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Thursday, 17 October 2002
Page: 5441

Senator BARNETT (6:08 PM) —I rise to support a US free trade agreement for Australia and emphasise the fact that this will benefit this country. The drought is very serious and is having implications for rural and regional communities and others right throughout Australia. It is estimated that the cost to the community could be $4 billion. It is also estimated that the merits of a US-Australia free trade agreement could deliver benefits to this country in the order of $4 billion each year. Why should the US spend $180 billion over the next 10 years to subsidise its farmers? There is no good reason. In fact it is a tragic outcome for Australian farmers, who by world standards are amongst the most efficient. The US administration and members of Congress support free trade in principle, but they are protectionists in practice, especially in a Congressional election year such as 2002.

During my time in 1986 and 1987 working in a US law firm in Washington DC on behalf of Australian trade and agricultural interests, $26 billion a year in subsidies was paid to US farmers under their US farm legislation. Strong lobbying by the US farm sector has maintained its protectionist and nationalistic approach, as exemplified by the recent passage of the US Farm Bill 2002. The Republicans control the House of Representatives, the Democrats control the Senate and both parties are fighting for the votes of the powerful farm lobby in advance of their Congressional elections on 5 November.

The President has now obtained trade promotion authority from the US Congress, enabling him to negotiate bilateral arrangements with other countries, including this free trade agreement with Australia. As the Prime Minister argued so well during his visit to Washington DC some months ago, a free trade agreement with Australia can deliver benefits to both countries. It is vital that negotiations on the terms and conditions of this agreement get under way as soon as possible, and I understand that that is now occurring. Based on discussions with our embassy officials and the Australian Ambassador to the US, Michael Thawley, during my recent visit in June, I am confident that we are in a good position to act swiftly. It is hoped that a free trade agreement can be finalised by the end of 2004. Our exporters will benefit, especially our farming community.

Beef is Australia's single largest export to the US and was worth over $A1.7 billion in 2001. This is followed by passenger motor vehicle exports of $591 million and alcoholic beverage exports of $552 million. Imports from the US are dominated by telecommunications equipment at $1 billion and aircraft and aircraft parts at $1.7 billion. A 378,000 metric tonne quota was imposed on Australian beef exports to the USA, and this quota was exceeded for the first time in 2001. Having met with Meat and Livestock Australia representatives in Washington DC, it is clear that not a lot can be done in the short term to gain concessions from the US regarding quotas. Beef exports to the US in excess of the quota incur a 26.4 per cent tariff, making the export of Australian-manufactured beef for US consumption uneconomic.

The Meat and Livestock Australia representation in Washington DC is a credit to the Australian industry, as they implement a professional lobbying regime. I met with them on my recent visits; they really are professional and should be commended. In my view, it is time for other Australian industry representatives and business organisations to take MLA's lead and to have representation in our second largest export market—the home of over one-third of Australia's investment inflow, which amounts to $215 billion. The US is also the host of over 50 per cent of Australia's direct investment overseas.

I would like to specifically focus on the subject of poppies, because it is such an important commodity for Tasmania. The US is an important market for the Australian licit opiate industry—the poppy industry. In 1981 the US introduced the so-called 80-20 rule, which stipulates that at least 80 per cent of narcotic raw material imports must be sourced from traditional suppliers such as India and Turkey. Australia competes with other countries such as Yugoslavia, France, Poland and Hungary for the 20 per cent balance of the US import demands.

I met with the US Drug Enforcement Administration, the DEA, who confirmed that thebaine, an opium poppy derivative which Tasmania produces in some quantity, would not be counted within the 20 per cent component. This is good news for the Tasmanian poppy industry, as the DEA confirmed that such an arrangement will remain in place until at least 2005. Tasmanian exports of thebaine account for about 35 tonnes of the annual US thebaine imports of 65 tonnes. The US government acknowledges that Australia and specifically Tasmania maintain the highest standards of security.

I commend the Tasmanian poppy industry, the Poppy Control Advisory Board and all those associated with the industry in Tasmania for having such a commendation passed upon that industry by the US administration. I want to also commend specifically the two processing factories in Tasmania. Firstly, there is Glaxo, at Westbury—which is near my home town of Hagley, in northern Tasmania—employing well over 100 people. That factory is owned by GSK—Glaxo Smith Kline. The second facility, near Ulverstone, is Tasmanian Alkaloids, owned by the company Johnson & Johnson. They make an important contribution to the Tasmanian industry, and I would certainly be encouraging them to consider other downstream processing activities and options for those particular activities.

Finally, I would like to congratulate the Australian government and specifically Mark Vaile, as Minister for Trade, and also the Minister for Agriculture, Fisheries and Forestry, Warren Truss, on the efforts that they are undertaking to pursue this US free trade agreement. I would also like to specifically congratulate our Prime Minister, the Hon. John Howard, who worked so hard and was so well recognised during his time in Washington DC, when he addressed both houses of the US Congress and had one-on-one meetings with the President, the Secretary of State and many other dignitaries in the administration. He was indeed honoured in many ways—and rightfully so. The Bush administration went out of its way to honour our Prime Minister. So I would like to pay those compliments and pass on those congratulations. I urge our government to continue with haste and professionalism to pursue a US free trade agreement with Australia. Finally, I want to commend the ambassador, Michael Thawley, his operatives and his support staff at the embassy in Washington DC, and also those working in the various consulates throughout the USA to achieve these objectives, for the good work that they do.