• Transcript, E&OE
Topics: New FTAs with Indonesia, Hong Kong and Peru.
28 November 2019

Fiona Breen: Now, the Federal Government has signed off on three new free trade deals. The Parliament this week endorsed FTAs with Indonesia, Hong Kong and Peru. The Indonesian deal will see greater access for beef, grains and horticultural exports, while the deal with Hong Kong cements existing arrangements. They also allow for more overseas travelers to work in Australia. The new deals come after market access issues have prevented some agricultural exporters from maximising the promises offered in the 2015 China FTA.

Brett Worthington is speaking here with Trade Minister, Simon Birmingham.


Simon Birmingham: We are on track to see them variously come into force over the next few months in the early parts of next year, meaning that, from 2020, farmers and businesses are going to be in a position to enjoy the increased market access, the lower tariffs, the bigger quotas created as a result of those agreements.

Brett Worthington: If you’re an agricultural exporter or a farmer is it safe to assume, though, that Indonesia of the three is the one that would likely deliver more gains than what Hong Kong or Peru could?

Simon Birmingham: Indonesia is absolutely the big prize in this. It is of course the largest of the countries by population terms. It is the most proximate to Australia as well, and it has really strong growth trajectory and potential for the future. So the growth of a much larger middle class in Indonesia over the years to come means that our businesses can try to pursue similar opportunities there, as they have with the growth of the middle class in other parts of Asia over recent years. So yes, Hong Kong is important. It particularly locks in place as part of a formal agreement much of the open market access that we already enjoy in Hong Kong. Peru provides particular opportunities, especially in some of the services sectors there, really for those who deliver mining services and support, but also for farming and other goods sectors too.

Brett Worthington: When that China Free Trade Agreement was unveiled it was put forward in similar ways to a way in which the Government is speaking about this Indonesian deal. Can you guarantee that there won’t be the market access problems that the China agreement has attracted?

Simon Birmingham: Well, the China agreement has yielded enormous benefits for Australia, and if you look at our beef exports to China, for example, we had a safeguard level put in place as part of the China-Australia Free Trade Agreement, which most parties didn’t ever think we’d reach. Last year we hit it in December; this year we hit the safeguard level in around August. And so, the huge volumes going through there really have exceeded, far exceeded, early expectations. But yes, there have been some niggles and problems in relation to getting approvals for individual meat processing facilities. And I guess that’s the interesting conflict there — that at the one hand you’ve got ever increasing volumes of meat products going through; on the other, we can’t manage to get the approvals for individual facilities. And I actually think that’s depriving China — not of the meat, because it’s still finding its way to market — but of getting the best prices, most competitively, with the best cuts from the newest meat processing facilities. And that’s why I urge them to change their approach.

In terms of the Indonesia agreement, we have got some commitments there in terms of automatic permit and licensing arrangements in place. We’ve got further commitments that are new to our free trade agreements, in terms of collaboration around non-tariff barriers and measures. And so I’m really optimistic there that not only will we see 500,000 tonnes of grain tariff-free, the more than 500,000 live cattle able to head tariff-free and the various other commodities and products that we’re seeing big gains in. But also that we’ll be able to effectively use the provisions in this agreement to get permits, to get licences and to tackle any non-tariff barriers that come up along the way.

Brett Worthington: How regrettable was it that the Prime Minister’s decision on moving the embassy in Israel had in terms of delaying- getting this deal ultimately signed off with Indonesia?

Simon Birmingham: Realistically the election cycles in both Australia and Indonesia meant that we were unlikely to ever be in a position to see the agreement actually entered into force until about the timeframe that we’re looking at, because each of us had our own parliamentary processes and scrutineers to go through. Indonesia in fact is still proceeding through theirs. But I’ve been in touch with my Indonesian counterpart since it passed to the Australian Senate and he’s optimistic about the fact that they should conclude their processes early next year which means that we can be looking for those first few months of next year for entering into force.

Brett Worthington: The union movement has been quite critical of some of these deals saying that that local work is here in Australia would miss out on work opportunities. What market testing guarantees are you going to insist on there being in place to ensure that an Australian worker isn’t missing out on our own possibilities of work?

Simon Birmingham: So the union movement have been quite misleading in terms of the content of some of these agreements. The three that we have just dealt with contain no additional labour market testing waivers above or beyond what’s long been common practice. So no new wavers are created, no new places in terms of visas or the like for contractual service suppliers created. Yes, we have some additional places related to training and some additional places related to working holiday makers. But working holiday makers is a program that has helped sustain Australian tourism industry and much of Australian agricultural industry for many, many years now. It’s a very targeted program, it’s for younger people under 30 and they’re only allowed to be here for a certain period of time. And what we’ve seen is the working holiday makers usually come here with their savings, spend their savings, spend what they earn, ask mum or dad for more money while they’re here. And in creating a few extra working holiday maker places from emerging middle class economies like Indonesia, we’re really hoping to pick up and fill the void of a few places that we’ve lost in some of our traditional markets of Europe that used to be where we saw working holiday makers come from and where we still have the vast majority come from, but not with same quite the same growth rates as we used to.

Fiona Breen: That was Federal Trade Minister, Simon Birmingham, speaking with Brett Worthington.