Radio National Drive

Subjects: Malaysia-Australia Free Trade Agreement, Craig Thomson.

Transcript, E&OE

22 May 2012

WALEED ALY: Australia has today signed a free trade agreement with Malaysia. It's one of only six bilateral deals that Australia has ever struck. Details have been reasonably thin on the ground. The Trade Minister Craig Emerson will hopefully be able to shed some light on what's in it and what all of it means. He joins us now from Kuala Lumpur. Dr Emerson thanks very much for you time.

CRAIG EMERSON: Thanks for having me on the show, Waleed.

ALY: What's in the deal?

EMERSON: It's a deal that eliminates all tariffs on goods imported into Australia from Malaysia, and does so to the extent of 99 per cent of goods exported from Australia to Malaysia by 2017. In other words, it creates pretty much free trade in goods. There are a couple of exceptions, but that's the best way of thinking about it. And in a very important area of services trade, namely professional services such as accounting, legal services and financial services, it allows those sorts of businesses to set up as majority-owned companies in Malaysia. In fact, the caps on equity participation are as high as 70 per cent, and even in some cases 100 per cent. So it really brings our two economies much closer together.

ALY: Sorry, so does that mean that Australian companies, majority Australian-owned will…

EMERSON: Yeah that's right…

ALY: … be able to trade.

EMERSON: And that's a bit unusual in the region, and I think that's an indication of Malaysia's commitment to closer economic integration with Australia. And in the end that means good jobs and even better jobs, indeed, for working people, because these professions are where the pay's pretty good. And by extending our involvement in a very fast-growing part of the world we are creating jobs for Australians into the future.

ALY: I understand the pragmatic calculations that are involved in creating economic relationships between us and other nations, but is there something a little bit concerning in the way this looks, given that there's increasing concern about the civil rights behaviour of Malaysia? We've seen a range of protests that are really heated up - in fact one of our own senators, Nick Xenophon, has been caught up in those protests and the use of tear gas there. Is this something that we should be concerned about here that might be used in the negotiations or could have been used in the negotiations?

EMERSON: I don't think when we negotiate trade deals that we extend those deals to the sorts of issues that you're raising. And between two countries such as Malaysia and Australia we have a very strong bond going back to, frankly, the Second World War. And we've supported Malaysia through various times of conflict in the post-independence era. So I think if we were in a situation of only doing trade deals with countries where we're completely happy with each and every possible decision that's been made by a government we wouldn't have too many trading partners.

ALY: One of the issues that's been kicking around in the media about this free trade deal, though, is that we don't get told what's in it before you sign it. And I understand your response, and your office's response, has been that's the way that free trade deals have always worked. But the Productivity Commission recommended in December 2010 that that should change; that the Government should commission and publish an independent and transparent assessment of the free trade deals at the conclusion of negotiations before we sign it. Why have you not done it?

EMERSON: Yeah, okay, I think that's a fair question, Waleed.

We've signed an agreement; it then goes to the Joint Standing Committee on Treaties, which scrutinises this. This is a committee in which there are Coalition Members and Green Members of Parliament. They can have a good look at it, because this would require legislative change. But you get to a point where … at what point do you say 'we have an agreement?'. The truth is we've signed an agreement; it does need to go through the Parliament; there will be scrutiny.

But I have to say with a level of scepticism about these fancy general computable equilibrium models of estimated benefits, that might be good for the modellers but they don't actually tell us very much, because it depends what assumptions you stick in. And these are supposed to model the world economy - a noble objective if you like, but I don't think that the results really tell us that much when we know that what we're doing here is integrating our two economies by breaking down barriers to trade and investment.

ALY: Sure, but it just seems odd to sign something and then have to go to Parliament and debate it and then have to argue for its ratification. Wouldn't it be better to have that debate before signing, so it's a smooth process?

EMERSON: Well I guess that I just wonder about the practicality of saying to another government, 'well we don't know whether we agree with this or not. Why don't we get back to you in about six months' time when we go and check'. And it is the Government of Australia; we do need to make decisions. But we are very happy to subject those decisions to Parliamentary scrutiny through the Joint Standing Committee on Treaties. I think it would be pretty difficult to negotiate an agreement when another country says 'so do we have an agreement?', and your answer is 'I don't know'.

ALY: Okay. Just finally, Craig Thomson made a one-hour speech to Parliament yesterday: I'm sure you're well across what happened. He cast a lot of doubt on the Fair Work Australia report. Do you believe Craig Thomson? In which case do you think that there are issues with Fair Work Australia that need to be looked into?

EMERSON: My answer is a very simple one: and that is I don't think we should be judging or pre-judging Craig Thomson. I definitely think it's a bad move to do what Tony Abbott wants to do, and that is appoint the Parliament as a judge deciding whether it agrees with Craig Thomson or with the Fair Work report. We actually have police, we have investigations, we have courts and we have judges for a reason. And they should not be subjugated by politicians standing in the middle of those processes and determining guilt or innocence. I really think it's fundamentally important for Australia that we allow the separation of powers to continue, and for the judges to be the proper ones; not Mr Abbott and the Opposition.

ALY: Craig Emerson, thanks very much for your time.

EMERSON: Thanks, Waleed.

ALY: He's the Trade Minister, speaking to us from Kuala Lumpur where he's just signed a free trade agreement with Malaysia.

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