STANDING COMMITTEE ON RURAL AND REGIONAL AFFAIRS AND TRANSPORT - 23/02/2009 - AGRICULTURE, FISHERIES AND FORESTRY PORTFOLIO - Australian Fisheries Management Authority

Senator «MILNE» -We have raised in this committee before the issue of carbon footprints and food miles and the potential of the EU to use food miles as a non-trade tariff barrier. So I just wondered we were up to in Australia in addressing this issue of actually establishing what our carbon footprint is in relation to our export primary products into various markets, including the EU.

Dr O'Connell-That is Climate Change division, I am afraid, Senator. That would have been the place to ask that one. We can take that on notice and give you an account.

Senator «MILNE»-Okay. The next question I have got is in relation to the Australian-US Free Trade Agreement. Are there any concerns about President Obama's statements about the Buy American campaign as part of his recent stimulus package? Is anyone doing any analysis of what that might mean for some Australian exports?

Mr Ross-Our initial assessment indicates that there are not direct implications for agriculture, but we are looking further into it to determine if there are any specific areas that might directly impact on that sector.

Senator «MILNE»-The other thing I wanted to ask under this area was this: earlier in the day the department indicated that the minister and some officials had to been to some high-level food security meeting in Europe. What are the ramifications of the talks with FAO around food security for trade and market access?

Mr Hunter-The meeting we referred to that the minister attended was a special meeting of the Food and Agriculture Organisation of the United Nations held in November last year at its headquarters in Rome. At that meeting it considered a series of reforms to the organisation in order for it to deliver on its outcomes more clearly. It also was an opportunity for the minister to do a couple things: firstly, to have a series of high-level meetings with FAO officials about the work that it is conducting in the area of food security and, secondly, to outline the priorities that Australia is giving to that topic at the conference proceedings. A particular area of interest that the minister pursued is the relationship between climate change and food security, in terms of both the direct impact of climate change and the impact of climate change mitigation policies on food security. He also outlined the priorities Australia has taken in the context of food security: firstly, through its contributions to international multilateral efforts to alleviate food security issues; secondly, through the work that we do through international multilateral organisations around agricultural research and development; and, thirdly, through the work that Australia does also to promote the removal of trade barriers and distortions, and the impact that they can have on food security.

Senator «MILNE»-My final question in this section relates to the ongoing negotiations around a free trade agreement with China. What is your assessment about the implications of that for the vegetable industry, in particular, in Australia?

Ms Anderson -Senator «Milne», at this stage I could not answer that question. The negotiations are still well and truly underway but we have not actually started talking tin tacks about any particular issues that would impact directly on horticulture.

Senator «MILNE»-Okay. What is your assessment currently, then, of the impact of cheap Chinese fresh food imports-frozen vegetables, I am referring to-on the prices that growers get in Australia, particularly in the processing sector?

Ms Anderson-I would say that, in terms of our agricultural trade balance with China, we export $3 billion worth of agricultural product to China and import products worth around half a billion dollars, so our trade balance is not doing too badly in that sense.

Senator HEFFERNAN -Farmers are going broke. It does not worry you.

CHAIR -Just carry on with your answer, Ms Anderson.

Ms Anderson -Sorry. Going to your particular question, Senator «Milne», would you mind repeating it?

Senator «MILNE»-My issue is that Australian vegetable growers are almost being denied access to vegetable processors now because the processors can import cheap frozen vegetables from China much more cheaply than the Australian growers can deliver to the factory, because the Chinese vegetables are subsidised by poor environmental practices, very low wages and, frequently, human rights abuses. Australian farmers cannot compete against that, so I am just interested to know what your assessment is on the impact of this on Australian agriculture.

Senator HEFFERNAN -They are not interested. No-one cares. It is not their job; they do not care.

Ms Anderson -There has not been any recent specific analysis that I am aware of, but others at the table may be aware.

Senator «MILNE»-Is it anybody's intention to actually have a look at what is going on now, before we get into any further discussions on free trade agreements with China? Because the impact on local growers is very substantial.

Mr Morris-I think issues about free trade agreements are largely for the Department of Foreign Affairs and Trade. Before each free trade agreement is entered into a study is done on the net costs and benefits to both countries from entering into a free trade agreement. That is looking at the overall benefits for all sectors in Australia-not just for vegetables but for all sectors-from those agreements, and an FTA is entered into by the Australian government in the context of the likely benefits from those agreements. So it is the same for China in that the decision to enter into it was based on a balancing of the potential benefits and costs, and the decision to finalise it and sign it will be also based on the potential benefits from and costs of the agreement.

Senator «MILNE»-Have we got anywhere looking at what the benefits to primary industry would be from a free trade agreement with China? We fully understand the resource sector, but I am asking about agriculture.

Dr O'Connell-I think Ms Anderson was pointing out that the farm-trade balance between China and Australia is, on the whole, beneficial to Australia.

Ms Anderson-I can also add that we will be discussing issues regularly with the horticultural industry itself. So they will have the ability to provide a submission to the foreign affairs department about, firstly, their pro-active concerns, in the sense of what access benefits they may wish to achieve through an FTA, and, secondly, any defensive interests that they may have. So, in the normal course of events, there are discussions with industry groups throughout the course of an FTA negotiation. That industry information is primarily the source of information we have, as well as analysis of our own, in terms of existing barriers to trade that may exist.

Senator HEFFERNAN-So do you compare notes on the food safety side of this? Is there a random check in terms of the import of frozen vegetables? Some it is grown on sewage, and there are all sorts of weird conditions in the backblocks of China, where they pay them threepence halfpenny a month. As I am instructed, we randomly check the health aspects of that. We learned from the milk violation-

Dr O'Connell -The issue around the food safety testing is one that we can have AQIS talk to you about.

Senator HEFFERNAN-I realise you do not care about that in this department; it is not your job. It is not that you do not care, but it is not your job. The implications are pretty serious for us. We are on the other side of the equation. I would have thought you would tie one to the other.

Dr O'Connell -The checking of food safety is a role that AQIS has.

Senator HEFFERNAN -I am busting to get to it.

Senator Sherry -We will get to them earlier if you desist from your interjections.

CHAIR-I am sorry, Minister. Let Dr O'Connell answer, Senator Heffernan. In all fairness, Senator Heffernan, your timing is perfect because it does wake a few of us up. Senator «Milne», please continue.

Senator «MILNE» -Thank you. Do you go back and have a look at the assessment you make on the free trade agreement benefits and disbenefits, if you like, a few years in, to actually see whether the assumptions you made had any basis in fact for what has occurred? That is my first question. What review is there about the claims made, as opposed to the on-the-ground truth? In particular, with the US-Australia Free Trade Agreement, what were the claimed benefits for Australia and have they been delivered in primary industry?

Mr Morris-Again, the benefits are across all sectors. We do go back and have a look at how the trade is going with each of those countries and review progress over time. In the case of Thailand, there have been quite large increases in agricultural exports to Thailand since the signing of that agreement. In the US it has been a bit more static for agriculture, partly because of our droughts in Australia and partly because one of our major exports to the US, beef, has been diverted into the North Asian markets because of the opportunities in those markets for our meat exports as a result of the US not having the same access that it used to have due to BSE in those markets. And so there are often a number of factors that are driving outcomes in that market, or in all markets. In the case of the US, as I said, looking at the raw trade figures, there has not been the growth because of those factors. But in the case of, say, Thailand, there has been quite a dramatic increase.

Senator «MILNE»-But in terms of the claims that were made at the time the US free trade agreement was made, does anyone actually go back and assess the claims against the reality?

Mr Morris-Probably, in a broad sense, that would be a question for DFAT rather than for us, because a lot of those claims are the claims made generally.

Senator «MILNE»-Yes. But DFAT make claims based on somebody's advice. They are not going to just make up a sector in primary industry that is supposedly going to benefit or not benefit, surely.

Dr O'Connell-I think the point Mr Morris is making is that the benefits are across the economy. So they are engaged in services and manufacturing and other areas.

Senator «MILNE»-I appreciate that. But we are trying to ensure there is sustainability in agriculture and trying to support as many of the primary industry sectors as we can. Whilst you can do net figures on energy or anything else you like, if we put a district or a whole area out of production because you get a huge increase in iron ore exports or something, that does not help feed anyone. That is the point that we are trying to make.

Mr Morris-A couple of claims that were made at the time in terms of the benefits were the removal of the in-quota tariff on beef, and so for every tonne of beef we send over to the US we get a benefit from that as a result of the FTA. Similarly on lamb, there was a removal of the tariff there, and, again, for every tonne of lamb we send over we get benefits from that. So those-

Senator McGAURAN -Which is offset by the farm gate policy, which they just renewed.

Mr Morris -I do not quite understand the comment.

CHAIR -Mr Morris, you were halfway through an answer. Could you answer Senator «Milne»'s last question, then we will go quickly to Senator McGauran, because we are way behind. Senator Heffernan also has one.

Mr Morris-They were just two of the examples that I was going to give of some of the obvious benefits that occur for every tonne of product we export over there in terms of beef and lamb.