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Wednesday, 10 November 1976
Page: 2522

Mr HOWARD (Bennelong) (Minister for Business and Consumer Affairs) - by leave- I visited Port Moresby from 6 to 8 November to sign the Papua New Guinea /Australia Trade and Commercial Relations Agreement on behalf of the Government of Australia. Sir Maori Kiki signed on behalf of the Government of Papua New Guinea. A joint Press statement was issued by Sir Maori and myself following signature of the Agreement on 6 November. The Agreement will come into force when notes are exchanged between the Government of Australia and the Government of Papua New Guinea notifying compliance with their respective legal requirements. Trade between Papua New Guinea and Australia has always been an important feature of the special relationship which exists between the 2 countries. Since 1926 Australia has accorded special duty free entry to Papua New Guinea products. In the 1950s Australia obtained waivers from the General Agreement on Tariffs and Trade to accord extensive duty free treatment to Papua New Guinea primary and processed primary products. At the present time 95 per cent of Australian imports from Papua New Guinea enter free of duty.

Papua New Guinea is an important market for Australian exports. In 1975-76 Australian producers exported approximately $170m worth of goods to Papua New Guinea. This represented 49 per cent of Papua New Guinea's total imports. Papua New Guinea is Australia's eleventh largest market for all exports and the third largest market for manufactured goods. Until the Agreement just signed comes into force trade relations between Australia and Papua New Guinea will continue to be governed by the Memorandum of Understanding relating to interim trade and commercial arrangements. The Memorandum, which was signed in December 1973, was intended to cover trade relations between Australia and Papua New Guinea in the period between self-government and independence. It was extended in April 1975 to cover the period between independence and the conclusion of a more permanent trade and commercial relations agreement between the 2 countries.

Objectives of the Agreement

Most of the trade between Papua New Guinea and Australia has traditionally been free of duties and other restrictions. It was therefore appropriate that both countries should enter into a free trade agreement. The Agreement was drawn up on the basis of the following 3 aims: To continue and extend the duty free and concessional conditions of access for Papua New Guinea exports into Australia; to allow the Papua New Guinea Government to develop new industries and to protect them from import competition; and to enable the Papua New Guinea Government to pursue its social and economic objectives through the encouragement of capital inflow consistent with its investment guidelines. It was recognised by both countries that Australia, in entering into this Agreement, should retain the right to protect its industries where it is considered that they are threatened with serious injury by imports from Papua New Guinea. It was also recognised that the Agreement should accord with Australia's GATT and other international obligations.

Consistent with the aims outlined above the objectives of the Agreement are: To further the development of the area through the expansion and diversification of trade; to further the development and use of the resources of the area in accordance with the respective social and economic objectives of the member states; to further the development of the area by the promotion of direct investment which is consistent with the foreign investment policies and priorities of the recipient member states; to promote and facilitate commercial, industrial, administrative and technical co-operation between member states; and to contribute to the harmonious development and expansion of world trade and to the progressive removal of barriers to it. Accordingly the Agreement provides that a free trade area is established consisting of Papua New Guinea and Australia and that subject to certain exceptions specified in the Agreement trade between the member states should be free of duties and other restrictive regulations of commerce.

Safeguards for Australian Industry

At present Papua New Guinea's exports to Australia consist mainly of foodstuffs and raw materials. However, Papua New Guinea has indicated its intention to establish new industries. Australia can assist in this development by allowing the products of Papua New Guinea industries to enter Australia duty free provided adequate safeguards are available to protect Australian industry. The Agreement, therefore, provides that Australia accord duty free entry to imports from Papua New Guinea on all but some 270 highly sensitive items. In addition there are 210 items, which are specified in the agreed minutes attached to the Agreement, and in respect of which Australia may take unilateral protective action if damage is caused or threatened to an Australian industry producing those goods. In those items where duties on a wide range of industrial and other products have been eliminated for Papua New Guinea, safeguards to protect Australian industry are included in the Agreement where serious injury is caused or threatened. There are also special provisions covering rules of origin, deflection of trade, dumping or subsidised trade and the suspension of obligations in exceptional or emergency circumstances.

The Australian Position under the Agreement

Whilst the Agreement meets the requirements of the free trade provisions of the GATT it is not the intention of the Australian Government to ask the Papua New Guinea Government to discriminate in favour of Australia as against third countries. Australia will receive no better access than any other country. The Agreement provides no special conditions in relation to Australian investment in Papua New Guinea. In this respect the Agreement is similar to the Lome Convention under which the European Economic Community grants non-reciprocal tariff preferences to a large number of developing countries and to which Papua New Guinea has received approval from the Council of the Economic Community for accession. At the same time Australia's most favoured nation position in Papua New Guinea is protected under the Agreement by the provision pursuant to which each Government agrees to accord the other treatment no less favourable than that accorded to any third country.

Trade with Third Countries

Any diversification of trade affecting third country suppliers to the Australian market will be gradual and will take place over a long period of time. Papua New Guinea is not expected to move in the foreseeable future to develop industries other than those based on its traditional exports. With regard to developing countries, nothing in the Agreement precludes Australia from continuing the liberal access it has already granted developing countries through its generalised scheme of preferences, or from making a positive contribution to the development of international trade through the GATT.

Other Matters

Other matters covered by the Agreement include, inter alia:

Consultation on the contribution of direct Australian investment to the social and economic development of Papua New Guinea in accordance with that Government's foreign investment policies and priorities;

Industrial, technical and administrative cooperation; the promotion of trade; consultations on the supply of scarce essential commodities; the encouragement and facilitation of commercial contracts; the association of other States with the Agreement; and the periodic consultation and review of the operation of the Agreement.

I have arranged for copies of the Agreement to be placed in the Library for the reference of honourable members. I intend to table the Agreement in the House in the near future and I understand that legislation will be introduced in the House as soon as possible to amend the Customs Act, the Customs Tariff Act and the Sales Tax (Exemptions and Classifications) Act. Once this legislation is passed through both Houses the Australian Government will be in a position to exchange notes and thereby to bring the Agreement into force.

Honourable gentlemen will be aware that I went to Papua New Guinea on behalf of the Minister for Overseas Trade (Mr Anthony) who is temporarily indisposed. I express my appreciation for the assistance rendered to me on that visit by the Permanent Head of the Department of National Resources, the Permanent Head of the of the Department of Overseas Trade and Mr McDonnell a senior officer with the Department of Overseas Trade. I commend the statement to the House.

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