Motions

Free Trade Agreements

Mr WHETSTONE (Chaffey) (11:30): I move:

That this house—

(a) recognises the benefits of free trade agreements to South Australian businesses and the economy; and

(b) acknowledges the work of the commonwealth government to establish recent free trade agreements with Korea, Japan and China.

I rise today to speak on this motion, which has been put forward in my role as shadow minister for investment and trade. I think it was probably one of the groundbreaking moments when minister Andrew Robb AO was able to negotiate, sign and implement free trade agreements that will be of huge benefit not only in the immediate export world but for many decades to come. Along the way, there have been a few detractors in relation to free trade agreements, but I would like to put on the record that if you are not in amongst it, if you are not there as part of having a free trade agreement, being more competitive, playing on a much more level playing field, then you are at a disadvantage right from the get-go.

Obviously, I acknowledge the commonwealth government and the trade and investment minister, Andrew Robb. As Prime Minister Malcolm Turnbull has explained, Andrew Robb is probably one of the greatest trade ministers in the history of this nation. What he was able to achieve was absolutely enormous, with the opportunities it presents to create jobs, to attract investment, to give further access to industries to open up new markets. In fact, many of the tariff reductions have now been realised and South Australian businesses are reaping the benefits.

Just recently, the shadow cabinet came to the electorate of Chaffey, and I was able to take Steven Marshall, the Leader of the Opposition and member for Dunstan, and others around to some of the businesses that are benefiting from those free trade agreements and explain the tariff reductions that they are now enjoying and benefiting from, the competitiveness there is now, putting product—particularly food and beverage—into markets that make us more competitive.

It really does put more onto the bottom line. More importantly, it creates a very high level of confidence when people are investing, whether it is local grassroots investors, farmers here in South Australia, or nationally right across the country. It is also about us being able to promote our great state to the world, to be more competitive, to have that confidence when we enter our markets that we are playing on a much more level playing field. I think that speaks volumes about where it is all going.

In addition to the most recent free trade agreements with Korea, Japan and China, Australia also has agreements in force with New Zealand, Singapore, Thailand, the US, and Chile and an association with our neighbours, the South-East Asian nations of the ASEAN region as well as New Zealand and Malaysia. The companies covered by Australia's 10 FTAs account for 67 per cent of Australia's total trade, which shows the significance of these agreements.

The proposed Trans Pacific Partnership currently being negotiated between 12 countries, including Australia, would become the largest free trade agreement in the world if it were signed, opening up an estimated $28 trillion in trade. You would have to ask: where can we benefit with that agreement, with those signings of those relationships? Also, what does it mean for the economy in South Australia? What does it mean for our businesses that are either already existing export traders or wannabe exporters? It gives them a fantastic platform to stand on, to set up a business model, to invest in their business and employ people.

To be a part of that, yes, we do have to create a relationship. We do have to meet our trading partners. It is not about putting product in boxes, containers or bottles and hoping that someone is going to buy them. FTAs are about a long-term strategy. In most cases, it is about creating a relationship and about meeting them. It is about bringing them here and showing the wannabe importers of those countries exactly where the product comes from—grown under blue skies with clean, potable water (in some cases it is not potable, but it is still reliable and not polluted). We look at the strategies with biosecurity measures. We look at all of the advantages that we have in South Australia to grow a premium product, a value-added product, and present it to the world.

Historically, we have been price takers in many of our export markets because we have traditionally loaded up containers, ships and trucks, sent them to a market and hoped we got paid. In many cases, there is also a bit of argy-bargy. As an exporter for many years, I was one of those culprits who would put product onto a boat and just pray that it was received at port when it got to its destination, was cleared and then I would in turn be paid for that product. In many cases, products have faced huge obstacles. Unregulated markets present huge problems and payment terms have always been an issue.

By way of background, the definition of a free trade agreement is an international treaty which removes barriers to trade and facilitates stronger trade and commercial ties which contributes towards increasing the economic integration between the participating countries. Free trade agreements can also cover entire regions with multiple participants or link just two economies together. Free trade agreements open up opportunities for our exporters and investors, and I think that is important to create an environment of confidence so that we do further invest, we do further value-add and we do further put our trust in these free trade agreements being of economic benefit.

It is all very well to have cultural ties with other cities and countries, but at the end of the day we are doing this for an economic gain. It is all very well to shake hands and put your arm around a trading partner, but it is a real issue when that is where it finishes. We have to actually create those relationships. Until our neighbours from Asia, and South-East Asia in particular, can meet exporters face to face and understand exactly what the business models are and where the product comes from, they do not trust us. I think anyone here would understand that, when undertaking any form of trade negotiation, it is about that face-to-face recognition. When you look someone in the eye, in most instances, you can understand, you can like and then you can trade.

Over many years, I have found probably one of the most valuable marketing tools is being able to present a product and also to show where that product comes from and how safe it is because we all know of food standards in many parts of the world that are questionable, whether it is where it has been grown, how it has been grown or the type of labour that is used to pick, process, pack and logistically move it. I think what is really important is that we now have a platform as an exporting state that we can build on.

I want to touch on some of the trade barriers and trade quotas that typically come in the form of tariffs. As an example, beef into Japan recently had its tariff cut from 38.5 per cent down to 19½ per cent. That is over 18 years, but it is a transition. We have to understand that we are now competing with other countries. We have to be on a playing field that we would like to think is level. As a competitive country, we have to be smart about how we do it, but we also need to know that we are selling a premium product to these markets that are craving premium high-end products, particularly South-East Asia, which has a growing middle-class economy that is prepared to pay a premium for what we are selling: a premium product at a premium price.

Free trade agreements foster free trade flows and create stronger ties with our partners. They do not just eliminate tariffs; they also address behind the border barriers. Particularly in the Riverland, we are dealing with recognition of having fruit fly free status, or area of freedom, so that our trading partners recognise that they are getting a product that is fruit fly free. We know that fruit fly is a part of the big picture right around the world, but the unique situation that we have, particularly in the Riverland, is that we are fruit fly free.

Biosecurity is a major issue in that region, my electorate, the Riverland and Mallee, and we guard it as best we can. I think that Biosecurity SA are doing a great job. They continue to put budget bottom lines into upholding that fruit fly free status. It is playing its role now with nectarines into China, which are now given that status. We are now looking to build on that network to include citrus.

The agreements enhance the competitiveness of the state's export sector, and I think South Australia will be one of the main beneficiaries. I should note that negotiations on the free trade agreements with China commenced under the Howard government in 2005. It has been a long time getting ink on paper, getting it signed and getting it into action to make sure that we are reaping the rewards and making sure that those agreements are for the benefit of all and not just for a one-sided show.

Those free trade agreements sadly languished between 2007 and 2013. I think that was due to a lack of federal government focus. Sadly, there was infighting between the federal Labor governments of the Gillard and Rudd years. While they were busy fighting, they were not negotiating for the country's best interest, particularly in export and trade. The 2015 federal budget provided $24.6 million to assist businesses to make the most of their export opportunities created by that trifecta of free trade agreements. I think that was a great initiative.

In a submission to the Agricultural Competitive Task Force, Business SA said that the federal government had been outstanding in securing trade agreements. I think that Business SA could see the writing on the wall that, if we could to get these signed, it would make a difference to business confidence in South Australia, which had been sliding. Business confidence had been very focused on the cost of doing business in South Australia and very focused on the regulations and the red tape when accessing international markets. I think that a lot of those barriers, those walls, have been broken down.

While Australia has some key arrangements with trading partners, we have to improve those business conditions and look at how we are going to support the SMEs, those small to medium enterprises, and how they can take advantage. My recent tour showed me our lack of presence in Japan, New Zealand and the ASEAN countries, where free trade agreements are vital. We are not putting enough effort and investment into those countries to make sure that we can take advantage of those agreements.

It is no good having a want to put products into countries. Take Japan as an example. While I was over there I saw that there is no South Australian presence—nothing, no-one home, no offices. We have an Austrade office that, when they are not too busy looking after their main customers, the eastern seaboard, deals with South Australia. That is no disrespect to Austrade. They have a certain amount of resources and a certain amount of manpower. What it shows is that South Australia does need to have a presence on the ground.

There is much more that I can talk about. Obviously the China free trade agreement has been an issue, but what I would like to say is that the free trade agreement is something that every South Australian business should consider. They should consider their model and be a part of that agreement and make hay while the sun shines.