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Wednesday, 2 December 2015
Page: 9704

Senator BACK (Western Australia) (17:33): On behalf of the Chair of the Foreign Affairs, Defence and Trade References Committee, Senator Gallacher, I present the report on Australia's relationship with Mexico, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

Senator BACK: I move:

That the Senate take note of the report.

I am pleased, on behalf of the Chair of the committee, Senator Gallacher, to speak to this report. I acknowledge the presence in the public gallery of His Excellency Mr Armando Alvarez and his colleagues, and I thank them for their participation and for appearing as witnesses to this inquiry.

The year 2016 marks the 50th anniversary of diplomatic relations between Australia and Mexico. I am delighted to report that the Prime Minister, Mr Turnbull, met with President Enrique Pena Nieto in Manila only last week, and I understand that plans are underway for visits between the countries at the highest level to recognise the 50th anniversary next year.

There were 46 submissions to the inquiry and some 13 recommendations to which I will speak in a few moments. Mexico is the 15th largest economy in the world, with a US$1.3 trillion economy. It is predicted by some to be in the top 10 countries of the world by 2050. An HSBC report that was handed to me in the last 24 hours indicates that Mexico may in fact end up in the top six economies of the world by 2050. It was timely that we conducted this inquiry. During the course of the inquiry, through the excellent work of Mr Andrew Robb, the Minister for Trade, we did sign the Trans-Pacific Partnership, in which Australia and Mexico are both participants.

Senators may be interested to know the companies that are prominent in Mexico now. Macquarie is a very significant investor. Lend Lease is constructing the tallest building in Mexico as we speak. In the energy sector there are Woodside, BHP Billiton, Rio Tinto and WorleyParsons.

In January this year I had the opportunity to visit Mexico on what I should emphasise was a self-funded study tour, assisted by the excellence of the Embassy of Mexico in organising my visit and strongly supported by Australia's Ambassador to Mexico, Tim George, and Trade Commissioner Chris Rodwell. I had the opportunity to meet with participants in the hard rock mining sector and the oil and gas sector of that country. Other Australian companies active in Mexico are Dyno, Orica, Amcor and Aristocrat; and I learned from speaking to representatives of Cooperative Bulk Handling, our Western Australian grain handling company, that Mexico is the largest importer of Western Australian oats.

Here in Australia, companies like Gruma and Cemex, the big Mexican cement company, have been very active—leading in fact to a decision by the government of Mexico to open in Melbourne the Pro Mexico Office, supporting trade between the countries. We have a five-country arrangement between Mexico, Indonesia, the Republic of Korea, Turkey and Australia, called MIKTA—five countries similar in terms of their OECD rating, who have come together to see the opportunities for trade, commerce and other activities.

The TPP will be of significant importance for Australia. We will see, for example, a reduction in beef tariffs of some 25 per cent in 10 years; in cheese and curds, 125 per cent; and in wheat, 67 per cent. We will immediately see a removal of all tariffs on pork, on barley a reduction of 115 per cent and, importantly for our wine industry, we will see a reduction of 20 per cent, down to the level of zero, which Chile, Peru and America now enjoy. On the other side of the relationship there is plenty of work for Australia to do—first of all, in terms of the capacity for the importation of Mexican agricultural products into this country. There is impatience now that our import risk analysis processes be accelerated so that many Mexican agricultural products can find their way into our country.

I want to place on the record the appreciation of the committee to the ANZMEX Chamber of Commerce for an excellent report that they prepared and then spoke to during the inquiry in relation to the possibilities of direct air transport between Mexico and Australia. Both for visitors and for freight, when that happens it will absolutely profoundly change the relationship between our countries. At the moment you must transit through the United States of America or Latin American and South American countries. We know in the States that you just cannot be in transit anymore; you actually have to get a visa to enter the United States. The cost is very, very significant, and you are looking at 28 to 40 hours of travel time. The committee endorsed that report and made recommendations in relation to it.

The other area that I want to draw attention to here is the opportunity to radically improve the visa availability for Mexicans wanting to come to this country either for business purposes or as tourists and, indeed, for student visas. Again, we make a recommendation in relation to that. On the tourism side, let me inform you that Mexico receives some 26 million visitors per year. It is regarded as a highly desirable and safe location, Again, I mention the question of visas and visa opportunities.

The committee addressed itself to education and research. When I visited the Mexican oil conglomerate, Pemex, in my time in Mexico City, they told me that tens of thousands of students in the oil and gas sector leave Mexico each year for study. As a result of my visit and that, subsequently, of Trade Commissioner Rodwell, there is the potential for three universities to have an enormous impact in Australia in that oil and gas sector—UWA and Curtin, in our home city, and the University of Queensland. I was delighted that we received evidence from the university sector speaking about the importance of the relationship now and the potential for an increased relationship in terms of research and, indeed, student exchange. The committee recommended that consideration be given to whether the New Colombo Plan can be expanded into the future to allow Australian students to study in Mexico. When I visited the Geological Survey of Mexico, they showed me the most wonderful maps—at 1:250,000 and 1:50,000—of the metalliferous areas of Mexico, and then very proudly turned to me and said that the software that enabled them to compile these maps came from Geoscience Australia and the CSIRO. You can imagine how proud I felt in that space. We have MOUs between Universities Australia and Mexican universities to accelerate and promote those relationships.

In the time left available to me, I want to devote some time to trade and investment. I particularly want to pick up on a recommendation that our chair was instrumental in ensuring went into the report, and that is 'that additional resources be allocated to Austrade to raise awareness of the significant value chain opportunities in the Mexican automotive sector, and advanced manufacturing more broadly, and assist Australian suppliers of OEMs and automotive aftermarket.' Mexico currently produces some three million motor vehicles per year and is moving up to five million. They said to me that they need the input of Australian automotive manufacturers into this burgeoning supply of vehicles in that country. So I concur with the chair, Senator Gallacher, that that certainly is an area in which we can see improvement.

Australian investment in Mexico is, we estimate, currently around $5.3 billion. There was two-way trade in 2014 of $2½ billion, and one can only sense that, as the TPP comes into force and as that relationship between the two countries grows, we will see it expanding significantly. The chamber should understand that, in 2013, Mexico received some $35 billion in foreign direct investment in that one year alone. That is the level of confidence that the world community has in Mexico. Again, I thank the secretariat for the excellent work they did. I thank those who put in submissions and those who appeared, and I thank the chamber for this opportunity.

I seek leave to continue my remarks.

Leave granted; debate adjourned.