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Joint Standing Committee on Foreign Affairs, Defence and Trade
10/09/2018
Access to free trade agreements by small and medium sized businesses

BATTAGLENE, Mr Anthony, Chief Executive, Winemakers' Federation of Australia

Committee met at 10:41

CHAIR ( Mr Ted O'Brien ): I declare open this public hearing of the inquiry by the Trade Subcommittee of the Joint Standing Committee on Foreign Affairs, Defence and Trade into access to free trade agreements by small and medium sized businesses. These are public proceedings, although the subcommittee may agree to a request to have evidence heard in camera or may determine that certain evidence should be heard in camera. I remind the witness that, in giving evidence to the subcommittee, he is protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee, and such action may be treated by either house of parliament as a contempt. It is also contempt to give false or misleading evidence to a committee.

Those present here today are advised that filming and recording are permitted during the hearing. In accordance with the committee's resolution of 12 October 2016, this hearing will be broadcast on the parliament's website, and the proof and official transcripts of proceedings will be published on the parliament's website.

I now welcome Mr Battaglene, representing the Winemakers' Federation of Australia. Thank you for your submission. Before we open up for some discussion, I invite you to make some opening remarks.

Mr Ba t taglene : I will be very brief. Firstly, I apologise that I didn't make it to the previous meeting, but it's been a bad year for deaths in the family, so it was unavoidable.

CHAIR: I'm sorry to hear that.

Mr Ba t taglene : The Winemakers' Federation is the peak industry body representing all the winemakers in Australia. We're about to amalgamate with the grapegrowers, so soon there will only be one body. That's not public knowledge, but we expect by November this year that will happen.

Mr PERRETT: This is being broadcast, so—

Mr Ba t taglene : That's all right. There are no secrets; it's just not public. I'm aware of that.

Mr PERRETT: It's less private now—put it that way!

Mr Bat t aglene : Indeed. But I'm saying that we do manage to represent the interests of that great ambit of people. There are 3,000 wineries in Australia and there are 6,000 grapegrowers, so there are a lot of people in direct and indirect employment in the business.

We survive by export. Export is vitally important to us. As you know, the structure of the industry is that there are four or five large companies that probably export 70 or 80 per cent to most major markets. But there are a lot of smaller markets that rely on export for a living. So we spend a lot of time in our business trying to get down trade barriers and trying to encourage those who should export to be able to export without hindrance.

CHAIR: Thank you. As you would know, given the submission put in by your organisation, this committee is looking at how small and medium businesses in Australia can better leverage the string of free trade agreements—how they engage with the free trade agreement deal-making process that leads to a signature on those agreements then post signature and implementation. Are there any particular parts of your submission that go to the terms of reference that you wish to call out up-front before we have a Q and A?

Mr Battaglene : The only thing I will say is that we are enthusiastic supporters of free trade agreements. We support a free trade climate because we think we are well positioned to take advantage of it. That's not to say that all free trade agreements give us large benefit. We will get nothing from the Indonesian agreement which has just been announced, for example, but that doesn't mean we don't support it. We understand the political necessity. We have a very close working relationship with the government—both the departments of agriculture and foreign affairs—in the negotiations. That goes for during and after the agreements. We've been heartened by some of the developments that the departments are working towards and which I can elaborate on later

Mr PERRETT: Tell me about your members. Are they mums and dads? I know you have big and small members. Our focus is obviously not on Treasury Wine Estates. They're doing okay. It's on whether the others are benefiting from free trade agreements.

Mr Battaglene : Our governance model is that we have three electoral colleges, if you like. There is the large one—the top four companies are members. We have one for the medium-sized companies, which are still quite large. They are the big family companies, like De Bortoli and Brown Brothers. Then we have the small college, which is everyone from 100 tonnes to five tonnes production. They all have equal representation on the board. You need an 80 per cent majority for any decision to be carried. So you can't be dominated by just the large companies, for example.

Mr PERRETT: In terms of voting, who has the clout? Is it value, numbers of bottles sold or—

Mr Battaglene : There's an equal vote between the colleges. Each is identical. On our board, you have four votes between you if you're large companies. You have four votes if you are medium companies. You have four votes if you are small companies.

Mr PERRETT: So Tasmania has the same rights as New South Wales?

Mr Battaglene : Correct. Someone from out here, like Lark Hill, has exactly the same rights as Treasury Wine Estates. It works. We in fact have only ever had a vote twice in my life. We run a consensus model. I have to say that the big companies are very keen to make sure that the small companies have good opportunities to export because they see that they can also benefit. There is a lot of, if you like, sex and sizzle and a lot of variety from small companies, and the big companies, while they drive through and make that pathway, can benefit down the track from small companies getting in behind them.

Mr PERRETT: The little company down the road you mentioned doesn't have the bodies to send over to China to knock on doors.

Mr Battaglene : Correct.

Mr PERRETT: So Treasury, for example, opens the doors and then the SMEs can come in the wake of that big company that's opened doors.

Mr Battaglene : Yes. The big companies can raise the awareness of Australian wine and what it can do and then the small companies are in a position where retailers or distributors say, 'I want some of that.' Treasury are selling all that Penfolds. They can say,' this is what I can get.' So it's really helpful to have large companies that have big sales forces and a lot of people. Treasury have something like 150 people in the market in China.

Mr PERRETT: That is a lot of doors being knocked on.

Mr Battaglene : That's right.

Mr PERRETT: Which a little Canberra winemaker would never be able to do.

Mr Battaglene : Exactly.

Mr PERRETT: Would they be unique in that sort of industry, in that they are all Australian wine rather than Australian widgets?

Mr Battaglene : And it's different because we are a food product, for a start. So you've got to compare it to other food. Then you get things like King Island Dairy, for example, if look at cheeses or things like that.

Mr PERRETT: So King Island is a King Island cheese rather than an Australian cheese?

Mr Battaglene : Yes. We unashamedly market Australia. Everyone who exports and all producers pay a levy and it goes to Wine Australia, which is the marketing body. That's roughly $3 million a year and then there's user pays where you can pay to participate in events—so they will organise events.

Mr PERRETT: So that's selling the brand and then those 70 Treasury people say this is the part of the brand that you—

Mr Battaglene : This is for generic events—so this is purely money that goes to generic. A large amount of that money comes from the large companies, because they export more, but the benefit goes to all. The other big thing is the $50 million that has come to the industry following the reforms and the WET, the wine equalisation tax. A lot of that is now being spent on getting smaller producers export ready, so they understand how to get into the markets, and also a lot more events in China and the US, in particular, where we're trying to get higher value product, where they can come and participate. For the next two next we'll be spending a lot of money particularly to make those small companies export ready and then to be able to take advantage of the extra investment.

Mr PERRETT: Your industry seems to have been a success story, but, for example, the distillers all brewers haven't quite copied or benefited from the brand. Would it be true to say that?

Mr Battaglene : That's a timing issue. We've been there because we've had a cooperative relationship between winemakers. So, yes, you compete hard in the marketplace but there's always been that cooperative relationship to get that levy up. To get a mandatory levy up everyone has to agree. So we've worked very hard and said we'll give it to a body that can deliver for all of us.

Mr PERRETT: That everyone has faith in.

Mr Battaglene : Yes. Sometimes that faith waxes and wanes. When times are tough it tends to wax.

Mr PERRETT: If you compare, say, the meat industry, there's a compulsory levy for the slaughter of cattle but you might say that the Meat & Livestock Australia hasn't necessarily got the reach into markets that you guys have.

Mr Battaglene : They're pretty good—and AMLC and the like get a lot more money than we do, for a start—but what they don't do is engage those smaller producers, like we do. I can say that with some authority because my parents were beef cattle producers and they hated paying a levy to these guys because they could never see any benefits.

Mr PERRETT: So they didn't see a return for a niche product?

Mr Battaglene : They were small producers—I call it Angus—and they saw that they would get that back.

Mr PERRETT: So there was never a big truck for them to follow behind in a way.

Mr Battaglene : Yes, and they didn't see that the big truck was actually trying to help them at all. The advantage we have is we've got a peak body, in ourselves, who have got direct engagement with a whole lot of small people and we do it not just with direct members but also through the regions, which are very powerful. So we engage in the grassroots. The thing about helping exports is that, even if you don't export it helps you, because, if someone else can sell product overseas, that product's not going domestically—so it's creating room for you. It's a hard thing to educate people about but it's really important.

Mr PERRETT: So there is more pie.

Mr Battaglene : Yes. So, if China stopped tomorrow, we'd be in big trouble.

Mr PERRETT: That's an interesting comparison.

CHAIR: You spoke about the $50 million. I assume that is the export and regional wine support package that's come through. Can you explain how that is going to be used to help the small and medium businesses export?

Mr Battaglene : There are several aspects to it. One aspect is deliberately marketing 'brand Australia' and giving the opportunity to people to sell product in the US and China. With China, as you know, we're going really well. We've grown at 50 per cent a year for the last few years. Six or seven years ago it was a $50 million dollar market, and we've gone to a billion dollar market. It's grown that quick. Now, that can't go forever—we're not silly enough to know that—but everyone's getting into China. It's growing. We're spending probably a fair proportion on the China market. The US market is the biggest potential market, and we are underweight in the US. We were a billion dollars in the US until the GFC and the perfect storm hit us. People couldn't afford to sell. People couldn't afford to sell into the US, so everyone got out of it. It's been very hard for us to get back in. Those two markets are key. It doesn't mean we're stopping investing in the others, but the additional money would be going to the US.

Apart from that, a lot of money is going for tourism. You've got to remember that most of our small guys are tourism operators. You produce wine and you make wine, but you're actually a tourism op. You've been to the Granite Belt—that should be one of the great tourist centres, and it's growing. So we're doing a lot of money expending on tourism ventures, partnering with state organisations and state tourism organisations. For example, South Australia, WA, Victoria and New South Wales are getting a million dollars each, which is being matched by the state, to direct at wine related tourism activities. That's going to directly benefit the small guys.

Mr PERRETT: Overseas? Is that internal tourism or external? Or doesn't it matter?

Mr Battaglene : It's for external tourism, but when you do international tourism it actually helps domestic as well; it's helping your infrastructure and the like. So they're all developing programs that are state specific and directly specific to them, which is really powerful.

The other thing that's really good is trying to make people export ready. We've also created two things. One is to make people export ready—training programs and that sort of thing so that people can understand what they need to get into markets. We already do that anyway, to the extent that this is really targeting a program. It's pretty exciting stuff. As part of that we're also giving people money back for attending events. So if you want to invest and go to ProWine in China, for example, which is on in November, you'll be able to get your money back for your investment to attend that. Large companies are not able to access that. That's for a finite time; we're just looking to extend that for another year because it's been very good.

Mr PERRETT: Mr Battaglene, is that in consultation with DFAT at all, or is that your own show?

Mr Battaglene : That's our own show.

Mr PERRETT: We had evidence in Griffith that they've done something similar, but I got the impression it was the local region that had put it on.

Mr Battaglene : It could well have been.

Mr PERRETT: They were giving info to every producer—not just wine but farm and agricultural equipment and the like.

Mr Battaglene : You get a lot of state operated things that do that. There are state funds. One of the things we're looking at is what's happening at the state level. The money that's going to state organisations actually takes that into account and leverages it. It's pretty powerful.

Mr PERRETT: Sorry to jump around a bit. WA, South Australia, New South Wales and Victoria are enemies on one level. The $4 million or $8 million is all trying to sell the same product in different geographies.

Mr Battaglene : Yes. In fact a part of this money, apart from just going to states, is going to be for an overarching portal which will have go around all of Australia.

Mr PERRETT: So they all sit alongside each other to get more pie.

Mr Battaglene : We're just trying to get everyone in the country and everyone to buy wine. If you're better, then you'll do better than someone else. We're looking at levelling the playing field and building the pie.

Mr PERRETT: Rather than Sunshine Coast stealing off the Gold Coast, you're actually saying, 'Get to the coast.'

Mr Battaglene : It will be that, and then it's how good you are and what your product's like. Our philosophy is to get the level playing field, get people in, grow the pie and then fight it out commercially.

Mr PERRETT: So to keep people in the collective, there's the profit motive, obviously, and they need a bang for their buck. People need to see that their dollar is being used in their self-interest. What else can you tell me?

Mr Battaglene : Absolutely. It's very hard, politically. We've got the $50 million on top of the mandatory levy which we currently have. The thing about mandatory levies is that people get so used to paying them that they just take them for granted. A lot of them don't even know they're paying a levy; it's just something that comes off and they just think it's a cost of doing business, without seeing that it's a cost but there's a return on it. Part of what we are trying to do is make people a lot more aware that there is a benefit and that if they want to influence, if they're not happy, don't just whinge and complain about it. Get in there and do something. That is where we come in. We try and make that corporate governance accountable. We are getting there. We are not perfect. The cooperative spirit in the wine industry has always been one of the things that characterises it. That is why we are not ready yet on the spirits and beer. They are relatively newer industries and are only getting together now.

Mr PERRETT: Does New Zealand do it better than us?

Mr Battaglene : New Zealand do it really well.

Mr PERRETT: France? They have their own history and geography.

Mr Battaglene : France are always between Burgundy and Bordeaux, so they are very regionally based rather than national. They always have trouble doing a national focus, but they have got a lot money. They have got a lot of subsidy money so they can spend a lot of money on it.

Mr PERRETT: New Zealand—

Mr Battaglene : New Zealand are good. They are very good and they are going really well. They don't have states, for a start, which stops a lot of those petty parochialisms—unless you're a Queenslander, of course, where it's not petty! I'm a Queenslander.

CHAIR: Thank you, Mr Battaglene. That is the best comment I've heard.

Mr PERRETT: We are a federation, Mr Battaglene, whether we like it or not.

Mr Battaglene : Indeed.

CHAIR: Can I follow up a little bit on China. We have in another submission some of the statistics, which I know that you mentioned verbally, showing an enormous increase in wine consumption in China, obviously with the tariff duties being reduced to zero per cent from 14 per cent, I believe, starting next year. That should open considerable opportunities. What impact would that have directly on small and medium players?

Mr Battaglene : It has already had that impact. Tariffs are the least important thing in most free trade agreements. They are the most visible, but the important thing about free trade agreements is the awareness they raise and the fact that people suddenly realise that there is a potential market both for the exporter and for the importer and that the awareness is raised on both sides. Tariffs are good. Don't get me wrong. I'm not trying to belittle the efforts—this reduction is fantastic—but the big thing here has been the awareness raising. We are already seeing it. In China, the top four companies have about 40 to 50 per cent of our exports. Normally, they have 70 to 80 per cent. There are 1,500 exporters to China. That is much more than any other country. So what we are seeing are small companies and entrepreneurs getting into the market. We are already seeing that. China is a market where we are seeing the small players play a large role. They are able to get in on that growth, which is fantastic.

CHAIR: The subcommittee has been advised from elsewhere that some of the wine exporters are having problems with documentation at the customs level in China. Have you had any experience or have you had any advice yourself in that regard?

Mr Battaglene : It is no secret that a couple of months ago there were some serious delays at the border in China and there was a lot of press about it. I was doing a lot of press. There were—I won't say the number, because it's not public—a lot of containers of wine held up at the border. It was first reported as just one company; it wasn't. Then it was reported that it was just three or four companies; it wasn't. It was across the board. There were two reasons for that.

Mr PERRETT: It wasn't happenstance is what you are saying. It wasn't coincidence.

Mr Battaglene : No. There were two reasons. The press was trying to say that it was entirely due to deteriorating relationships at the political level. There was an element of that; there is no doubt. But what did happen back in March was that the Chinese bureaucracy underwent a massive restructure and so the group that was responsible for imports, AQSIQ, no longer existed. It was absorbed into the bigger general administration of China customs. So we had a lot of people with different cultures in charge of imports and regulation at the border. We had people at the border doing something that they hadn't done before and under a new set of rules. This had a big impact.

The issue was particularly around certificates of origin. You get certificates of origin when you have got a free trade agreement. It shows that all your product comes from Australia; therefore, you can get the preferential tariff rate, and there are requirements where you can verify those in market of course by the authorities. Normally you would get 10 per cent to 20 per cent verification. Under the new regime, it was increased to 60 per cent, 70 per cent, 80 per cent. That was a massive increase, so we got massive delays at the border. It was partly this change in the bureaucracy and we're seeing that start to run through now. But also the massive increase of exports mean that there's a lot more product going in. There's still the same number of staff that they've got to administer it for the warning. So there was an element of both.

CHAIR: Okay. Thank you.

Mr Battaglene : I understand that one company is still having trouble. That's the first I've heard of that. Every other company I've heard from, the problem has run through and they're not having any extra delays at the border. Yes, there's still verification but it's normal verification and normal play. So I'm very interested to hear that and I'll follow that up with my members.

CHAIR: Thank you. Moving on to another high-growth Asian country, India—and we'll get to some of the non-tariff issues shortly—but specifically on tariffs, I understand India has a tariff of 150 per cent. Is it that high?

Mr Battaglene : One hundred and sixty, I thought. It could be 150. It's very high.

CHAIR: Can you just run through—for the benefit of the subcommittee—what impact that has on Australian exporters, particularly small and medium.

Mr Battaglene : If you're small or medium, you just don’t go to India. It's just too hard. It's not just the tariff; they've also got a lot of restrictions—on labelling and composition in particular. We've worked through that and overcome some of those to make it possible. But it's a very difficult market to break into and certainly not one I would recommend to small producers. Some of the big companies are in there. Whether they're making any money, I'm not sure. It's a tricky one. Obviously it's got great potential, but it's a 10-years' time market. Free trade agreement negotiations clearly are going nowhere. There's a possibility that we might get something but it's going to be very tricky. It's attractive on the surface, but in practice I wouldn't be trying to do it. If I was recommending something to any small winemaker, I would be saying: 'Forget about it. Go for a better market.'

CHAIR: I want to move on to talk about geographical indications. Can you provide an explanation as to the extent to which GI rules in other markets act as effective barriers or 'obstacles', as your submission refers to them.

Mr Battaglene : This is my favourite subject, one I get very grumpy about.

CHAIR: Is that right? Good. Let's get into it.

Mr Battaglene : As you know, we've lived under a geographical indication system since the early nineties because we created a system with the European Union. We have lived quite happily under it. Since that time, the EU has very cynically tried to reinvent the wheel a little bit. For example, they have abolished the use of 'Prosecco' as a grape variety—which it always was, and it was in our original wine agreement. They now called it Glera under legislation, and they've created a region called 'Prosecco'. So, not only can't we sell Prosecco to the EU anymore, but they try and register these GIs. These are principally GIs that have Italian grape varieties in them, so there's a fairly small subset but it's growing, and they will go around and individually register these in different countries around the world as a GI. Once these countries do an agreement with Europe, part of that agreement is, 'You will register our GIs,' and that prevents us using that term at all. So we are seeing them pick us off one by one. For example, we can no longer export Prosecco to Japan; we would have to call it something else.

CHAIR: On that example, just so I am clear, are you saying they named an area after what was a successful brand, which then effectively triggered GI?

Mr Battaglene : It was a grape variety. Prosecco was always a grape variety and it was indigenous to a large area around Conegliano and Valdobbiadene, near Venice, a lovely area. So Prosecco was sold and it was a sparkling wine, described as a grape variety, like we do in Australia—very successful. Then, as other countries started planting that grape variety, the Italians got nervous that other countries would compete with them on the market. You can't stop other people using it; you can just protect the name for yourselves, and then you do wine agreements and trade agreements. So the second biggest producers of Prosecco in the world are Brazil and then Australia, and this was mainly aimed at Brazil and Australia. It's very cynical, because there's room for us all, in our view.

CHAIR: Your submission refers to the negotiations with the EU and some of the concerns around their GI protections and your organisation's desire for certain clarifications in the negotiation—common English word usage et cetera.

Mr Battaglene : Yes.

CHAIR: Putting the issue that you wish to lobby for to the side, can you just focus on the process of lobbying itself? What I'm going to here is the part of the terms of reference for this inquiry that looks at how small and medium businesses can influence the FTA negotiation process. How do your small and medium businesses influence the negotiation of the process we have underway with the EU with respect to GI or any other issue?

Mr Battaglene : It is a really good example of how the GI works. Let's take Prosecco and other grape varieties because they're front and centre. We realised this issue was going to be a live one well before the negotiations, so we went out and talked to not just our members but the industry involved in what is commonly known as alternative grape varieties. We said, 'We're going to have an issue here.' We initiated a group with a phone hook-up and said, 'We've got to work out a strategy so that we can make sure there's a high degree of awareness not just with the government but with all political parties and consumers about what's happening on this so that we can preserve our right.' Because in a trade negotiation you can get sold out in a heartbeat, and we're not that powerful. Wheat, beef, sugar, dairy—any of those—will get a guernsey ahead of wine, and we know that.

With Prosecco, we created the group, and then we ran events at Parliament House, which you all should have gone to. They were very well attended. And we met with the Prosecco producers so that we could get the real producers there—these weren't the big companies; these were the small guys from King Valley and around the place—to meet people, introduce it and lobby. We had a Landline program two Sundays ago. Landline did a thing on this, and that was, again, showing the small producers and what they're doing and how they're going to grow this. We've been obviously lobbying very closely with both the government and the opposition on this. We've had bipartisan support, which is good, but we do know that we're negotiating collateral. We report back to our stakeholder group, which are the small guys, this special group that we're created. It's working fantastically. They've all become members now, so it works both ways.

They weren't aware that this was an issue, and they wouldn't have been because they don't have the capacity to understand some of these things and where they're going to happen. They need to rely on organisations like ours to identify when risks are coming and what can be done about them. And our biggest support from them is to use them as personalities, because everyone loves to talk to the real winemaker and not to a suit like me. So we actively involve them in the process.

CHAIR: This might require you to do some hypothesising, but how do you believe small and medium businesses in sectors similar to yours would influence the FTA process if they didn't have an organisation like yours, which is clearly, from the description you've just given us, taking a lead in putting together a campaign involving public relations, stakeholder engagement, direct lobbying et cetera?

Mr Battaglene : It's the only way it can work. You've got to have a peak body. I mean that's why industry advocacy groups are important. But they have to be genuinely representative. It can't be just the big companies. You need to make sure you represent the whole industry. It's the only way it can work, because if you're a small winemaker or small beef-cattle producer you aren't big enough or have the time. You don't have the time or the understanding of the issues to do it, so you need to have some structure in place to get someone who will think about it on your behalf and who will make sure that you know what's going on. I know it sounds very paternalistic, but it's a market failure issue and you need a way around it.

I don't believe government should be doing that for us, because one thing is government could sell me off tomorrow and I'm also a strong believer that industries need to stand up for themselves. Most of the commodity industries, I think, are fairly well organised. On trade stuff, they tend to rely too much on government doing their job for them. I've got a personal belief that industry's got to stand up and work with government rather than say, 'Government, can you fix it for me.' I have a beef with my other colleagues about that all the time, because they just say, 'Why doesn't the department of agriculture fix it?' I say, 'No, why don't you tell them how to fix it and help them on it?' So you need representative bodies.

The other thing is a lot of them do it through industry-owned companies which have got the R&D levy. I think that's probably strengthened because they now do some of that policy development work—not the advocacy, because that's done with a different group, but the strong industry-owned companies, and we don't have one. I think that probably helps getting that collective mass of information that can get out to producers and be able to contact them.

Senator IAN MACDONALD: If any of my questions have been asked, tell me and I'll read the answers in Hansard. In a broader approach, free trade agreements for your industry have been significant in China which I read about in newsletters and elsewhere.

Mr Battaglene : China, Japan and Korea have all been really good ones—crackers. We'll get nothing out of Indonesia; ASEAN has limited benefits. Thailand, funnily enough, was really good. It took us 14 years to get the full tariff reduction to zero, but no-one else has got that. That's come in thick now, so it's been very helpful.

In general, we're enormous supporters of free trade agreements even if we don't benefit specifically. Alcohol is not so popular in the Muslim countries so we have some problems there, but we understand that. We are trying to run an approach now which government hopefully is starting to adopt. Everything is a systems based approach. Everything is about non-tariff barriers. Free trade agreements traditionally don't touch non-tariff barriers. That recognition is now coming, and we've been pushing that for 10 years.

The next issue is that, if we are going to address it, all non-tariff barriers are basically four categories—certification, testing, labelling and composition requirements. But let's look at cross-industry solutions to cross-industry problems, and that's my next big battle that I'm currently winning, I think.

Senator IAN MACDONALD: I was going to ask you about non-tariff barriers, but you pre-empted that. You're suggesting that, as well as talking effectively about tariffs, duties, trade negotiators should also be trying to regularise labelling, certification and other issues.

Mr Battaglene : Yes, and, in that systems based approach, don't just look at labelling in wine; what you do is look at food labelling and say, 'Are there tariff barriers that will arise?' because they'll be the same ones across all products. And then, 'What's a mechanism to solve that in a free trade agreement? The logical thing is to set up a system on how you can put forward points of view or how you can stop—for us, it's having all our mandatories in one field of vision so that you can't regulate placement, size, colour. You can, but it's got to be on a separate label, and that saves us millions of dollars around the world. So some simple solutions—and they don't have to be perfect.

One of the things that we've been really heartened by is both Foreign Affairs and Agriculture have now realised and have set up some groups to look at non-tariff measures. There are currently consultants out doing some work for DFAT on NTMs—they came and saw me two days ago, so I gave them chapter and verse, and a bottle of wine, to make sure they understood.

Senator IAN MACDONALD: We had a lot of evidence in other hearings that China in particular has, depending on which port you go into, different rules and regulations. Have you found that with wine at all?

Mr Battaglene : Yes, and it's not just China; it used to be the same in Europe. You would go to different ports, and we used to identify the border guard because there were particular border guards you'd have trouble with. So, yes, it's always a problem and will always be a problem; it's not unique to China.

Senator IAN MACDONALD: I'm sorry. I will have to go. We've got a number of divisions, so my apologies.

Mr Battaglene : I'm always happy to talk to you bilaterally, Senator. I'm in Canberra, if you ever want to chat.

Senator IAN MACDONALD: I'm interested in the bottle of wine you might bring! That's only a joke!

CHAIR: Mr Battaglene, we will wrap up. Is there anything that we haven't already covered that you were hoping we would do a deep dive into?

Mr Battaglene : Maybe not a deep dive, but I still think that one of the best things that we can do to help small producers of all sorts, not just winemakers, is non-tariff work and starting to work out very systematically how to get down the barriers. While there's been some good work done on apples and some things like that, I think that, if we get the systems approach and look at how we deal with MRLs across the board in a certain market, then every industry can benefit.

CHAIR: MRLs?

Mr Battaglene : Maximum residue limits—sorry. That's one of the biggest problems. And how we look at testing methods to make sure that we've all got harmonised testing methods or whether we use them for regulatory purposes. These are just examples, but it's the systems that we need to be able to solve, not individual situations of wine into Japan. It's about all products going in and how they deal with the issues. Once we get there, I think it will make it a lot easier.

CHAIR: How do we go about that? Is that through the international institutions, the WTO et cetera or do you see it through the FTAs themselves?

Mr Battaglene : Through FTAs. We're doing a lot of work to try and influence the outcomes. We're starting to do it in annexes. We had it in the TPP-11, for example. There was annex on wine. But we've suggested that, perhaps, they should try and do a food annex which deals with the broader cross-cutting issues. We've modified that annex and we're proposing the Pacific Alliance negotiations. That's a good one for us because we've got some friends in Mexico and Chile who can help support those. Once you get a template forward and some precedence, it becomes easier for negotiators to move down that route. We're leading the charge on it because we see it's really important, but, once you level the playing field, everyone wins.

CHAIR: If there is any supplementary information you could provide to the subcommittee, we'd be grateful for that. You may have also just answered my last question, which we ask of everybody who appears before the subcommittee: if this subcommittee were to make one recommendation to government to improve the lives of small and medium businesses with respect to FTAs, what would that one recommendation be from your point of view? What would you like to see?

Mr Battaglene : Directly address non-tariff barriers within free trade agreements.

CHAIR: Excellent. Mr Battaglene, thank you very much. That concludes today's hearing. You've made yourself available and you've also provided a submission, for which we are grateful. You have been asked to provide some supplementary material, which I just mentioned, so could you please send it through to Andrew from the secretariat? You'll be sent a copy of the transcript and, if you wish to make any corrections, please also advise the secretariat.

Mr Battaglene : Thank you very much. It was a great pleasure, as always.

CHAIR: Thank you.

Committee adjourned at 11:23