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Wednesday, 31 October 2012
Page: 12771


Mr KELVIN THOMSON (Wills) (12:11): On behalf of the Joint Standing Committee on Treaties I present the committee's report, incorporating a dissenting report, entitled Report 130: treaty tabled on 14 August 2012.

In accordance with standing order 39(f) the report was made a parliamentary paper.

Mr KELVIN THOMSON: by leave—This report contains the committee's views on the Malaysia-Australia Free Trade Agreement, which was tabled on 14 August.

This agreement is Australia's latest bilateral free trade agreement with a member of ASEAN. Australia has previously made bilateral free trade agreements with Thailand and Singapore.

Like those agreements, this treaty has been made to build upon the ASEAN, Australia and New Zealand Free Trade Area agreement, which entered into force in 2010.

According to the Department of Foreign Affairs and Trade, the agreement will deliver benefits to Australian producers, exporters, consumers and investors and provide a platform for trade and investment liberalisation between Australia and Malaysia in the future.

The department was especially pleased with progress made towards reducing Malaysian non-tariff barriers, particularly in relation to rice and milk.

Australian milk exporters will be able to access additional Malaysian quotas, including for higher value products, on MAFTA's entry into force.

Australian rice exporters will have open access to the Malaysian market from 2023, with the complete elimination of tariffs by 2026.

Other participants in the inquiry raised some issues of concern about the agreement, including:

how this agreement will interact with others applying to trade between Australia and Malaysia;

the method of demonstrating the country of origin of traded products; and

the inclusion of environmental and labour standards in free trade agreements.

This last issue is one close to the heart of a number of members of the committee. This agreement contains two legally binding side letters that form part of the agreement on labour standards and the environment.

Nevertheless, the committee reiterates its previous recommendation that labour and environmental standards be included in FTAs rather than in 'side letters'.

Given that my electorate contains many manufacturing employees, a particular concern of mine is the role that free trade might play in job losses in manufacturing.

In August, the respected US foreign policy think tank, the Council on Foreign Relations, published an article containing evidence that free trade has played a role in job losses in manufacturing, at least in the United States during the past decade.

In terms of the agreement under consideration here, the Federal Chamber of Automotive Industries believes that non-tariff barriers and local content rules that are in place in Malaysia make it unlikely that Australian-built vehicles will be exported to Malaysia. Conversely, the chamber believes the agreement will facilitate a significant increase in Malaysian vehicle imports to Australia.

In response, the department argued that studies showed the importance of free trade and complementary policies to support inclusive growth and job creation, particularly macroeconomic policy, a positive business environment, a flexible labour market, high-quality education, skills training systems and adequate safety nets.

Treaty negotiation is a set of trade-offs between both parties. It is important to the people in my electorate that Australian negotiators provide balanced outcomes when agreements are reached, rather than making compromises for the sake of reaching an agreement without meaningful compromises being made by the other party.

When I look at the outcome of negotiations in relation to rice, one of the highlights of this agreement, I can see that the Malaysians will not need to take any action for another 10 years.

In the interim, I note the potential for immediate increases in Malaysian car imports.

I worry about the impact on people in my electorate and wonder whether this constitutes a balanced outcome.

Given this, the committee has made three recommendations in this report, two of which go the issues I have just mentioned.

The committee has in the past recommended that an independent analysis of the potential benefits and disadvantages be prepared prior to engaging in the negotiation for a free trade agreement.

The committee recognises that the government has in recent years released statements prior to the commencement of free trade agreement negotiations.

But the committee still believes that such agreements require detailed independent analysis.

Accordingly, the committee has again recommended that an independent analysis of the potential benefits and disadvantages be prepared prior to engaging in the negotiation of a free trade agreement.

The committee has also in the past recommended that the Department of Foreign Affairs and Trade undertake and publish a review of the operation of free trade agreements.

In relation to the Chile free trade agreement, the committee recommended that the review take place after two years of operation and address specific concerns raised in relation to that agreement.

In response, the government argued that the agreement required a review that would be presented to the relevant minister, at whose discretion it could be published.

The committee is not satisfied with this approach. It does not, for example, specifically address the issues of concern expressed in the report, nor is there any commitment to be transparent about the outcome.

The committee strongly believes that the government needs to be responsive to the concerns and transparent about the actual results of free trade agreements.

If free trade agreements are as beneficial as the government asserts, it should be prepared to stand by that conviction by undertaking and publishing an analysis of what a free trade agreement has achieved.

Notwithstanding this, the committee concluded that the Malaysia-Australia Free Trade Agreement should be supported with binding action.

On behalf of the committee, I commend the report to the House.