It is with great pleasure that I speak about the Japan-Australia Economic Partnership Agreement (JAEPA) and accompanying National Interest Analysis, which was tabled yesterday for Parliament’s consideration. Australia and Japan concluded negotiations in April during the Prime Minister’s historic and very successful visit to North Asia. The Prime Minister signed the Agreement with Japanese Prime Minister Shinzo Abe in Canberra on 8 July.
As with all proposed treaties, the Parliament’s Joint Standing Committee on Treaties will now review JAEPA and, in due course, provide its report. The tabling yesterday of JAEPA will also give the public the opportunity to scrutinise the provisions of the treaty.
The signing of JAEPA is a significant milestone for the Government’s economic diplomacy agenda. JAEPA is an important step forward in our trade and investment relationship with Japan.
Japan is an economic heavy-weight. It is the third-largest economy in the world, worth almost US$5 trillion in 2013, and our second-largest export market, second-largest trading partner, and a major player in regional and global supply chains. Two-way trade between Japan and Australia stood at $70.8 billion in 2013, more than ten percent of Australia’s total trade. Japan is a vital, long-standing and highly complementary trading partner for Australia.
Greater integration with the Japanese economy will create jobs and build our economy. JAEPA gives Australian exporters significantly improved market access across the spectrum of the Australian business community, reflecting the importance of Japan to the Australian economy.
It eliminates high tariffs on a wide range of Australian exports. More than 97 per cent of Australia’s exports to Japan will receive preferential access or enter duty-free when JAEPA is fully implemented.
JAEPA gives Australian agricultural producers and exporters a significant competitive advantage. It makes Australia the first major agricultural exporting economy to conclude such a liberalising agreement with Japan. Australian beef exports to Japan, worth $1.4 billion in 2013, will benefit from a halving of the tariff, with a deep cut immediately on entry into force.
Industry modelling shows that JAEPA will benefit Australian beef export sales by around $5.5 billion over 20 years and deliver an increase in the annual gross value of Australian beef production by up to 7 per cent.
The beef outcome affords Australia a major advantage over our fiercest competitors, including the United States.
The former US Assistant Secretary of State for East Asia – and a man who’s spoken of as a future Secretary of State – Kurt Campbell – described the agreement as a "massive victory" for Australia.
And I quote: "Europe and the United States … have been trying to get this kind of agreement from Japan for 30 years."
Exporters of horticulture, wine and seafood will also benefit from tariff-free access to the Japanese market.
JAEPA of course is not just about agriculture. Japan will eliminate tariffs on all of Australia’s manufacturing, energy and resources exports. This will particularly benefit our exporters of transformed resource products.
Services outcomes are equal to, or better than, the best commitments Japan has made in any of its other trade agreements and extend beyond Japan´s existing commitments to Australia under the World Trade Organization. JAEPA guarantees Australian services suppliers access to the significant and well-developed Japanese market in key areas of commercial interest, including financial, education, telecommunications and legal services and a range of other professional services.
For example, Australian financial services providers will benefit from new commitments by Japan, beyond those in its existing trade agreements. Japan will allow cross-border access for Australian fund managers providing investment advice and portfolio management services in Japan. Japan has also guaranteed access for Australian financial services firms to conduct cross-border securities transactions with Japanese institutions. These commitments by Japan will help secure and protect Australia’s access to one of the largest funds management markets in the world.
Both governments will support work towards enhanced mutual recognition of professional qualifications. Australian professionals will also benefit from guaranteed visa access arrangements, including for their spouse and dependents, to enter and stay in Japan.
In the education sector, Australia and Japan have further agreed to cooperate bilaterally to promote the recognition of each other´s education qualifications, improve access to graduate studies in each other’s country and strengthen student mobility between both countries.
In all key areas of commercial interest, Japan will extend commitments it makes in future trade agreements with other countries to Australian services exporters and investors, helping ensure that the agreement will remain relevant for Australian services exporters and investors in the years ahead.
JAEPA improves investment protections for both Australian and Japanese investors. With $130 billion invested in Australia in 2013, Japan is our third-largest investor and our most important Asian investor. By raising the foreign investment screening threshold for Japanese private investors, JAEPA will encourage increased and more diverse investment from Japan and deliver the clear message that Australia is open for business.
I acknowledge that some sections of Australia’s agricultural community had hoped for stronger outcomes on the products that they export. The government pushed on all products. However, the fact is that Japan is traditionally a very highly protected agriculture market, and on some products it deems as particularly sensitive due to food security concerns, it moved in a tentative way, and on rice it would not move beyond our existing WTO access levels.
The choice for Australia was continued stalemate and no agreement - or to secure a deal now that delivers considerable competitive advantage and keep pushing for further reform.
So we fought for the best possible deal and made sure that JAEPA also included mechanisms for future liberalisation. Scheduled renegotiation of outcomes for our key agriculture exports, and also a commitment to renegotiations should Japan give a better deal in the future to one of our competitors, means that JAEPA has positioned Australia well for driving further gains.
And, of course, the Government will keep pushing for further liberalisation with Japan in other trade negotiations, including through the Trans-Pacific Partnership.
Let’s be very clear – no other country has managed to negotiate such an ambitious Agreement with Japan. No other country! For once Australia is ahead of the curve. We needed the Korea Free Trade Agreement to help level the playing field given the advantage the US and the EU had because of their deals with Korea. We were playing catch-up. Under JAEPA, Australian exporters will have the advantage. And I am confident Australian exporters will be able to make the most of this opportunity.
As part of our commitments, Australia will remove its remaining tariffs on Japanese goods on entry into force or over several years. This will benefit Australian consumers and industries which rely on imported Japanese products. Tariffs on some products that compete with Australian-made goods, including some vehicles and automotive parts, steel, plastics, copper, and textiles, clothing and footwear, will be phased out in staging periods to allow industry to adjust.
The bottom line is with one in five Australian jobs linked to trade, this agreement will provide an important boost to Australia’s economy. It is part of the Government’s broader push on trade. JAEPA is the second of a series of bilateral trade agreements we are committed to concluding with major trading partners, following on the heels of the Korea-Australia Free Trade Agreement.
Now that the agreements with Korea and Japan are finished, we are intensifying our negotiations with China. This suite of agreements is significant for deepening these important bilateral relationships, as well as reinforcing our connection to North Asia which is becoming integrated through increasing trade flows and supply chains. China, Japan and Korea together currently purchase 51 per cent of Australia’s exports.
The economic benefits of JAEPA to our businesses and consumers – and to the Australian economy more broadly – will start to flow once JAEPA enters into force. We aim for entry into force in early 2015 to allow Australians to reap the benefits from this agreement as early as possible.
Implementation of JAEPA will require a number of legislative amendments and I urge Members and Senators to give favourable consideration to these amendments when they are introduced.
This is an agreement that took a long time to negotiate, and I commend the achievement of officials from various agencies led by the Department of Foreign Affairs and Trade. There is bipartisan recognition of the crucial importance of Japan as a trading partner, and Governments from both sides of the house worked on this agreement. In that light, I acknowledge the contribution of former Trade Ministers Craig Emerson and Simon Crean as well as the Deputy Prime Minister, Warren Truss, who was Trade Minister when negotiations commenced in 2007. We should also recognise the vision of former Prime Minister John Howard. When he launched these negotiations with Prime Minister Abe in 2007, many said that a meaningful agreement with Japan was not possible. But Australia now stands as the first major agricultural producer to have secured such preferential access into the Japanese market.
I would also like to acknowledge all of those officials and negotiators from my Department who have worked so diligently over a long period of time to help arrive at this outcome, including Jan Adams, Frances Lisson, Peter Roberts, Simon Farbenbloom and the many others.
I commend this agreement to Parliament, and hereby table the Japan-Australia Economic Partnership Agreement with its National Interest Analysis.
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