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Thursday, 24 June 2004
Page: 31493

Mr ANDREN (12:11 PM) —Amongst all of the debate over the US-Australia free trade agreement, it is enlightening to go to the `Trade facts' page of the Office of the United States Trade Representative. In detail, in the `Expanding US manufacturing' sector, the site boasts:

More than 99 percent of U.S. exports of manufactured goods to Australia will become duty-free immediately ...

The site says:

This is the most significant immediate reduction of industrial tariffs ever achieved in a U.S. free trade agreement, and will provide immediate benefits for America's manufacturing workers and companies.

This begs the question: will it provide immediate benefits to Australia's manufacturing workers and companies? Based on what I have read in the plethora of information about this deal, I think not. In that I am supported by none other than one of this country's most conservative economists, Alan Wood, whose column in the Australian on 9 March is very revealing. Wood says that the government's refusal to seek a Productivity Commission assessment of the deal `is an admission the government wants a quick and dirty job'. Wood also said that his inquiries revealed serious reservations in DFAT about the agreement.

At the very least, members need to review in full the 300-page report and recommendations of the Joint Standing Committee on Treaties inquiry. The `tabling yesterday, voting today' program of the government is blatantly politically motivated. I will certainly not be supporting the legislation at this point. It should be remembered that the Senate Select Committee on the Free Trade Agreement between Australia and the United States of America is not due to report until 12 August and that report should also be considered before this parliament commits itself to the agreement.

While the opposition seems inclined to approve this legislation, you would have to wonder why after listening to the dissenting report delivered by the member for Swan, especially as he highlighted Professor Ross Garnaut's evidence that the Centre for International Economics projection of a $6 billion GDP bonus from the agreement does not `pass the laughter test'. I thoroughly support the dissenting report's recommendation that binding treaty action should not be taken until adequate opportunity has been given to consider the necessary legislative, regulatory and administrative actions that underpin the implementation of the treaty. That is the most basic of requirements. How long did it take to lobby and then negotiate this deal: two or perhaps three years. How much time do we have to consider the report and the legislation and then vote: 24 hours.

Among information presented to the Senate select committee was the very detailed submission by Dr Philippa Dee from the Asia Pacific School of Economics and Government at the Australian National University. I present some of her observations in no particular order of importance. Firstly, under preferential tariff cuts, most of the tariff revenue goes not to Australian consumers but to US producers to make up for their higher production costs. Secondly, it is likely that many Australian products in the categories of textiles and other machinery and equipment could have difficulties meeting the rules of origin and thus being eligible for preferential tariff treatment, especially when they are assembled from components sourced in East Asia. It is interesting to note that the Singapore-US free trade agreement allows a concession of up to nine years on the application of the rules of origin for apparel.

Thirdly, there is a high cost of proving compliance with the rules of origin, especially for small and medium sized businesses. Fourthly, the DFAT-CIE study has assessed that only 8.8 per cent of Australian exports of textiles and clothing will meet the yarn forward rule. Fifthly, on government procurement, Dr Dee contradicts the DFAT-CIE assessment that Australia could achieve as much as 30 per cent of Canada's market penetration to government procurement contracts. She says empirical studies that correct for country size and distance between countries suggest the figure is more likely four per cent. On intellectual property rights, Dee suggests the changes in copyright payments will be $88 million per year to Australia. Indeed another study from academics at Macquarie University, the University of Sydney and the University of New South Wales says our negotiators have agreed to abandon any `buy Australian' clauses or conditionalities, `and these are totally unreciprocated by the US side'.

According to Dr Dee, based on the alternative assessment to that provided for the government, the annual gains to Australia from the AUSFTA are a mere $58 million. She concludes:

On a strict cost-benefit calculation, the agreement is of marginal benefit to Australia, and possibly of negative benefit given some of the pernicious but unquantifiable elements in the intellectual property chapter. Australia will continue to be subject to US bilateral opportunism, whether or not it signs AUSFTA, unless it can persuade the United States and all its future bilateral partners to multilateralise all future concessions, not just those in services and investment.

That is one assessment of the agreement. While Dr Dee makes comment on the fact Australia has received less than other US bilateral partners on agriculture, let me quote from the NSW Farmers Association press release of 9 February. It says:

The outcome of Australia's trade negotiations with the US will bring some benefits to our agricultural industries, but it is ultimately a victory for the powerful US farm lobby.

Even though our beef producers will achieve some market access gains, with the 378,000 tonne quota rising by 18.5 per cent over 18 years, it is disappointing to see such a huge phase-in period.

“The US has no justification for blocking Australian farmers from unimpeded access into their market and Australian farmers will remember this moment for a long time,” said president Mal Peters.

The previous speaker, the member for Oxley, alluded to moves in Congress to even further toughen this access regime, which begs the question: why won't The Nationals come in here and justify why they are lending their support to that part of the deal at this stage, a deal that means little or nothing to most farmers, as far as I can see, whose sons might enjoy some benefit, but who in the short term have got the short straw?

Mr Peters, the NSW Farmers Association President, should have also included pork and apple growers in his assessment, for these producers are seeing the current erosion of our Biosecurity standards in order to facilitate the entry of pork and, inevitably, fruit under this agreement. Less than two weeks after the Prime Minister and President Bush announced their intention to pursue a free trade agreement, three reports from Biosecurity Australia were released recommending imports of pork, bananas and apples. All these reports reversed previous positions that consistently banned imports due to quarantine concerns that legitimately protected our clean and green products.

Not long afterwards, the US trade facts briefing paper proudly boasted that the trade agreement offered new opportunities for US farm exporters saying, `Food inspection procedures that have posed barriers in the past will be addressed, benefiting sectors such as pork, citrus, apples and stone fruit.' The US obviously know something my apple growers do not know yet relating to the fire blight decision, which has yet to be announced by the government. Is this coincidence? I think not. Now we have the spectre of fruit from fire blight affected North America allowed into Australia, picked by cheap labour from Mexico to unfairly compete with apple growers in my electorate who are already being exploited by supermarket chains and a corrupt paddock-to-plate supply chain—all of this in the best interests of the consumer.

To compete, our growers will have to find cheap labour too, and it is already happening in the horticulture sector with picking and pruning teams made up of temporary visa holders paid about half the going rate. Sydney Morning Herald economics writer Ross Gittens said on 11 February:

The main thing we wanted from the Americans was exemptions from the huge protection they give their farmers. As everyone knows, they didn't give us much.

In fact Phillippa Dee points out that `Australia has achieved less than others' and less than other trading partners have in bilateral negotiations with the US.

Linda Weiss, Elizabeth Thurbon and John Mathews, three academics from the University of Sydney, the University of New South Wales and Macquarie University, say that under this agreement Australia is `voluntarily abandoning its long-established independent quarantine procedures. The deal stipulates the creation of a new oversight committee—including US trade representatives—to monitor Australia's science-based quarantine decisions.' Weiss, Thurbon and Mathews go on: “In effect we are about to downgrade the scientific rigour of risk assessment in favour of trade politics.”

We have a marketplace here already in which many horticulturists can barely survive. Why throw out our biosecurity and labour standards to allow more unfair competition? We have already created unfair competition with our very own internal free trade agreements between the big supermarkets, processors and the government. We may have finally got around to addressing some of that with the collective bargaining legislation introduced into the parliament yesterday after a lot of pressure over quite some years from, among others, orchardists in my electorate, but there is a long way to go before that is tested in the marketplace. One of the weaknesses of collective bargaining will be that it is as strong as its weakest point. How often do we see growers in Batlow, for example, forced to take the price on offer when they have tried to hang together in the face of the price being offered? It is a start, but it is a long way from overcoming the problem.

While claiming to be concerned about aspects of competition policy and weaknesses in the Trade Practices Act relating to small producers, the alternative Labor government is nevertheless making it clear at this point that it will sign off on this FTA. That is the feeling I am getting, despite all the huffing and puffing of the opposition leader.

According to the Australian Conservation Foundation, on environmental issues, article 11.7 of the agreement will `fetter the capacity of future Australian governments to legislate to protect the environment or act on other matters that become important to Australia's economic and social welfare'. The ACF says that, under AUSFTA, compensation might well be paid to US investors where, for example, an amendment is made to a state planning scheme designed to protect sensitive coastal areas from development, which prohibits a US property owner from developing a coastal property.

Another area of concern is the inevitable higher cost of medicines, with the review of decisions of the Pharmaceutical Benefits Advisory Committee, despite the assurances of the minister. The free trade agreement changes the process to allow drug companies to seek review of PBAC decisions. As the Bathurst branch of the Combined Pensioners and Superannuants Association pointed out in a submission to the Senate inquiry, the people of Australia were given a guarantee by the present government that the Pharmaceutical Benefits Scheme would not be on the negotiating table. It might not be quite in the middle of the table, but it is certainly in the top drawer.

Pensioners might ask whether the Labor Party rollover on prescription charges is recognition of the inevitability of further increases in the wake of the FTA. Currently the Pharmaceutical Benefits Advisory Committee only lists new drugs for subsidy if they offer real health benefits and value for money. The giant US drug companies want higher wholesale prices and will apply plenty of pressure to ensure that happens. I am aware of arguments from Medicines Australia—notably, from the eminent cancer researcher, John Zalcberg—that the FTA will make drugs more readily available, but most consumers are not convinced that we should risk any tampering with a process that has ensured the most rigorous proof of the efficacy of a drug before it is listed. There is real concern that that protocol is under threat with this agreement. Perhaps we do need to review the PBAC process, as Dr Zalcberg recommends, but the FTA need not be the catalyst or the leverage for such a review.

I must reflect the concerns from the entertainment and media community at the restrictions in this agreement on Australian content rules for new media. The government would argue that it has protected local content, but it has set existing content at existing levels which, if reduced in the future, cannot be restored. Free-to-air radio broadcasting, the most popular of media in disseminating talk and ideas—and arguably our most important national identity medium—has Australian content capped at 25 per cent. I have seen no counterargument from the minister to the contention of the Media, Entertainment and Arts Alliance that new media such as e-cinema and others are set to be dominated by programming from Hollywood.

Let me return to Trade Facts on the web site of the US Trade Representative. It brags that all US investment in new business is exempted from screening by Australia's `Foreign Investment Promotion Board'. That is a very Freudian slip. It should be the Foreign Investment Review Board. What a beautiful irony, and how fitting it is that the US Trade Representative should see it as a promotion board for US investment, because that is exactly what this agreement seems to achieve: promote US investment at the expense of Australia. The US Trade Representative web site goes on to spell it out. It says:

Thresholds for acquisitions by US investors in nearly all sectors are raised significantly, from $A50 million to $A800 million. This higher threshold would have exempted nearly 90 per cent of US investment transactions from screening over the past three years.

Is this what the Australian people want from this deal? I am not sure that it is. Yet it is boasted about on this site as a plus for US investors. Whether it is US, French or Chinese investment, Australians want our investment reviews to remain. I would suggest that the majority of Australians would still strongly argue for a maximum of 49 per cent foreign ownership, but those days are long gone. Telstra remains one entity that is firmly in the sights of overseas investors and, no doubt, American investors. Not only will there be increasing pressure to privatise, there will surely be inexorable moves towards greater foreign shareholding. I would urge ordinary Australians to visit the US Trade Representative site at

I am asked: why would Australia risk so much? The alleged $6 billion worth of benefits claimed by the government just do not seem to be there, so why would we do it? Unless there is some agenda to lock us into an American alliance—both security and economic—then I cannot see a lot of good or any sense in it. I cannot see a lot of sense in it unless there is a belief that the world is developing into three great economic blocs—the EU, Asia and America. The government may believe this is our only course—to be integrated primarily into the American economy. If decisions on supporting pre-emptive military action are any guide, we have already taken that move and made our choice. That is the only logic I can see for such a deal that seems, from all I have read, to be so one-way.

My electorate has been seriously impacted by the loss of employment under the free trade agenda in recent years. Jobs at Berlei were exported to Indonesia, and there was no benefit to anyone except the Berlei shareholders. Australian defence industry jobs were lost, with orders being sourced overseas. Email—and now Electrolux—jobs are to go as refrigeration manufacture is moved offshore to China and Thailand, with cheaper product coming back into this country. Orchardists and pork producers will be left with not even the protection of our quarantine standards, which stood unchallenged for many years. I could go on.

There are many aspects of this free trade agreement that need scrutiny far beyond this truncated debate. It is vital to point out that Australians have no process available to them to change the draft text. Unlike the US Congress, which has a vote on any agreement in total, this parliament can only debate certain enabling legislation, as we are doing here, whatever title it is dressed up in. The final decision on signing off rests with the Prime Minister and the cabinet. I had intended to move a second reading amendment but, because of procedural difficulties—because of the opposition's amendment—that is not possible. I would have moved: `That all words after “That” be omitted with a view to substituting the following words: the House is of the opinion that the Bill should not proceed until legislation has been enacted that will ensure that the Commonwealth Parliament has a defining role in approving or amending international trade agreements, such as the proposed Australia/United States Free Trade Agreement.'

I am confident that the people of my electorate have as many doubts as I do about this deal. It has been presented as a major dual-carriageway freeway, when it is really a one-way street, headed our way, with only a footpath in the other direction. It seems to most farmers in my electorate—quite apart from the manufacturers—that the US gets to eat the cake and we are left with the crumbs. It is not good enough, it is not fair enough and it is not free enough. I cannot support it as it stands.