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Wednesday, 24 March 2004
Page: 21881

Senator SANDY MACDONALD (7:08 PM) —I want to discuss the Australia-United States free trade agreement tonight because the dust has settled since it was announced in February. The document has now been published, and it is proper to again recognise the incredible effort made by our Minister for Trade, Mark Vaile, and his team in negotiating the agreement. The document has been scrubbed and published. It is being looked at by the Joint Standing Committee on Treaties, and a Senate select committee is also making inquiries. They will report their findings in due course.

The negotiation of the free trade agreement between Australia and the United States will bring huge benefits for the Australian agricultural and manufacturing industries, providing a tremendous boost for trade and our trade relationship with the United States. We are both leading trading nations in a world where trade is often corrupted. We came together in a bilateral sense with clean hands in negotiating the FTA. The United States is our most important trading partner, with an economy that accounts for one-third of the world's GDP, and I suspect our relationship will become more important over the next 20 years, not less. After that who knows? I guess that will depend on the strength of the Chinese influence as we understand it, and it is very important that we have a good trade relationship with China as well.

Our trade relationship with China has grown exponentially over the last four or five years, upwards of 10 or 15 per cent per year. It was interesting that in November last year we had visits from both the President of the United States and the President of China on consecutive days. That reflected not only the importance that Australia puts on its trade relationship with the United States, as evidenced by the FTA, but also the enormous synergy we have the Chinese economy.

The opening up of trade channels between Australia and the United States is incredibly important. The FTA will mean many Australian exporting companies will now have free and open access to markets in the United States. Agricultural producers will see the majority of tariffs reduced to zero immediately, and the rest over time. I believe that Australia will get far more out of this trade deal than the United States. On that point this is probably the most exciting thing that has happened to Australia since I have been in the Senate. This FTA is incredibly good news for Australia, and I do not think we should sell it short for one moment.

Agriculture will certainly benefit. Manufacturing will benefit. Existing jobs will be retained and new jobs will be created. Our economy will continue to grow from the benefits that will flow from new opportunities. Over 97 per cent of Australian non-agricultural exports to the United States, worth about $6½ billion last year, will gain duty-free entry into the United States. Under the FTA around 66 per cent of tariffs on agricultural products will be cut to zero immediately, with a number of other tariffs reduced over the following five years of the agreement. In time our beef industry will achieve completely free trade with the United States. The in-quota tariff is to be eliminated immediately, saving around $16 million a year in tariff revenue alone. Presently our quota with the United States is about 380,000 tonnes. Only once in 15 years have we reached our quota of beef into North America, so the elimination of the in-quota tariff is very useful.

In addition to the substantial WTO quota that Australia already holds with the US, our beef producers will have access for an additional 15,000 tonnes of beef in year 2, increasing to 70,000 tonnes in year 18. Then effectively it will be free trade. There has been some criticism of the time that it will take for our beef quota to become in effect free trade. Eighteen years may seem a long time but, in terms of the development of trade links and relationships and industries developing and strengthening, 18 years is like an evening gone.

Australian dairy farmers will more than double their access to the world's second largest dairy market, and that will happen immediately. It is suggested that this initial increase will be worth over $50 million in 2005, and there will be about a five per cent increase every year after that. This is wonderful news for the dairy industry. I see my colleague Senator McGauran in the chamber. He represents the state of Victoria, which produces a very large percentage of our export dairy product. I know he is delighted with the impact that this will have on his state and on his industry.

Other agricultural sectors will see a reduction in tariffs and will benefit from gaining access to a market of more than 300 million people. The single desk exporting arrangements in wheat, rice and barley will all remain intact. That was of the utmost importance to the Australian government when it was negotiating the deal and, of course, to crop producers nationwide. While sugar has not been included in the FTA and will not benefit from increased market access, it is no worse off for not being included and will certainly be better off when the government delivers on its promised compensation arrangements as we move into 2005. The agricultural deal in the US FTA delivers substantial market access gains for the majority of Australian agricultural producers—including the beef and dairy industries, which have faced restrictive barriers in the US market before.

Under the manufacturing industry, virtually all of Australia's exports to the United States—worth a very substantial amount of money—will be duty-free from day one. Tariffs on textiles, some footwear and a handful of other items will be phased out, with all trade in goods free of duty by 2015. A mechanism to address nontariff barriers will also be established. Access to US markets has been enhanced for Australian service suppliers such as providers of professional, business, education, environmental, financial and transport services. A framework to promote mutual recognition of professional services has been developed—a big gain for Australian professionals doing business in the United States—and, most importantly, the Pharmaceutical Benefits Scheme will not be affected by the US FTA. The price of prescription medicines will not be increased by this agreement. The Australian government was firm in its stance that the PBS be retained and unchanged, and Australia will improve the transparency of the PBS processes. This will include making more information available about the reason for recommendations to add medicines to the PBS, which is something very dear to the Australian community.

I urge our political opponents, the Labor Party, to take a very good look at all the good things that will come out of the FTA with the United States. I do not believe that Labor are serving Australia well in opposing this one-off chance to conclude such a historic trade linkage with the United States, and I agree with a commentator who said that any other country that had been offered this deal could not have got to their pen quickly enough to sign it. You might say that Labor believe it is all right to have an FTA with Thailand or Singapore or even New Zealand, but when it comes to the United States they equivocate. I cannot understand this anti-America element in the Australian Labor Party. To me, it is inexplicable, it is opportunistic and it is sad on this occasion because it is not in the best interests of Australia. The United States is one of the most important economies in the world, and the deal negotiated is good for Australia; it is in Australia's best interests in both the short and long term. I commend it to the Senate and to the Australian people.