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Legislative Council - Fifty-Third Parliament, Second Session (53-2)
2015-05-13 Daily Xml
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Free Trade Agreements

The Hon. J.S. LEE (16:34): I move:

That this council—

1. Recognises the benefits of free trade agreements to South Australian businesses and the economy; and

2. Acknowledges the work of the commonwealth government to establish recent free trade agreements with Korea, Japan and China.

It is my pleasure to rise today to move this motion as the shadow parliamentary secretary for trade and investment and small business, because I believe the signing of the free trade agreements with China, Korea and Japan is a timely and strategic move to align our economic development with our Asian neighbours. Provided that we have the right business conditions in South Australia and a ready for business approach, these trade agreements will open up many new doors for South Australian small to medium-sized businesses and exporters.

I move this motion today to outline why free trade agreements are important to South Australia. As honourable members would know, free trade agreements (FTAs) are designed to reduce the barriers to trade between two or more countries, which are in place to help protect local markets and industries. Trade barriers typically come in the form of tariffs and trade quotas, and they cover areas such as government procurement, intellectual property rights and competition policy. Lowering trade barriers helps industries access new markets, boosting their reach and the number of people they can sell their products to. FTAs are also ultimately designed to benefit consumers; therefore, increasing competition means more products on the shelves and lower prices.

Prior to the signing of FTAs with China, Korea and Japan, Australia had a total of seven FTAs in place, with New Zealand, the United States of America, Chile, Thailand, Malaysia, Singapore and the Association of Southeast Asian Nations (ASEAN). The establishment of free trade agreements that the federal Liberal Coalition has negotiated for Australia are fantastic opportunities for the Australian economy and the wider community.

With this in mind, I congratulate the Liberal Coalition government for successfully establishing free trade agreements with three of Australia's top trading partners: China, Japan and Korea. Honourable members might be interested to know that these newly signed trade deals have formed a powerful trifecta of agreements with Australia's three largest export markets, which account for more than 61 per cent of our export of goods. My recent study tour and trade delegation to China and Korea has confirmed that government departments and business sectors in China and Korea welcome the newly-established free trade agreements with Australia.

Around Easter this year, I conducted a study tour and business delegation to China and Korea. Meetings and site visits were scheduled for me in various cities and provinces. In China, I visited Shantou, Zhongshan, Guangzhou, Panyu, Kunming, Zhouzhuang, Suzhou and Shanghai; and in South Korea, I visited Daejeon, Seoul, Incheon and Gyeonnggi-do

Amongst the many official meetings and site visits to factories, trade fairs and exhibitions, logistic centres and seaports and government departments, I also had the opportunity to deliver lectures on the topics of international trade and free trade agreements at two universities in Korea, namely, Kyung Hee University and Mokwon University.

The business community and education sector in Korea were excited about the free trade agreements and very keen to develop a strong relationship with South Australia. As a result of my first visit to Korea, I was overwhelmed by their forthright business approach and very honoured to be appointed in the following positions: Honorary Chief Adviser of Australia-Korea Business Council of South Australia; Honorary Chief Adviser for Korea Industrial Complex Cooperation, Gwangju Biz Growth Support Centre; and Honorary Member of the Advisory Committee of the Korea-Australia Strategic Centre for International Trade.

The reception throughout China and Korea was overwhelmingly warm and productive. Meaningful discussions were held with many government officials and business leaders in various cities, as I mentioned earlier. They demonstrated their interest in working with me in developing trade, investment and educational and tourism opportunities between their respective cities and South Australia. It was certainly a successful study tour and business delegation for me in my portfolio of multicultural affairs, small business, trade and investment.

The Chinese and Korean government officials and business people I met during my trip in late March and early April were incredibly receptive. They have all regarded free trade agreements as a positive development between Australia and their respective countries. Despite the very tight and demanding travel schedules, I am grateful for all the help and assistance given by many business leaders and government officials in China and Korea, providing me with valuable information, contacts and new propositions and opportunities for South Australia.

During my visit, they indicated a new level of confidence in Australia and an increase in their appetite to explore new opportunities for South Australia. I place on the record my special thanks to the business community and different levels of government in China and Korea for their generous reception and productive meetings.

At this point, I would also like to take the opportunity to acknowledge the member for Chaffey, Mr Tim Whetstone in the other place, who will be moving the same motion in the House of Assembly as the shadow minister for trade and investment. His recent trip to Japan has been very fruitful. He informed me that he gained valuable insights into the economic situation in Japan and identified many opportunities for South Australian exporters. I congratulate the member for Chaffey for his wonderful work and his continued interest in building trade and investment opportunities for our state.

Coming back to the free trade agreements, in 2013 Australia's international business survey of more than 1,600 small to medium-sized exporters ranked China as the most important market for export growth opportunities. Yet 40 per cent of the companies identified tariffs and quotas as barriers to doing business in China. Negotiations for a free trade agreement with China commenced under the Howard government in 2005, and languished between 2007 and 2013. It took nearly 10 years, after 21 negotiating rounds, for the landmark China-Australia Free Trade Agreement (ChAFTA) between the governments of Australia and China to be completed.

ChAFTA, the China-Australia Free Trade Agreement, was signed on 17 November 2014 by Australian Liberal Prime Minister Tony Abbott and the Chinese President Xi Jinping. ChAFTA lays a historic foundation for the next phase of Australia's economic relationship with China. The signed agreement will unlock significant opportunities for South Australia, as China is Australia's largest export market for both goods and services, accounting for nearly a third of cultural exports, and a growing source of foreign investment.

China continues to grow at nearly 7 per cent, despite a recent slowdown. With more than 1.3 billion consumers living in China, the demand for our exports will continue to grow. I personally witnessed the increased appetite for Australian goods when I was in China recently. For every dollar we spend buying Chinese goods and services, the Chinese spend two dollars buying Australian goods and services. There should not be any doubt who are the bigger winners in this relationship.

The signed FTAs acknowledge the long-term stability and rapid growth of the bilateral economic and trade cooperation since the establishment of diplomatic relations between China and Australia in 1972. This new FTA does not only put us on an equal footing with other countries which have FTAs with China, but it gives Australia, and South Australia, a significant advantage over other major players in the Chinese agricultural market, such as the US and the EU.

The China-Australia Free Trade Agreement will unlock substantial new benefits for Australians for years to come. It will add billions to the economy, create jobs and drive higher living standards for Australians, as was pointed out in the budget announcement speech by the Hon. Joe Hockey, our Treasurer.

More than 85 per cent of Australian goods exports will be tariff free upon coming into force, rising to 93 per cent in four years. Some of these goods are currently subject to tariffs of up to 40 per cent. On full implementation of the China-Australia Free Trade Agreement, 95 per cent of Australian goods exports to China will be tariff free.

Significantly, tariffs will be abolished for Australia's $13 billion dairy industry. Australia's beef and sheep farmers will also gain from the abolition of tariffs ranging from 12 to 25 per cent, and all tariffs on Australian horticulture will be eliminated. Tariffs on Australian wine of 14 to 30 per cent will go within four years, while restrictive tariffs on a wide range of seafood, including abalone, rock lobster and southern bluefin tuna, will also cease within four years.

The Australian government has secured the best ever market access provided to a foreign country by China on services, with enormous scope to build on an export market already worth $7 billion. Legal services, financial services, education, telecommunications, tourism and travel, construction and engineering, health and aged care, mining and extractive industries, manufacturing services, architecture and urban planning as well as transport, amongst others, will all benefit from being able to do business in China more readily. This places Australia in a strong position to secure additional gains as China undergoes further economic reforms into the future.

For the record, China is Australia's largest two-way trading partner in goods and services, valued at more than $150 billion in 2013. As a goods export destination, it is worth $95 billion, and as our largest source of goods imports, it was worth $47 billion in 2013. China is Australia's largest services export market, which, as I mentioned before, is worth $7 billion.

South Australia will really benefit greatly in the agriculture and food industries. The Stock Journal stated that the signing of the China-Australia Free Trade Agreement could have huge potential benefits for the national sheep and wool industry. Under the agreement, sheep meat tariffs of 15 to 23 per cent will be eliminated over four to eight years. In relation to China taking on 80 per cent of Australian wool, as well as 25 per cent of sheep meat exports, Livestock SA President, Geoff Power, from Orroroo, said that there was no doubt that the FTA would be beneficial for the industry. He confirmed that it is going to create a more secure market and that, by doing that, we are creating more demand.

In addition to those comments, WoolProducers Australia President, Richard Halliday, from Bordertown, said that the biggest benefit for the wool industry would be the percentage of wool that no longer attracted a tariff over an extended period. This China-Australia Free Trade Agreement will definitely produce long-term benefits to Australia and South Australia.

In regard to Japan, Japan has been classified as an economic heavyweight and is the third largest economy in the world. It was worth $US5 trillion in 2013 and it is still Australia's second largest trading partner. In 2013, Australia and Japan's two-way trade totalled $70.8 billion, which is more than 10 per cent of Australia's total trade. Japan is an extremely vital, longstanding and highly complementary trading party for our nation. It is also the third largest investor in Australia with investment stocks worth $130 billion.

With the recently signed Japan-Australia Economic Partnership Agreement, more than 97 per cent of Australian exports to Japan will enter duty-free or receive preferential access when JAEPA is fully implemented. It will slash prohibitive agricultural tariffs on a wide range of products to our second largest agricultural export destination, Japan, and will eliminate tariffs on all of Australia's current minerals, energy and manufacturing products. This agreement lays the foundation for the next phase of bilateral economic relations and will strengthen the special strategic partnership between Japan and Australia.

As I pointed out earlier, my recent trip to Korea has definitely been beneficial. As Korea is Asia's fourth largest economy with 50 million people, Australia and Korea have natural economic, political and strategic complementary common values and interests which will continue to allow for a strong bilateral partnership to grow. Korea is currently Australia's third largest export market and the fourth largest overall trading partner in terms of two-way trade exceeding $30 billion in 2012-13. The Korea-Australia Free Trade Agreement will strengthen and expand opportunities for Australian companies doing business with Korea as the bilateral investment between Korea and Australia will continue to grow and diversify.

The stock of Korean investment in Australia has grown 25-fold to $12 billion between the time period of 2001 and 2012. KAFTA, which is the Korea-Australia Free Trade Agreement, will enable Australia's agricultural exporters to compete in this highly protected lucrative market and also open new markets in Korea for Australian law firms, accountants and telecommunications providers. It guarantees access in a wide range of other sectors including education and financial services.

With all those important elements that I have mentioned in terms of free trade agreements that are set between Australia and Japan, China and South Korea, I think increasingly we need to pay tribute to all the community organisations as well as business associations which are furthering the trade and improving relationships for South Australia and those three countries. The trifecta, I call it—Japan, China and South Korea—of free trade agreements are incredible opportunities for South Australia, so I believe that South Australia can tap into and access some of the world's largest economies. With those remarks, I commend the motion to the council.

Debate adjourned on motion of Hon. G.A. Kandelaars.

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