MCA opening statement to the Joint Parliamentary Committee into Free Trade Agreements

Opening Statement to the Parliamentary Inquiry into the Business Utilisation of Free Trade Agreements

Brendan Pearson

Chief Executive, Minerals Council of Australia

The minerals industry is Australia’s largest exporter, with exports of $175 billion in the year to June 30. 

Or think of it this way. If Australia did not export minerals and energy commodities, our merchandise export income would be lower than Kuwait, Nigeria, Hungary, Ireland and Denmark. 

Mr Chairman, the minerals sector strongly supports the pursuit, by successive governments, of bilateral and regional free trade agreements.

Since 1983 Australia has completed 9 bilateral agreements and one multi-party agreement and is currently negotiating 7 new more agreements.

To varying degrees, all of these agreements have delivered real and practical benefits to Australia’s minerals exporting sector. I will briefly review some of those gains shortly.

Before I do that, I would like to address some of the points made by critics of free trade agreements.

First, some critics argue that FTAs distract attention from multilateral trade deals.  This is wrong.  FTAs are the symptom not the cause of the failure of multilateral trade negotiations.

Second, some critics argue that the FTAs have failed to deliver promised gains, pointing to shifts in bilateral trade flows. This approach is crude and simplistic. It assumes no other substantial influences on a nation’s trading profile.

Mr Chairman, you can be assured that, in the case of the minerals sector, Australia’s free trade agreements have delivered meaningful and practical gains.  Some examples include:

  • The deal with China will eliminate tariffs which add nearly $600 million to bilateral minerals and energy trade, including about $380 million for exporters of thermal and metallurgical coal.
  • Our agreement with Japan has, or will, eliminate tariffs on a number of commodities which generated $310 million in export income in 2013.
  • The agreement with Korea abolished tariffs ranging between 1.5 and 8 per cent on a range of minerals commodities.
  • Our deal with Thailand resulted in a number of gains for metals exporters, with the elimination of tariffs on unwrought lead and zinc of 10 per cent. 
  • The FTAs with ASEAN and Malaysia led to useful gains in market access in Malaysia for iron and steel, with tariffs on over 96 per cent of these products imported from Australia to be eliminated by 2016 and 100 per cent by 2020.
  • In the case of investment, higher thresholds for FIRB scrutiny in Australia for the United States, China, Japan and Korea as well as New Zealand provide easier opportunities for investment from these economies in the Australian mining industry.

We also need to remember that these FTAs have improved the operating environment for Australian companies operating abroad. The minerals sector alone has invested more than $160 billion in overseas operations.  

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