consider it.

I have absolutely no doubt that a Malaysia free trade agreement will bring benefits to some Australian businesses. It is a significant trading partner of Australia. But the world is not that simple. When we get market exchanges and voluntary exchanges, which of course make up trade, we also have costs associated with free trade agreements. That is not just the view of the Greens; it is also the view of the recent Joint Standing Committee on Treaties inquiry and its recommendations on the Malaysia free-trade agreement. Recommendation 1 is very clear:

That prior to commencing negotiations for a new agreement, the Government table in Parliament a document setting out its priorities and objectives including … the anticipated costs and benefits of the agreement.

That recommendation is based on the Productivity Commission report of 2010, which in fact looked at all free trade agreements in terms of what benefits and what costs they brought to the Australian community and the Australian economy. Speaking here purely in economic terms, it is actually not that simple to say that free trade agreements do bring benefits because, until the costs are actually looked at and weighed against the benefits, we cannot say that with any confidence. We are dealing with very complex arrangements and with a large number of countries with overlapping trade agreements.

For example, one cost that the Productivity Commission focused on was trade diversions. Trade diversions are pretty simple and, God knows, I have lectured on that matter enough to students at university. When we have limited capacity and limited resources in our economy and we allocate them to one country under a preferential trade agreement then we do not know what the opportunity costs are for diversion of trade away from other countries and other potential agreements. These are just one of the many economic factors that were looked at by the Productivity Commission.

I know it is late at night and everybody wants to go home, so I am not going to keep talking on this matter for too much longer. The Greens have been steadfast on this issue in terms of our views on free trade agreements. When we look at voluntary exchanges and the transactions that we get in trade, it is like anything that occurs on a market—there is a value we can assign to these transactions. However, quite often those market transactions do not factor in the things that are important to parties such as the Greens, such as economic costs in environmental terms and social costs. Senator Milne will be talking about that very shortly. But I do want to say that this is also well-established in theory on free trade agreements. In fact, the discipline of economics does not even agree on what is a free trade agreement. The WTO has its own agreement and it is often misunderstood—that it relates purely to barriers on the physical free trade of goods and services across national boundaries. However, that is not really the case. It really looks at what is a level playing field. And that takes us into a whole minefield of complexities. In fact, sometimes free trade agreements are anything but that. They can impose extra barriers to trade, such as we see with monopoly rights on things such as intellectual property.

So it is not an easy thing. Put simply, free trade agreements bring economic benefits. That is in dispute. We have considerable concerns about not just this free trade agreement but others and we would like to see the recommendations from the committee implemented at a government level for all future free trade agreements. Notwithstanding that there will be industries that will benefit from this agreement—Senator Brandis talked about the dairy industry—we feel that good policy in future should always, at least, set out in advance what the costs and benefits are. And, importantly, as also emphasised by the Productivity Commission, over time those recommendations can be a set of benchmarks that we can actually go back to and have a look at and with which we can back-test whether these agreements are actually bringing the benefits that we expect they do.

Before I finish up I would like to highlight chamber attendant John Brown, who told me this afternoon that he raised a considerable amount of money for Movember. Given we are the only two guys in the chamber with moustaches, I thought it worth getting that on record here tonight.

The ACTING DEPUTY PRESIDENT ( Senator Stephens ): Senator Xenophon, Welcome back!