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Thursday, 27 November 2014
Page: 9479


Senator BACK (Western Australia) (10:48): I rise to speak to the Fair Trade (Australian Standards) Bill 2013 as it has been proposed by our colleague Senator Madigan. I wish to put on record that I do not support the bill as it has been presented by Senator Madigan. But, at the same time, I do want to express my support for the sentiment that has been expressed by Senator Madigan and his deep interest in protecting Australian industry, protecting Australian jobs and protecting Australia's place in the world. The situation is that the bill, as it has been presented to the Senate, will do nothing to advance the interests of Australia or Australian consumers or, indeed, the Australian economy. But it would leave our exporters vulnerable to retaliatory action by other countries.

It is important that we are very clear on the circumstances of Australia—its economy and its place in the world—and why Australia enjoys such a high per capita income and why we are regarded as such a wealthy country. We are only 23 million people in the same land mass as the United States of America, which has some 350 million people, and we have the same population, indeed, as greater New York. When you have a look at China, with 1.2 billion people, or you look at India, which is rushing towards 1.2 billion people and which has the same land mass as Western Australia—only one third of our continent—it is interesting to reflect why it is that we actually do enjoy such a high per capita income.

There are a number of reasons. One has been, and hopefully will continue to be, cheap energy. But the other point that has got to be made very strongly, relevant to this debate, is that we are an exporting country. We cannot consume anywhere near what we produce. My own home state of Western Australia is an example when it comes to grain production, particularly wheat production. We export about 95 per cent of everything that we produce. The point is that Australia must observe its obligations under World Trade Organisation agreements, its commitments and its commitments to free trade. We must be able to regulate goods that are sold in Australia and prevent the import of goods that do not meet our mandatory standards.

Of course, it is necessary for people to understand that there are elements within Senator Madigan's bill, the Fair Trade (Australian Standards) Bill 2013, that will adversely impact on our capacity, impact on our reputation and impact on our compliance with world trade and other agreements, and I want to go through some of those. The point I want to leave the chamber with is that Australia is a major beneficiary of World Trade Organization agreements and, indeed, the other trading agreements to which we are a signatory.

There are times, I have to say, when these agreements are frustrating. I think back to the debate that we had over the importation of apples from New Zealand. An enormous amount of argument went on, and I led the arguments with the Department of Agriculture, Fisheries and Forestry. The sequence of events was that the then Prime Minister Gillard in Wellington, New Zealand said, 'We're going to allow the importation of your apples into Australia,' and all of a sudden the very DAFF officials who had argued so eloquently against apples from New Zealand coming into Australia had to change horse midstream, or 'change stream midhorse'—whichever you want to take on board. Then they had to argue to our Rural and Regional Affairs and Transport committee why, after all the reasons that they had previously given for why apples should not be able to be imported from New Zealand into Australia, they now could be. I am one who argued vehemently, but the point that I need to make is that it went to the independent international arbiter, the umpire, the World Trade Organization. We put our case, the New Zealanders put their case and it came down in favour of New Zealand. To this day, I still argue about the risk matrix that was adopted. Nevertheless, we are in a global trading environment. We must accept the rules of the umpire if we want to play on the oval, and that is exactly where we are. We cannot pick and choose. We cannot have a set of circumstances in which we place greater burdens on the importers of products coming into this country than we would expect to be placed upon us.

Once again, by way of practical illustration, I think of the move made in 2009 when the then Prime Minister Rudd and the then trade minister Crean put pressure on the then agriculture minister Burke to allow, in a cursory way, the importation of beef from the United States and Canada—Japan was also an applicant in the process—without going through an import risk analysis process. It was largely Senator Heffernan, supported at that time by Senator Nash and me, who led a very spirited campaign over an extended period of time in which we were able to prove to Minister Burke that he should indeed require a full import risk analysis.

Because it is absolutely relevant to this legislation, I want to share with the chamber some of the background. One of the precepts, one of the absolute rock hard conditions associated with world trade agreements, is that you cannot impose on another country that which you do not impose on your own producers. We had a circumstance where Japan, Canada and the United States of America all wanted a lifting of sanctions against the importation of beef. Those countries, especially Canada and the United States, had had BSE, bovine spongiform encephalopathy, better known as mad cow disease, a disease which we know had been transmissible to human beings. Of course, we all know about the BSE outbreak in the United Kingdom in the middle part of the last decade. Japan, unfortunately, had an outbreak of foot-and-mouth disease, so they ceased to be an applicant under this process.

What was interesting in that whole process is that it came down to a national livestock identification system. The United States of America claimed that we were imposing sanctions, hurdles or barriers on them which we did not impose on ourselves. We in this country do have an NLIS for our cattle herds. For a consumer purchasing a retail product today, should anything adverse occur we can go right back through the supply chain from that product in the retail store, back through the wholesaler, back to the facility at which it was processed and then through to the original property. So we were able to prove to the Americans that, since they did not have a national livestock identification scheme, we were not imposing on the Americans anything greater than we imposed on our own producers.

Acting Deputy President Sterle, you were of course part of that committee process. Basically, it was World Trade Organization agreements playing out in the correct space. So America was unable to continue that line of argument. To finish off the trifecta, right in the midst of it all a seven-year-old Angus cow from Manitoba in Canada was diagnosed with BSE. The end result was that Mr Burke, the then agriculture minister, did require that an import risk analysis process be undertaken.

I make that point to the chamber because it shows that we are part of international trade and how important international trade is. The two examples that I have given—one that went against us with the importation of apples from New Zealand and one which went in our favour in relation to the importation of beef from North America—are prime examples of the fact that, at the end of the day, the umpire must be allowed to regulate and to dictate. If you want to play on the field, you have to be subject to the rules of the umpire.

What the bill would do is actually skew those rules. It would impose on our importers a greater burden than we would be imposing on our own producers or that we would want imposed on ourselves as exporters. Unfortunately, you cannot have it both ways. We need to ensure that a country's mandatory import requirements do not create unnecessary barriers to trade, taking account of the risks that noncompliance with those requirements would create.

I will give you yet another example of how important it is that we retain and maintain the regulatory environment in which we now work. As a young veterinarian I recall that the importation into the United States of our manufacturing beef was a growing market. Today it is, of course, vitally important. Australia exports manufacturing meat equivalent to what the McDonald's chain in the United States itself actually sells on a daily basis. But back in the early 1970s, when these rules were not as strong as they now are, the United States beef lobby was strong enough to influence the US Department of Agriculture to place upon Australia a set of requirements—in this case, that we be free of tuberculosis and brucellosis, which indeed America was not and to this day is still not free of. You might ask: when it comes to brucellosis, where was the importance?

Senator BACK: I am glad you asked that, Acting Deputy President, because brucellosis is actually a disease of the reproductive system and has got nothing to do with meat quality. In the case of tuberculosis, what were the Americans doing requiring Australia to be free of TB when they themselves were not? That was a trade barrier. Because the industry was so important to us in the early 1970s Australia in fact did eradicate it. We had the Brucellosis and Tuberculosis Eradication Scheme. We were the only country in the world to have eradicated both of those diseases, of which our profession today and the Department of Agriculture at the time are justifiably proud. But it makes the point that a barrier had been placed upon this country simply for trade imposition purposes. When we actually got rid of brucellosis and tuberculosis, they had another go. They said, 'Your export abattoirs have got to be lifted to a very high standard, indeed, a standard higher than those of the American abattoirs for their own domestic consumption.'

So we have moved on in the world and now both our sanitary and phytosanitary measures, some of which I have given examples of today—the SBS agreement—and the Technical Barriers to Trade Agreement are critically important pillars in the World Trade Organization framework. Those, in my very strong view, have to be protected and enhanced.

The difficulty that would confront us is that this bill, if passed, would actually make trade negotiations with other countries, those critical to Australia, our export wellbeing and the wealth of this economy, very much more difficult. It would have the effect of actually putting barriers in place, because if we impose any barrier on an importer then we can expect there will be an equivalent action against us as exporters. As I have just pointed out, we actually export about 65 per cent of everything that we produce.

The bill, if passed, would require Australia to give less favourable treatment to goods imported from free trade agreement partners than treatment given to goods from other countries. In other words, we would once again be skewing the market and removing what in fact is critical to international trade. We would be giving one group of importers an unfair advantage over others. They, in turn, would logically, necessarily and quickly impose exactly the same sorts of restrictions on Australia. The bill, if passed, would require that Australia not consider applications for Australia to accept conformity assessment procedures in other countries as being equivalent to those in Australia. I draw, again, on the analogies I have just given you with regard to BSE beef of that exact circumstance, that of conformity and assessment procedures in other countries being equivalent to those in Australia.

Mr Acting Deputy President Sterle, you will recall because you were part of that committee process, that at that time we said, 'We are not imposing on those other countries anything greater than we impose on our own producers. We have the national livestock identification system and therefore we would expect any importing country to meet those same levels of requirement.'

The bill, if passed, would require that Australia not consider applications for Australia to accept that another country's requirements are equivalent to Australia's in terms of policy objectives being pursued. There is an analogy here with New Zealand apples. We argued that case. We believe that a different set of requirements were being imposed. It involved, if you remember, the use of the antibiotic streptomycin, used at some stages in the production cycle of apples in New Zealand and not used here in Australia. And that was the argument which you and I and others presented at the time, but which the umpire determined otherwise. If we want to be part of international trade, as we do, we have simply got to say with respect to this particular case: the umpire's decision is final.

As an aside, I still regard that we probably did not do as good a job as we could have done in the appeals tribunal but you, Acting Deputy President Sterle, in football circles would probably have appeared before the tribunal more often than I did. So maybe we should have sent you to Geneva to argue the case.

Another point I need to make is that, if the Madigan bill is passed, it would require that Australia adopt import requirements that have the effect of creating unnecessary obstacles to trade. The example I give you, again, is that of the United States doing that to us in the 1970s, with diseases like brucellosis, tuberculosis et cetera. We cannot have that. We have moved on from that circumstance. Just look at what an advantage that has been to our country. Look at the current level of export of agricultural produce, in the case of manufacturing beef, to the United States of America. Of course, we all know of the possibility of retaliatory action. One of the great strengths of the WTO process is its binding dispute settlement system. We just cannot opt out if we do not like what the chairman of stewards tells us. We take it on the chin, we correct it and if we want to stay playing in the game and keep on the course we must then obviously comply. We cannot opt out, and it is tremendously to Australia's benefit that we continue to opt in.

It is the case that the dispute settlement rules do allow a complaining country—and we do plenty of that—to apply retaliatory action against a defending country's exports if the defending country has been found to be acting in breach of its rules and does not act to remedy those breaches. We are in an exciting phase now. We recently concluded the Korea-Australia Free Trade Agreement. We are hopefully in the final processes of concluding the Japan-Australia Free Trade Agreement. And we witnessed the signing the other day by trade minister Robb and the trade minister from China of the China-Australia Free Trade Agreement. These are all incredibly exciting opportunities.

I want to conclude by talking about Australia's role as a developed country in assisting least developed countries, underdeveloped countries and the small island development states. The best way we can help those countries is to encourage their development of trade, to encourage their domestic consumption so that they will get to the stage where they themselves will be net exporters and we have a set of rules and guidelines in place that will allow them to actually grow economically and to develop their people to move them towards middle-class aspirations, all within a World Trade Organisation framework. That is where I stand.