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Conroy says FTA in national interest -

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Conroy says FTA in national interest

Reporter: Tony Jones

TONY JONES: Now, returning to tonight's top story and Labor's about face on the free trade
agreement with the US.

Earlier this year, Labor leader Mark Latham said he was against it.

Now a Senate committee, which included three Labor senators, has backed the deal.

Despite the unhappiness of Labor's parliamentary Left and some in the union movement, Caucus is
expected to endorse the free trade agreement tomorrow.

One of the senators on the committee is our guest tonight, Labor's trade spokesman, Stephen Conroy.

TONY JONES: Stephen Conroy, would you be recommending signing up to this deal if there were not an
election looming?

STEPHEN CONROY, OPPOSITION TRADE SPOKESMAN: The Senate inquiry has looked at this issue now for a
good three or four months and, on balance, at the end of the Senate investigation, we've had
hundreds of submissions, we've heard from many, many witnesses in person as well as those written
submissions and, on balance, the Senate Economics Committee hired one of Australia's top modellers,
Phillipa Dee, formerly from the Productivity Commission at the ANU and, on balance, she suggests in
her study, with far more realistic assumptions than the Government's study, that this is a net
benefit to Australia.

TONY JONES: How much of a benefit?

What is the figure that she puts forward as the net benefit?

STEPHEN CONROY: $53 million was her figure, which is a small net benefit, as I said, but, on
balance, after looking at all the issues, looking at the concerns that Labor has had, that's why
the Labor senators recommended the way that we did.

TONY JONES: So you would support this election or no election?

STEPHEN CONROY: This was an issue that we looked at in terms of Australia's national interests and
we believe this deal is in Australia's national interests.

TONY JONES: So you would expect Caucus to give you the rubber stamp on this tomorrow morning?

STEPHEN CONROY: I wouldn't think that this would be a rubber stamp.

I'd be expecting a very lively meeting.

TONY JONES: It's not something you would leave to chance though, is it?

You must know what the numbers are already.

STEPHEN CONROY: Well, all the different groups in Caucus are having their meetings tonight.

I haven't heard report back from all of those meetings yet, so at this stage the Caucus will have a
full and frank discussion and there will be a decision.

After that, as always the case in the Labor Party, we'll move on.


Listening to what you've been saying today, at each point where the FTA seems to conflict with what
you consider to be Australian interests - pharmaceuticals, intellectual property, et cetera, et
cetera - you appear to want to introduce legislation to protect those interests.

How can you do that?

STEPHEN CONROY: Well, the simplest example is in terms of Australian local content on free-to-air

Completely consistent with the agreement, at the moment the ABA sets the local content rules and
what we're saying is that we want to take that out of the hands of the ABA and we want to legislate
it into Parliament, so that, in future, if anybody wants to reduce local content, it has to be a
vote of the Parliament, it's not just in the hands of the ABA.

So we think that's a very simple, straightforward proposition that is consistent with the aims and
objectives of the FTA and doesn't come into conflict but gives an extra added strength to
protecting local content in Australia.

TONY JONES: Isn't it a fact that the FTA in and of itself overrides Australian legislation?

STEPHEN CONROY: Look, not in this case.

What you do with a trade deal is you agree that in the future that you won't do certain things like
traditional deals around tariffs - you agree that you will reduce tariffs and you won't put them
back up.

And in this case, what the FTA says is that there is a maximum, a cap, if you like, on Australian
local content.

There is no floor.

What this legislation that we would be proposing would do was put a floor at the same level as the

In other words, keep it consistent with where it is now at 55 per cent and that will give
Australians extra comfort in ensuring that we will hear Australian voices on television, that we
will still hear Australian stories on television.

TONY JONES: All right.

But if there is a trade dispute on local content or pharmaceuticals, for example, isn't it the case
that trade dispute is not settled by Australian law, but by three trade lawyers who consider the
issue on its merits, only according to what is written within the FTA agreement?

STEPHEN CONROY: Well, that's consistent with all of our trade obligations under the WTO.

There is no change to the fact that there is a dispute settlement - a dispute mechanism in the WTO
or in these individual benefits.

In fact, on a number of occasions we have been taken to the WTO for government measures and
programs that have supported Australian industries.

The most recent one that I can think of is how leather goods in Victoria - where we were taken to
the appeals mechanism of the WTO and they ruled against us.

There is nothing new about having a dispute mechanism under the FTA that we don't have currently
under the WTO.

TONY JONES: But there is nothing you can do by Australian legislation which is passed after the FTA
which could alter the FTA.

The FTA can only be changed, can it not, or altered in and of its nature by some sort of draft
agreement or a signed letter attached to the agreement?

STEPHEN CONROY: That's the ways that you can look at making changes, yes.

You can renegotiate, get side letters.

Bill Clinton renegotiated parts of NAFTA when he came to power in 1992 when NAFTA had been agreed
between Canada, Mexico and the US.

And he got some extra side letters.

So, yes, that is a mechanism that politically you can negotiate where you're unhappy with certain
parts of it.

TONY JONES: Can you do that after the agreement is signed?

In other words, could a Labor government seek side letters changing key elements of the FTA once it
is signed?

STEPHEN CONROY: We can seek to have aspects that we may be concerned about renegotiated.

That's an option with any of the trade deals that we've currently got, with New Zealand, with
Singapore and the one we're currently putting to bed with Thailand.

So there is no difference there in the ability to approach the government of the day and say,
"Look, we'd like to discuss these issues.

Let's sit down and have a talk.

We're unhappy about these aspects".

TONY JONES: What will you do in government if, in spite of everything, all the protections you
claim to be putting in place, drug prices keep rising?

STEPHEN CONROY: Well, let's make it clear.

This is one of the issues that is fundamental to Labor.

We've said consistently that if drug prices were to be forced up through the FTA process, we would
be voting against it.

After getting all the information through the course of the Senate inquiry, the legislation which
was available a couple of months ago, but the most recent and key information which Tony Abbott
released about 10 days ago to two weeks ago, and once we had all that information, we were able to
make the assessment that there is no appeals mechanism against a price listing - sorry, against a
price determination.

There is only the ability to appeal to this transparent review process on a listing.

So there is no capacity - if PBAC set a price and say it's X, the review mechanism does not have
the authority under the FTA for there to be an appeal.

It's only on the listing of a drug, not on the price of a drug, and that's a very important point
for people to understand.


Let's move on.

Will you be giving the Caucus any indication that there will be no serious job losses to the
manufacturing industry?

STEPHEN CONROY: Well, the studies have had mixed results.

We've had a study commissioned by the Metal Workers Union that predicts a fairly drastic - I think
50,000-odd job losses over 20 years.

You then have the Government study which was less predictive in terms of the amount of job losses.

There are always areas in manufacturing that are going to be adversely affected.

The three areas where we have substantive tariffs at the moment which will be under the most import
competition from these changes are obviously passenger motor vehicles, components for passenger
motor vehicles, and textiles and clothing.

They're the areas -

TONY JONES: Well, let me ask you a key question about those three areas.

How many jobs do you think will be lost in those three areas?

STEPHEN CONROY: Well, at the moment, what we're seeing is companies coming forward and saying that
they believe there will be job increases in some areas.

Holden, Toyota are both talking about the positive impacts of this, believing they will be able to
expand their markets.

They're being led into the US and, in Toyota's case, possibly Thailand and Holden is also looking
at the Thai free trade agreement.

So, what those companies are saying is, "We believe we'll be exporting more cars."

In the case of Holden, they talk about the ute to the US.

So there is going to be a net effect in the manufacturing sector.

There will be some winners and some loser.

TONY JONES: All right.

The losers could be car component manufacturers, do you agree with that?

That is one of the potential areas because their tariff will be coming down and that is an area
where there will be import competition for them because of this FTA.

TONY JONES: If there were job losses in some sections of the manufacturing industry, what will a
Labor government do to help those people affected by those job losses?

STEPHEN CONROY: Well, Mark Latham announced last week a strong industry plan to complement the
trade policies that we're having and that's the key difference between the Labor Party and the
conservatives in this country.

When we have a trade policy, we have a complementary industry policy.

When the conservatives have a trade policy, it's just, "Well, let the market have whatever impact
it does."

Labor is concerned to marry together so that they complement each other, a trade policy and a
strong industry policy.

TONY JONES: But what would you do with a car component manufacturing sector that started losing
lots of jobs?

Would you try to prop them up?

Would you try to get them into other jobs in the manufacturing area?

What would you do?

STEPHEN CONROY: Well, one of the key things to understand is that car makers and car component
manufacturers are already faced with tariffs going down on 1st January next year.

That's on already passed legislation which Labor supported and what Labor said is, "into the
future, we will hold a review to have a look at this issue about whether or not we need to make
more changes".

The FTA on US goods would reduce that by 2010.

So you're talking about, over time, the same impact in terms of tariffs and in terms of the recent
WTO announcements, they're talking about manufactured goods as well as agriculture and phasing down
in manufactured goods.

Also, Australia's APEC commitment which we've made previously - a previous Labor government -

TONY JONES: What would you do for those workers who are losing their jobs?

Would you seek some sort of restructuring arrangements for them?

Would you put money into their industries?

What would you do for them?

STEPHEN CONROY: What we are committing to do is have a look through the Productivity Commission and
other expert bodies at the impact.

Let's monitor it closely.

Let's find out what is happening.

Then we'd look at the potential for restructuring packages, if necessary but we're looking to grow
the manufacturing industry.

We're not sitting back and saying, "this is the end for the manufacturing industry".

Labor wants a strong manufacturing industry that will grow the jobs in this sector, so that would
be the most equitable way to try to deal with this, make sure the sector is growing, make sure you
have a restructuring package, if it's necessary, to throw into the mix so that you can help people
transfer and make that transition.

TONY JONES: So you would be prepared to create a fund, as this government did with the sugar
industry, to help those workers, is that what you're saying?

STEPHEN CONROY: Well, we'd have to have a look at the impact immediately.

No one is suggesting that on day one of this deal that suddenly, you know, 55,000 people are losing
their jobs.

That's not what the Metal Workers' study said.

It said over 20 years there is going to be a net loss of jobs.

So that's where we've got to have a look at this, keep an eye on it, make sure that we've got the
expert information and then, as those things unfolded, we'd hopefully have the manufacturing sector
growing strongly so that those people could move into the growing areas of the industry TONY JONES:
Final quick question - do you expect a backlash from the union movement over this?

STEPHEN CONROY: Well, I think the ACTU today have been very reasonable about this.

They've said as long as there is a fair dinkum debate inside the Labor Caucus, they will accept

And that's what Mark Latham has committed to do.

He committed to give the Caucus the opportunity.

He has been criticised consistently by the Prime Minister for dithering.

I mean, let's be frank here.

George Bush has not signed this yet.

Is he dithering?

Congress voted on this three weeks ago.

Were they dithering?

The agreement comes into place on 1st January.

There is absolutely nothing wrong with a Senate committee that has gone through this transparent
and open process and in a genuine debate in determination by the Labor Caucus.

There is nothing wrong with that.

TONY JONES: Thank you, Stephen Conroy.

We'll have to leave it there.

We thank you very much for taking the time to come and talk to us tonight.

STEPHEN CONROY: Thanks very much, Tony.

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