House of Representatives

Customs Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018

Second Reading Speech

Mr CIOBO (Moncrieff-Minister for Trade, Tourism and Investment)

I move:

That this bill be now read a second time.

The Customs Amendment (Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation) Bill 2018 amends the Customs Act 1901 to implement Australia's obligations under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, otherwise known as the TPP-11.

The TPP-11 is one of the most comprehensive trade deals ever concluded and will eliminate more than 98 per cent of tariffs in a trade zone spanning the Americas and Asia, with a combined GDP worth $13.7 trillion. Australian farmers, manufacturers and services exporters will benefit from new market access opportunities in economies with nearly 500 million consumers.

It will provide better access for farm exporters including beef and sheep meat producers, dairy producers, canegrowers and sugar millers, as well as cereal and grains exporters. There will be new opportunities for our rice growers, cotton and woolgrowers, horticultural producers and our wine exporters.

Let me provide one example of how TPP-11 will give our farm exporters an advantage over some of our toughest competitors. Within two years, Australian beef exporters will face tariffs 13 percentage points lower than their United States competitors in the multibillion-dollar Japanese market. That tariff advantage will continue to widen over subsequent years.

Our manufacturers will benefit from the elimination of tariffs on industrial goods. Our services exporters will have access to liberalised and improved regulatory regimes for investment, notably in mining and resources, telecommunications and financial services.

The TPP-11 is truly a next-generation trade agreement.

And for the first time in a trade agreement, TPP-11 countries will guarantee the free flow of data across borders for services suppliers and investors as part of their business activity. This 'movement of information' or 'data flow' is relevant to all kinds of Australian businesses-from a hotel which relies on an international online reservation system to a telecommunications company providing data management services to businesses across a number of the TPP-11 markets. It's important to note that TPP-11 governments have retained the ability to maintain and amend regulations related to data flows, but have undertaken to do so in a way that does not create barriers to trade.

The TPP-11 also creates Australia's first free trade agreements with Canada and Mexico, giving Australian exporters preferential access to two of the world's top 20 economies for the first time. In 2016-17, nearly one-quarter of Australia's total exports, worth nearly $88 billion, went to TPP-11 countries.

The forthcoming entry-into-force of the TPP-11 is a significant moment for open markets, free trade and the rules based international system. But it is important to note that the achievement of a final TPP-11 deal was far from guaranteed. When the United States withdrew from the original TPP in early 2017, the prospects of the ground-breaking deal were far from certain. For Australia and its TPP partners, it was a test of resolve and judgment. There was no guarantee of success.

One option was retreat. That was the favoured option of the Leader of the Opposition. The deal was 'dead', he said, and the government was 'deluded' for continuing to pursue the TPP. The Leader of the Opposition's understanding of the Asia-Pacific region was so acute, so sharp and so incisive that he decided that pursuit of a TPP without the US was a lost cause. Giving up on the TPP would save money, he said.

If the Leader of the Opposition got his way, there would have been no TPP-11. There would have been no new and historic access to the Canadian market for our grains, refined sugar and beef exporters; no new access to the Mexican market for our pork, wheat, sugar, barley and horticulture producers and education services providers. There would have been no improved access to the Japanese market for our beef, wheat, barley and dairy exporters; no improved access for our wine producers in the Vietnamese, Canadian, Mexican and Malaysian markets.

Thankfully the government and our trading partners, led by Japan, ignored the Leader of the Opposition's advice and pressed ahead. And, in particular, the Prime Minister, Malcolm Turnbull, together with John Key and Shinzo Abe, principally drove the TPP-11 agreement, fervent in their belief that this was going to be a very good deal for our region and for our respective countries. As a consequence, our global trading system is stronger today because of the TPP-11. We have created a beacon for nations who want to work within a rule based framework that is complementary to the global architecture provided by the World Trade Organization. We want the TPP-11 to grow in membership. We don't want the TPP-11 to be an exclusive, inward-looking bloc. We welcome the interest in TPP-11 shown already by nations within and outside the Asia-Pacific.

Given the significant contribution the TPP-11 will make to our trading future, it is important Australia and its TPP partners reap the benefits of the deal as soon as possible. The TPP-11 will enter-into-force 60 days after the six TPP-11 member countries complete all necessary ratification procedures. To date, three countries-Mexico, Japan and Singapore-have ratified the agreement and a number of other countries, including New Zealand, Peru and Canada have indicated that they will ratify in coming months.

In other words, if Australia and five other countries can complete ratification before the end of October, the TPP will enter into force before 31 December 2018. That means there will be two opportunities for tariff reductions-the first on entry-into-force and the second on 1 January 2019.

On the other hand, if the TPP-11 were to enter into force this year without Australia, our exporters would be placed at a significant competitive disadvantage. For example, New Zealand and Canada would have superior access to the Japanese beef and dairy markets, better access to the Japanese cheese market and better access to wine markets in Mexico. I therefore seek the cooperation of the parliament to consider the legislation as expeditiously as possible.

I want to acknowledge the cordial conversations that I've had with the shadow minister for trade and I recognise that, for Labor, this may not be the agreement that they ultimately would have signed. I recognise that Labor's preference would be, if they were to be successful-and I certainly hope they won't be-that they may in fact look at amending the agreement with TPP partners down the track.

But the deal signed on 8 March 2018 is one that fundamentally serves Australia's national interest. Its scope and level of ambition cannot be underestimated. It will create new opportunities and greater certainty for our businesses and encourage job-creating foreign investment. It will make Australian exports more competitive so our farmers can sell more produce, our professionals can provide more services, and our manufacturers can make and sell more goods. Our involvement in the negotiation of this deal means Australia played a key role in setting 21st-century rules for commerce across the world's fastest-growing region. This will enable us to tackle new trade and investment barriers as they arise, helping our businesses weather the increasingly challenging global trading environment.

This bill, along with the companion Customs Tariff Amendment Bill, will see the elimination of 98 per cent of tariffs from TPP-11 countries, in a regional free trade zone that already accounts for over one-fifth of Australia's total two-way trade. The TPP-11 tariff cuts will have a cost-saving impact on imported goods for Australian households and businesses, and will deliver material gains for our exports.

The amendments to the Customs Act 1901 contained in this bill will implement the provisions of chapter 3 of TPP-11. Chapter 3 sets out rules-of-origin criteria and related documentary requirements for claiming preferential tariff entry for goods imported from countries that accede to TPP-11. Under TPP-11, preferential tariff treatment is available based on declarations regarding the origin of goods based on information provided by the importer, exporter, producer or their authorised representative. This will reduce the amount of red tape for importers of goods originating in TPP-11 countries.

Here in Australia, this agreement has undergone a level of scrutiny perhaps unprecedented by any other free trade agreement. It has been subject to four parliamentary committee inquiries. After the TPP-11 was tabled in this House on 26 March this year, it was examined by the Joint Standing Committee on Treaties.

I am tabling the TPP-11 implementing legislation today because I want Australia to remain a leader among trading nations-a country that is not afraid to show our trading partners, in concrete actions, that we are committed to a future of liberalised trade and investment. This is what these TPP-11 implementing bills represent. Our early ratification of the TPP-11 demonstrates Australia's leadership in pursuing liberalised trade globally, and embodies the government's strong commitment to maximising trading opportunities for Australian businesses, both large and small.

The TPP-11 outcome is a feature of an ambitious and confident trade policy, one that didn't turn back at the first hurdle, an audacious but pragmatic approach. That, in my view, has been the hallmark of this government's trade and investment policy.

I particularly want to acknowledge not only the strong leadership of the Prime Minister with respect to the stewardship he's provided the TPP-11 but also my predecessor, Andrew Robb. He played a critical role in the original negotiation of the TPP-11, which this bill and the subsequent bill largely give effect to. I want to also acknowledge the outstanding work of many of the fine men and women of the Department of Foreign Affairs and Trade, in particular the chief negotiator and the teams of negotiators that played a critical role and consulted broadly and widely with stakeholders across the Australian economy. This legislation is a testament to the vision of Andrew Robb, of the negotiators and stakeholders, and I'm so pleased I've had the privilege of being able to ensure that the TPP-11 was successful and that we introduced this legislation today.

I commend the bill to the House.

Debate adjourned.