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Thursday, 27 November 2014
Page: 9525

Senator LUDWIG (Queensland) (13:03): I rise to speak on the Customs Amendment (Japan-Australia Economic Partnership Agreement Implementation) Bill 2014 and related bill. Can I, at the outset, indicate that I did not get an opportunity to talk on report 144 of the Treaties Committee. I am on the Treaties Committee and did want to use this time to speak on the bill and obviously underline a treaty that now supports it. Of course, the Treaties Committee plays a very valuable role in both looking at the treaty itself, the national interest analysis provided by the government, and looking at the submissions from a range of individuals about the impact of the treaty. The interest that this treaty did provoke, not only in agriculture, but in minerals and energy and a range of financial services highlights the interest from stakeholders in this particular treaty. Some may ask why. If you look at Japan from Australia's perspective it is our second largest export market, which is in the vicinity of $4 billion. We have had attempts to finalise a treaty arrangement with Japan for some time now, so I do congratulate the government for finalising this important agreement.

I note that Labor has always supported stronger trading links within our region, and in government we had pursued and successfully completed a number of free trade negotiations with our regional neighbours. As I indicated, Japan is Australia's second largest trading partner after, of course, one of our near neighbours, China. It is an important agreement, nonetheless, which will open up many opportunities for agriculture, for financial services sector, and for oil and gas. The Regulatory Impact Statement for this agreement shows that Japan has granted tariff reductions to beef, sugar, seafood, wine and horticultural goods. I will come back to sugar in a moment. Japan will also eliminate its tariffs on Australia's mineral and fuel resources within 10 years. Australia has been given increased quotas for goods such as pork, dairy and grains. I might just come back to pork as well.

However, there are some concerns as noted by the National Farmers' Federation which said the agreement 'falls short of the mark'. That was said by the National Farmers' Federation, which represents the interests of farmers right across Australia. They also said that it:

… does not improve—or marginally improves—market access and terms of trade for a number of sectors such as dairy, sugar, grains, pork and rice.

Australian Pork Limited said the agreement is 'substandard' and a 'missed opportunity'. Cane growers said, more stridently, it was 'yet another kick in the guts for Aussie cane growers'. When you look at the Joint Standing Committee on Treaties report, we do go through some of these issues; although I think the government did play down the missed opportunities for both pork and sugar. The sugar industry in my home state plays a significant role in our economy, and it was looking for a much better opportunity in its export markets. It supports many regional economies in Queensland, it supports jobs and opportunity and it supports investment as well. It would have been good to see the sugar industry benefit. Having not been part of the negotiations—these are matters for the executive to do—I encourage the executive to continue to press for better opportunities for sugar for Queensland specifically, although I do recognise that New South Wales does contribute to the sugar industry; but I am not going to talk about New South Wales.

It is important that we do have a government that remains focused on agriculture, because the benefits for agriculture in Japan are very good. We did mention sugar briefly in the treaties committee when dealing with agriculture. Japan is our second-largest agricultural market with an estimated total market of $4 billion. In real terms that amounts to about 10 per cent of Australia's agricultural exports in 2013. Significantly, beef is up there as one of the high marks, and beef will have reduced tariffs, from 38.5 per cent to 19.5 per cent for frozen beef, and 23.5 per cent for fresh and chilled beef over 18 years and 15 years respectively. This will ensure that we maintain our ability to compete in that market with the US and that we can continue to have opportunities in the domestic market in Japan. Of course, these cuts are heavily front loaded because they do provide an early benefit to beef. From the perspective of the negotiators of this agreement, they did listen to the beef industry, who had been seeking much better access over some time for this market.

There are some areas where Australia will be permanently exempt from Japan's global snap back safeguard, whereby Japan has the right to increase the tariff to 50 per cent should beef imports from all sources exceed a volume limit. There is also improved access for offal preserved meats and live cattle. When we talk about beef people often think about rump steak and T-bones. But it is important that the whole animal—in its broken-down state, of course—including offal, accesses these markets, because that is where the beef processors can realise some great opportunities and sustain interest in those markets.

The pork industry will gain preferential access for a large volume of product—more than 10 times the current trade and around 40 per cent of Australia's total pork exports to all countries. The industry acknowledges the significant quota for Australian pork but it does highlight Japan's continuing high surcharges.

I will deal with sugar before I go on to deal with the broader issue that I think the pork industry has touched upon. The report of the treaties committee says that the Australian sugar industry has expressed disappointment that low polarity raw sugar was excluded from the agreement. The sugar industry had pushed for improvements in its access for high polarity raw sugar, and I mentioned their view on that. But one of the areas overall, and I think the pork industry did highlight it, is that it is about the agreement providing opportunities into the Japanese market by having a reduced tariff and by having those opportunities. But one of the areas where the government must remain vigilant is in ensuring that there are no technical barriers to the trade, that the Japanese market remains open and that Australian exporters can compete, because it is noted in the treaties report that there are non-tariff barriers. While it says that the significance of the tariff elimination reductions are generally acknowledged, there remains considerable concern over ongoing non-tariff barriers inhibiting access to the Japanese market. This is where the government who has signed this agreement must remain very vigilant to ensure that those non-tariff barriers do not get in the way of Australian exporters going into that market. The Export Council of Australia told the committee:

… that Japan's 'relatively complex and multi-layered regulatory framework' proved a deterrent to Australian businesses …

It is important that this government works with the Export Council of Australia and its members to make sure that those non-tariff barriers are not significant, that they can be ironed out and that they do not provide a barrier to trade between Australia and Japan, particularly in agricultural products.

This agreement comes with the support of the Labor Party. That is why the previous government released the Australia in the Asian Century white paper—because we believe it is important to have a plan for the opportunities as well as to prepare for the challenges in our region. The white paper is clear on how we can move forward in this regard:

The Asian century offers a wealth of opportunities and career choices in a variety of businesses (including small and medium-sized enterprises), especially for Australia's young people:

in mining and resource related sectors—continued economic development in the region will drive demand for energy and mineral resources

in tourism, sport, education, the arts and creative industries, professional, banking and financial services, and science and technology—thanks to growing affluence in Asia

in agriculture—rising food demand, connected to rising populations and an expanding middle class in Asia, offers an opportunity for Australia to be an important supplier of high-value food, requiring greater investment by agribusinesses to boost output and research, adapt to regulatory change and build capacity

in manufacturing and services—as Australian businesses join regional and global value chains and over time become increasingly integrated and specialised, they will offer high-value and innovative products and services

in environmentally sustainable growth, natural resource management, infrastructure development, urban design and health and aged care—as Australians leverage their expertise to do business with their neighbours.

The Australia in the Asian Century white paper laid down these fundamental principles about how we should engage with Asia, because it is important to have a plan for the future. I note that the Abbott government has shunned the Australia in the Asian Century white paper. It has been taken down from the website of the Department of the Prime Minister and Cabinet. That concerns me for many reasons but for one in particular. It seems to be just like the Abbott government to do this, because it does not have a plan for Australia in the Asian century. It also reflects on a government that does not have a plan for health, education, infrastructure, defence, manufacturing—and the list goes on, unless you consider that the only plan that they have is cuts, cuts, more cuts, a bit more pain and a few more cuts. That appears to be the only plan that they could have.

Government senators interjecting

Senator LUDWIG: Some others that do not have a plan—if we want to get under their skin—are the Newman government in my home state of Queensland. We have seen the impact that that can have on the economy. Business confidence and investment and trade opportunities for Queenslanders can slump. The unemployment rate today in Queensland is 6.8 per cent. That is right—6.8 per cent. When Labor was in government, it was 5.4 per cent. That does rouse the opposition, but what are they doing to assist exporters in sugar and other industries to ensure that they have opportunities in Queensland, to create jobs and to ensure that we have great export markets into Japan, other than just whinge from the sideline? That seems to be their major way of progressing the issue.

Let me deal with some of the key benefits of implementing the agreement. We have a first-mover's advantage. Australia has secured preferential market access for some of its goods and services ahead of any other country. This preferential access, coupled with Australia's clean, green image and reliable supplier status, will result in increased exports to Japan, and they should grow over time as these tariff barriers come down. I just hope that this government remains focused on ensuring that technical and market access issues are dealt with quickly and in the right way to ensure trade continues to grow.

The joint standing committee, as I referred to, provided a unanimous report, with no additional comments or dissent, because of the significance that Japan has to Australia. The report provided a balanced view on the benefits, as well as—and I have touched on these—the suboptimal outcomes and the regulatory complexity that could be a barrier to trade. Importantly, multiple parties support this agreement—including the National Party in Queensland, because of sugar, I suspect. They can explain to that industry what happened, and they can then clearly indicate to beef and the remaining agricultural industries that there has been a good outcome by this Liberal government federally. But, if I want to go back, the work started in 2007 under Labor. I visited Japan to push for an agreement and a reduction in tariff barriers for agriculture. Why? Because I recognise the importance of Japan to agriculture, both in Queensland and nationally. It has been difficult across the divide, particularly in agriculture, to get our countries focused on ensuring that we could reduce those tariff barriers.

Turning to some of the important parts of this agreement and the subsequent amendments, the tariff amendments bill will ensure that the customs duty rates applied by Australian Customs to Japanese goods will be in accordance with the preferential rates and phasing-out periods agreed to in the agreement. It will provide rules and procedures to identify and certify Japanese goods that qualify for preferential tariff rates and related matters, and it will ensure that the operative amendments come into force on the day of the agreement so that agricultural products and industries can benefit from this agreement in the first part of 2015.