House of Representatives- Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008

The Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and cognate bill give effect to the Australia-Chile Free Trade Agreement, negotiations for which were concluded on 27 May this year by the Minister for Trade and the Chilean Minister of Foreign Affairs. It was signed on 30 July by the Australian and Chilean foreign ministers. I had the pleasure of meeting the Chilean Foreign Minister, Alejandro Foxley, in July on the occasion of the signing and I was impressed by his deep interest in and knowledge of Australia and also by his pursuit on that visit to Australia of bilateral educational links between our two countries.

The Customs Tariff Amendment (Australia-Chile Free Trade Agreement Implementation) Bill 2008 and cognate bill give effect to the Australia-Chile Free Trade Agreement, negotiations for which were concluded on 27 May this year by the Minister for Trade and the Chilean Minister of Foreign Affairs. It was signed on 30 July by the Australian and Chilean foreign ministers. I had the pleasure of meeting the Chilean Foreign Minister, Alejandro Foxley, in July on the occasion of the signing and I was impressed by his deep interest in and knowledge of Australia and also by his pursuit on that visit to Australia of bilateral educational links between our two countries.

I would like to start by congratulating the Minister for Trade on his leadership in concluding these negotiations and for his leadership more generally in advancing Australia’s trade liberalisation agenda. This is the Rudd government’s first free trade agreement and it is a high-quality free trade agreement. As the Minister for Trade has said previously, the last free trade agreement of this quality with an agriculture producing country, as Chile of course is, was the closer economic relations agreement also concluded by a Labor government in 1983, 25 years ago. I have a deep interest in this bill as a proponent of trade liberalisation and, as the previous government speaker, the member for Shortland, mentioned, I am someone who has deep ties and indeed a deep affection for Chile.

This is an excellent free trade agreement. It takes us beyond our World Trade Organisation commitments. This is a bilateral free trade agreement that will support Australian efforts for further trade liberalisation at both a multilateral level through the Doha Round as well as at a regional level. It is consistent with the principles of multilateralism that will deliver further trade liberalisation.

As the Minister for Trade said at the time of the completion of negotiations, this first free trade agreement concluded by the Rudd Labor government is the most comprehensive free trade agreement Australia has ever negotiated. It will eliminate all tariffs on existing merchandise trade by 2015 and it will immediately eliminate tariffs on around 92 per cent of lines covering around 97 per cent of trade in each direction on the free trade agreement’s entry into force. It will lock both countries into a liberal services regime and liberal investment regime and will provide certainty for Australian investors in Chile. It ensures non-discriminatory access for Australian suppliers of goods and services, except financial services, to Chile’s government procurement market and it is fair to say that this free trade agreement will deliver new opportunities for trade and investment on the part of both Australian and Chilean companies, bringing benefits to consumers in both nations.

This agreement provides for both Australia and Chile to lock in future trade liberalisation measures by, firstly, a ratchet mechanism which locks in any liberalisation achieved within Chile on services and investment and, secondly, by a most favoured nation clause which extends to Australia any liberalisation Chile grants to any new free trade agreement partner. And Chile has already negotiated quite a number of free trade agreements with countries throughout the world and is actively working on free trade agreements, particularly in Asia.

Although current bilateral trade between Australia and Chile is modest in global terms, it is growing rapidly—up from $547 million in 2006 to $856 million in 2007. Perhaps more significantly, Australia is the fourth largest source of inward investment in Chile with around $3 billion of direct investment. Chile is Australia’s third largest merchandise trading partner in Latin America. Merchandise exports to Chile of A$200 million and services exports of A$120 million occurred in 2007.

The current economic relationship that Australia has with Chile is based primarily on mining, engineering, agribusiness and energy, but the services sector is increasingly important. There are over 70 Australian companies which have invested in Chile or are providing services, notably BHP Billiton, which operates in Chile the largest copper mine in the world, Escondida. Other Australian companies include AGL, which is involved with gas distribution, and Pacific Hydro in power generation. It is right to say that although Chile and Australia have many things in common, one thing that the two countries do not have in common is a water shortage. Chile has an abundance of water, which is used in particular for hydroelectric generation.

Particular service sectors that are likely to benefit from this free trade agreement include education, professional services, mining, engineering services, telecommunications and management consulting. The free trade agreement includes access for financial services suppliers to Chile’s pension funds system. Chile has been increasing its focus on the Asia-Pacific region, particularly through the APEC forum meetings. This free trade agreement has an accession clause which will enable other APEC members to join.

Over the last 50 years, world trade has grown three times faster than world output. This simple statistic is an ample sign of the increased interconnectedness in the increasingly globalised economy. While the focus of our economic activities will inevitably be on the economic powerhouses of China and India and on our longstanding trading partners in Europe, the United States and Japan, we must constantly seek new opportunities to engage with new markets in emerging economies. As well as strengthening the relationship between Australia and Chile directly, this free trade agreement will provide a bridge to Latin America for Australia and a bridge to Asia for Chile.

Australia has many shared values with Chile, most notably a democratic tradition. At this particular time Chile has a social democratic government which is deeply interested in the reform of public administration, the health system and the education system, and in that direct sense there are many similarities and matters in common between the present government of Australia and the government of Chile, presently led by Michelle Bachelet, who was elected in 2006.

It is worth mentioning that Chile has a long history of congressional democracy, sadly and notoriously interrupted in 1973 by a brutal military coup led by General Augusto Pinochet. In the weeks immediately following that coup in September 1973, many thousands of Chileans perished and many thousands of others were forced to flee the country. Australia has, in a sad way, been the beneficiary of the flight of many wonderful Chileans to this country seeking refuge from that brutal military regime. We now have a situation in Australia where there are some 23,000 Chilean-born Australians. They have made their lives in Australia and they are here to stay. Their children, in turn, perhaps see themselves as Chilean-Australians, being born here but nevertheless with many strong links back to the country from which their parents came.

Representative democracy was returned to Chile, happily, in 1989 with the re-establishment of a democratic government led by Christian Democrat Patricio Aylwin. There have been successive elections since 1989. Ricardo Lagos was elected president in March 2000 and the present President of Chile, Michelle Bachelet, was elected in March 2006. It is worth noting that Michelle Bachelet, the first woman president of Chile, has very strong links with Australia. She sought refuge from the military regime of General Augusto Pinochet by coming to Australia in 1975 and remained here into 1976. President Bachelet is a paediatrician and has, as you might gather from these few short details, a remarkable life story. She had to flee from a military regime, she managed to educate herself and acquire specialist qualifications as a paediatrician, she practised as a paediatrician for many years when she was able to return to Chile and she found time to become a mother. She managed all of that and eventually rose to the highest elected position in her own country, that of president.

There is a strong and vibrant Chilean community in Melbourne. In particular, there are a number of Chileans in my electorate in south-east Melbourne, including, as I mentioned previously, many second and third generation Chilean-Australians. It is worth noting that there has been an acceleration of visits between our two countries, particularly in this past decade. In this year alone, there have been a number of parliamentary and ministerial visits. This year Minister Garrett, the Minister for the Environment, Heritage and the Arts, has been to Santiago for talks on whaling. The Parliamentary Secretary for Early Childhood Education and Childcare, Maxine McKew, and the Parliamentary Secretary for Trade, John Murphy, have also visited Santiago this year. I have mentioned the visit by Minister of Foreign Affairs Alejandro Foxley to sign the agreement in July. If we go back to last year, the president herself, Michelle Bachelet, visited Australia during APEC in 2007. We have had visits from Chilean ministers for finance, agriculture, foreign affairs and mining and energy during 2006 and 2007. There was another presidential visit by former President Ricardo Lagos to Australia in 2005. Going back a year before that, Prime Minister Howard and the ministers for foreign affairs and trade in the former government visited Chile in November 2004. That same year, the then Minister of Defense, now President, Michelle Bachelet, also came to Australia. There have been parliamentary delegations from both countries returning visits.

The two countries are working on strengthening links not just through this free trade agreement. It is worth mentioning a memorandum of understanding, signed in July 2005, which established a work and holiday visa program between the two countries. Chile and Australia have also signed a bilateral social security agreement. And, as I mentioned at the start of this speech, there is work proceeding—work which was carried forward by the Chilean foreign minister when he came to Australia in July—pursuing bilateral education linkages. These linkages are intended to build on the announcement by the Chilean government in May of an expanded international scholarship program. Under this program, Chile will fund Chilean students in their thousands to study in the United States, Canada and Australia. Very many Chilean students are choosing Australia from among the countries that they can go to, apparently recognising the excellence of Australian universities. I know that the Chilean Ambassador to Australia, His Excellency Jose Balmaceda, has done great work in forging links with Australian universities to provide places for the students from Chile who are going to take up places in the international scholarship program announced by the Chilean government earlier this year.

I should perhaps declare a little more directly my interest, as mentioned by the member for Shortland, which is of course that my wife was born in Chile and lived there for the first 15 years of her life. I have visited Chile with her for two lengthy periods—the first in 1981, when my wife and I backpacked to the very far south of Chile and also to the far north. As most people would be aware, it is a very long country—7,000 kilometres of coast facing the South Pacific. It ranges from the hot north, with what is said to be the driest desert in the world, the Atacama Desert, down to the frozen south and Tierra del Fuego, if one goes to the bottom of the continent. The Chileans, of course, claim a Chilean Antarctic territory, which is something else that they have in common with our country, in that they have a deep and abiding interest in the protection of the Antarctic. On that visit, I spent time in the beautiful lakes district and on the historic island of Chiloe and walked in the spectacular Torres del Paine National Park in the far south, going as far south as the quaintly named town of Porvenir in Tierra del Fuego, but we did not get all the way south to the Antarctic territory.

In 1981, Chile was still ruled by the brutal and repressive military regime of Augusto Pinochet, with a curfew and tight military control. It was a relief to be able to return to Chile in 1995, this time with my wife and three children, for some five months and find that democracy had been well and truly restored. There was a very marked contrast, as you might expect, between the atmosphere of the country in 1981, at a time when political activity was effectively banned and many, many people had been detained by the military regime and remained in detention, and the environment of 1995, with a fully functioning congressional democracy. We lived in Santiago for those five months, visiting again the lakes district. My children went to school for a term in Santiago, and it enabled us to well and truly participate in the life of the country and gave me a much deeper understanding of just how much Australians and Chileans have in common. They have in common not only a commitment to democracy but a love of fine food, a love of fine wine and a love of sport. They are almost as mad sports followers in Santiago, Chile, as the people are in the city I come from, Melbourne—even down to having a football team that wears the same colours as the Collingwood football team and has a name that is very similar: Colo Colo.

The two countries have much to look forward to in terms of building on those shared links. There are shared links in trade, there will be I hope shared links in a cultural sense and I hope there will be shared links in education. Australia has found, over the past four decades or so, the education of students from Asian countries leading to permanent links with people who have been educated in Australia and have returned to their countries; so too I hope with Chile. I hope that thousands of students from Chile will come to Australian universities. Some of them may stay, as occurs with students from Asian countries, but many more of them will return home to Chile and it will be possible to build on those links.

The Labor Party has a longstanding commitment to trade liberalisation. The government is continuing discussions with the Gulf states and with China, Korea, Malaysia, Japan and India in relation to trade liberalisation. Most importantly, the Minister for Trade has continued to push for a successful conclusion to the Doha development round. As the minister has said:

If we have the right political will, I am convinced we can conclude a Doha package which would have major benefits for the world economy and for Australia’s future trade and prosperity.

I congratulate the Minister for Trade on the conclusion of this excellent free trade agreement and commend the bill to the chamber.