Howard Defends Free Trade Agreement With U.S.

The Prime Minister, John Howard, has strongly defended the proposed Free Trade Agreement with the United States.

Speaking at a press conference in Canberra, Howard fielded questions on sugar, local content rules in television, and the possibility of a flood of American imports.

  • Listen to Howard’s press conference (26m)

Transcript of John Howard’s press conference.

PRIME MINISTER:

Everybody, welcome back. I haven’t seen you, or most of you for ages. Well ladies and gentlemen, I’ve called this news conference to announce that Cabinet has given broad approval, in principle – which is all one can do at this stage – at the negotiated Free Trade Agreement concluded yesterday in Washington between Australia and the United States.

Let me start by congratulating Mark Vaile and all the other members of the negotiating team who did such an outstanding job. And in particular, I want to add to my thanks to Mark, Steve Deady the head negotiator, Ashton Calvert the head of the Department of Foreign Affairs and Trade. And also Michael Thawley the Australian Ambassador in Washington who’s been an indefatigable champion of this agreement now the whole time that he’s been our representative in the United States.

It is an historic agreement. It will add enormous long-term benefits to the Australian economy. It recognises that Australia’s economic partnership with the United States is as much about the future as it is about past and current traditional patterns of trade. Let me illustrate by pointing out that, according to figures I’ve been given this morning, the level of direct foreign investment from Australia in the United States is the equal of the level of direct United States investment in this country. And, in fact, last year Australia was the second largest investor in the United States property market, after Germany, and when you think of the comparative sizes of those three economies you have an understanding of the special character and the changing character of Australia’s economic relationship with the United States. That future, without in any way down-playing the importance of traditional patterns of trade and investment, it is a future very much bound up with the expansion of our service industries and our manufacturing industries. And that is why the massive opening up of service and manufacturing opportunities that this deal affords is so very important.

So this is very much about the future rather than the past. This is very much about a test of the capacity of this country to grab yet another opportunity and I am very strongly committed to this agreement because I believe it will further strengthen the Australian economy. It will link Australia’s economy with the biggest economy in the world and an economy whose importance to Australia will grow rather than diminish.

I’d also make the point that this was a once in a generation opportunity to conclude such an agreement. The planets were not going to be aligned like this in the future, or certainly not in the near future, and that was why it was necessary to grab hold of this opportunity. Like all agreements of this nature there are benefits for it for both sides otherwise you don’t sign them. There are great benefits in this for manufacturing; there are great benefits in it for the service industry; there are very significant benefits in it for agriculture. Agriculture has lost nothing from this and has gained a lot. 66 per cent of agricultural items go to zero immediately. There are significant upfront gains for the dairy industry; there are gains for the beef industry; there are gains for horticulture; there are gains for seafood, for example, which is a $150 million trade, goes to zero immediately; the Cairns tuna industry a 35 per cent American tariff is removed. Lamb, sheep meat sales, something like greasy wool, which of course there are not major sales of that to the United States, but we’ve had a 50 year struggle to get rid of the tariff on that and that is gone. So when you add all of the agricultural benefits together they are very significant.

Yes, it is true that sugar is not there. And I spent some time over the weekend, and I’m amused to see that some people are suggesting I sat on the agreement, if only they knew, I spent some time over the weekend weighing up whether because we couldn’t get anything on sugar we should scupper the whole deal. And I came to the conclusion that that would not make any sense. And I might also say, having privately consulted a number of farm leaders, none of them recommended that I should take that attitude. And in relation to sugar I’ve already made it known that I’ll meet the sugar industry in the very near future, sit down and talk about the clear problem that industry has. They are the victims of a corrupted world trading system and I feel sorry for them, but I couldn’t have helped them by denying others. If we’d walked away from this because of sugar, that wouldn’t have advantaged the sugar people at all and it would have, I believe, robbed many other Australian industries of advantages that they are entitled to have and it would have denied this country a generational opportunity to build an even stronger future and that is why I took the decision that I did. It was the right decision, a decision that’s been endorsed by the Cabinet and it’s a decision that nonetheless will result in my talking to the sugar industry and we are willing to provide further assistance to that industry. But it will be on condition that there is a proper recognition of two things – of the need for change and restructuring and also the need for some of the participants in that industry to recognise that their only future is to exit the industry, and that the Government has a role in helping them in that process to make it less painful than it would otherwise be and we stand ready to do that.

Indeed, there are some industries in Australia where the most realistic thing to do is to recognise the need to leave the industry. What Government has got to do is to understand, particularly in regional communities, that the social dislocation of leaving an industry like that is significant and that you’ve got to provide them with some help along the way.

But ladies and gentlemen, I regard this as a very important day in the economic life of this country. We are building further for our strong and more prosperous future. For us to have turned our back on this generational opportunity because we didn’t get every single thing we wanted would have been a mistake. It would have been recreant to the national interest and I would rightly have been condemned by the Australian public for having done that.

There is a fairly long process of congressional and parliamentary debate and approval ahead. We have a treaties’ community to which the matter will be referred as soon as possible. There are congressional processes in the United States. The President has indicated to me that he is very strongly committed to obtaining congressional approval to this treaty this year. And given the pressures that are upon a President in an election year, given that some of the critics within the United States of this agreement come from constituencies that normally support the President and his party, that represents a very strong commitment by him to this agreement and to it coming into force.

But, again, can I thank Mark Vaile and Steve Deady and Michael Thawley and Ashton Calvert and all the other members of their negotiating team for an extraordinary job. It only finally came together over the weekend and it was, I think, a weekend that should properly be seen as very important in the economic life of Australia.

JOURNALIST:

Mr Howard, John Anderson 16 days ago said it would be un-Australian to accept a deal without sugar.

PRIME MINISTER:

Well, it’s disappointing we don’t have sugar. But I’m asking the Australian public, I’m asking you to look at the balance of advantage. I mean what would have been the good for Australia to walk away from benefits for other industries because we couldn’t get all the benefits we wanted, or any additional benefits in a particular industry and I could not have done that and let me say nor could John and he was widely consulted on this matter and extensively and regularly consulted and I am very content with the decision that I’ve taken and I just want to say again to those in the sugar industry I understand their plight and we’re going to do something to help them but it’s got to be upon the twin bases that I’ve outlined.

JOURNALIST:

Did you make any personal pleas to the President for sugar?

PRIME MINISTER:

I had a very long discussion with President Bush about aspects of this that were important to Australia, it was never my intention nor his to get into all of the nitty gritty of the negotiating, we left that to Mark Vaile and Robert Zoellick. He also canvassed some issues that were important to him. You’ve got to remember one of the things the Americans were very interested in was the changes that might have had an impact on the Pharmaceutical Benefits Scheme and it was made very clear to them, particularly over the weekend, that we were simply not going to shift on that issue because that issue was always sacrosanct to me and obviously there were issues that in the end proved sacrosanct to the United States.

JOURNALIST:

Prime Minister, what does this agreement mean for Australian consumers, does it mean they will now be able to buy imported manufactured items from America cheaper, and is that a problem in itself?

PRIME MINISTER:

Well in some cases there will be modest price reductions, in other cases of course there’ll be very big export opportunities opened up, for example they hope to sell the Commodore utility in to the United States and that is a very big, potential, exciting market for Holden. The American tariff on utilities, ‘pick ups’ they call them, is I think 25 per cent, that’s going immediately, ours I think is much lower. We have got an arrangement in relation to passenger motor vehicles that involves a phase down over a five year period to a zero situation by 2010 which accommodates some of the concerns that were put to us by Toyota. I think one of the great advantages out of this is the way in which it is going to further interlock our service industries, it’s going to lead to a speedier acceptance of the qualifications of Australians in the United States, that will produce opportunities for our educational services, it is going to guarantee Australian investment in the service sector against certain legal consequences of American legislation where such guarantees don’t exist at the present time. It builds of course upon an already very close economic relationship between our service sector and the American one, and of course it will also because we become a free trade partner, it will also insulate Australia against automatic inclusion in what might be seen as arbitrary imposition by the United States of temporary protective measures. You will recall at the time the steel tariffs were implemented by the United States, within a fairly short period of time the impact up to about 85 to 90 per cent of that was waived by the United States but we had to go through a process. It was my understanding that as a result of this just as Canada was automatically was excluded from the impact of that, so Australia will be automatically excluded from the impact of such things in the future.

JOURNALIST:

How much of this will require parliamentary approval?

PRIME MINISTER:

Oh there are a number of pieces of legislation are needed and obviously we’ll be asking the Labor Party and others to support it. Can I just say that I am astonished that the Leader of the Opposition has been so negative about something that is about Australia’s future, his reaction today is very much the reaction of the old politics, why is he opposed to something that is going to add great economic benefit to this country?

JOURNALIST:

He’s supported in that by the Greens and the Democrats…

PRIME MINISTER:

I beg your pardon?

JOURNALIST:

Mr Latham has been supported today…

PRIME MINISTER:

Well I mean my remarks would apply with equal force, I notice that I’m supported by the re-elected Mr Beattie…

JOURNALIST:

…but what’s the prospect of this bill getting through Parliament?

PRIME MINISTER:

… the re-elected Mr Beattie has said that although he’s disappointed about the sugar industry, which I understand, he is the Premier of Queensland, the re-elected Mr Beattie said that “I support it, it’s good for Australia, it’s good for a whole lot of other people and that’s fantastic and it’s good for Australia and I say that upfront because I support it.” So that’s the re-elected, successfully re-elected, and I congratulate him on his re-election, Mr Beattie, I think speaking common sense, having just won an election and looking for the future, feeling sensitive to the sugar industry as I am and feeling upset for them as I do that they won’t share, but recognising if you go across all of the other sectors there are gains and it is just against Australia’s interests to pass up this opportunity and I cannot understand why Mr Latham who offered to bring the fresh breezes of new politics and co-operation and bipartisanship to these matters has chosen to react in such a negative, carping, old politics fashion.

JOURNALIST:

Nevertheless are you expecting a political backlash from the so-called sugar seats?

PRIME MINISTER:

Michael, I understand the disappointment of the sugar industry. They have lost nothing from this, they have not shared in the gain, I understand that. That is why amongst other things I will meet them very soon personally to talk about their problems, I won’t be just leaving, no disrespect to others, leaving it, I will personally involve myself in discussions on new support measures on the conditions I outlined for the Australian sugar industry. They have suffered a lot but I could not in good conscience have dumped all of these other advantages because I couldn’t get a deal on sugar.

JOURNALIST:

A lot of them saying they’re going to actively campaign against you.

PRIME MINISTER:

Well let us wait and see, I mean I’m interested about the long term benefits for this country, I’ll leave the short term commentary to the experts and I will just focus on the long term benefits for our country.

JOURNALIST:

… benefits Prime Minister, the current US trade surplus with Australia at about $9 billion, what would expect this agreement would do to that in the next few years?

PRIME MINISTER:

I believe over time it will reduce it, I can’t put a quantification on that, I mean people have given me figures of and adding over time $4 billion, depends what measurements you use, I think you know enough about these things to say that people who run around with a precise figure are probably trying to kid you.

JOURNALIST:

What are the circumstances Prime Minister, you mentioned that this is a once in a generation opportunity, what are the circumstances and inputs that led to that opportunity?

PRIME MINISTER:

Well I think certainly the political amity between the United States administration and the Australian Government was a factor, I think the strident support within the United States by many business leaders, particularly in the service and manufacturing and mining industries, the very strong commitment of very significant business leaders in Australia and I think of amongst many others of people like Frank Lowy and Rupert Murdoch, or Rupert Murdoch in the United States, and many others who were very strong, the fact that we were able to get together on successive visits that I’ve paid to the United States business leaders from both countries who are very strongly supportive of this. I think all of those things played a role. Can I also say that there was a very constructive role played by the industry groups in Australia, I mean I understand the difficulty for the National Farmers Federation and I suppose I’d have had close to a dozen conversations over the past few days with the President of the National Farmers Federation Mr Corish, he has a vast constituency to represent, some of them have gained very significantly, others are disappointed but they all took a constructive long term role. Nothing is perfect in this world, this is not a perfect agreement but it’s the best we could get in current circumstances and I don’t think the like of that opportunity would come along for a whole combination of reasons for a very long time and that is why, amongst other things, I was so determined to agree to it in the end and why I will campaign all over this country to win approval and win support. I look forward to the opportunity of explaining these benefits, I am very much about arguing the value of sensible change and reform because that is our future, adopting a negative, nit-picking central focus and ignoring the broader picture, the bigger picture, dare I say it, is a big mistake.

JOURNALIST:

Why won’t Australia be swamped by American manufacturers?

PRIME MINISTER:

Well, because the tariffs already have been very low. The manufacturing tariffs in this country are already quite low, so you’re not going to have in that sense an enormous change and bear in mind that many comparing the American economy and the Australian economy, given our difference sizes, a little bit of access in America goes a lot longer in Australia than the other way around.

JOURNALIST:

…(inaudible) in the detail?

PRIME MINISTER:

Yes, it is. Always is, Don.

JOURNALIST:

So why haven’t you released yet the full text of the agreement and when do you expect it?

PRIME MINISTER:

Well, I understand all of that’s being put together. I mean, you’d have to talk to Mark Vaile’s office about that. But if there are any blockages with the proper flow of information in the democratic process, well, I’ll be very pleased to attend to that. I understood that there were sort of blocky kits and fact sheets and all of those sorts of things.

JOURNALIST:

And you’d get a very different picture from the USTR’s fact sheets.

PRIME MINISTER:

Look, I can only tell you what’s in the agreement and what it means to Australia. Mr Zoellick has a constituency he has talk to, leave that to me, you go and question Mr Zoellick.

JOURNALIST:

…(inaudible)…in the agreement on local content rules because Mr Zoellick has said that it contains important and unprecedented provisions to improve market access to US films?

PRIME MINISTER:

Well, I’ll tell you what’s in it. I’ll tell you what’s in it. Let’s start with the existing provisions. The existing provisions in relation to free to air television are grandfathered and that includes any extensions to digital platforms, okay. In relation to new media, there is a reservation which effectively allows the Australian Government after a proper objective process involving consultation with parties to reserve a level of local content. Now, it’s not specified because frankly, we don’t know how this new media thing is going to work out. I had a very long meeting with the industry about this before Christmas and one of the things that clearly came out of that discussion was that they didn’t really know quite new media was going to develop and the idea of trying to mandate a particular level is a bit unrealistic. Now, that’s in relation to that. In relation to pay television, the 10% expenditure rule has been extended to additional genres, I think is the technical expression of documentaries and histories, children’s programmes and education. Then in addition to that we have reserved the right to go from ten to twenty in relation to drama. And we have also reserved a right to impose the local content requirement in relation to free to air television, that’s the 55% to up to two to three channels in a multi-channelling environment and let me stress – we don’t have any proposals for multi channelling – I want to make that very clear. But because we’re talking about way into the future it was necessary to refer to it, but I don’t want people to infer from that that we have some plan about multi-channelling because we don’t. We’re not currently considering any policy change. Now, I think that strikes a fair balance between preserving the local voices, and the local history, and the local resonance, and the local identity, but also recognising that we do live in a globalised media market and particularly with the proliferation of so many access points for media that you do need to have balance and that flexibility. I hope it will be seen as a fair balance because I was very determined that we would protect the Australian identity. It’ very precious to me and it’s very important to what we think of ourselves and how we feel about ourselves and therefore it is certainly worth protecting and preserving.

JOURNALIST:

On the PBS, Prime Minister – wouldn’t this proposal for an independent review, why wouldn’t that lead to an increased cost to Government?

PRIME MINISTER:

Well, I’ll tell you what it might possibly, Mark, lead to. It might lead to even, possibly, some more drugs being made available to the public. Not necessarily, but it could. Now, I wouldn’t have thought the Australian public would object to that.

JOURNALIST:

Does that mean price rises under the PBS?

PRIME MINISTER:

No, no – It wouldn’t. Can I tell you that, that this issue, people kept rolling it out and saying, “ you know, he’s going to give in on this” – we have really protected this because it is very important to us. There is no impact in relation to generics which is very important to the ongoing sustainability of this scheme and there’s certainly no direct or indirect effect on price. I mean, I made it very clear to President Bush when he was here a few months and again it was made clear during the discussions that the PBS is one of those parts of the social welfare structure of this country that is proved very successful and I have, in fact, have suggested to him on a couple of occasions he should adopt such a policy in the United States.

JOURNALIST:

How is the review process going to work for the PBS?

PRIME MINISTER:

There’s a review process now, it’s just going to be enhanced and made more transparent.

JOURNALIST:

Will you give us any guarantee on job creation from this? What’s it going to mean to manufacturing industry…?

PRIME MINISTER:

As you know, I don’t get into guarantees in these areas. Although, I do get into results and I’ve seen unemployment fall to 5.6% in the time that I’ve been Prime Minister. I believe there will be increases in jobs and job opportunities in a number of the manufacturing export sectors, I can’t put a finger on it but I’ve seen statements issued today by Holden, by the Automotive Components Association – there are obviously some great job opportunities for them and they will be very pleased about that. But as for putting a figure on it. I could pluck a figure out of the air but that wouldn’t help anybody.

JOURNALIST:

But that will be a consequence?

PRIME MINISTER:

I do. I believe there will be more manufacturing jobs. But I would have thought anybody who was trying to oppose this agreement ought to go and explain themselves to some of the manufacturing unions.

JOURNALIST:

Given that this going to be such a big political fight, Prime Minister, based on what the Opposition parties have said already. You’re saying you’re going to go around the country selling it – would you be doing an address to the nation or running any kind of advertising strategy to sell?

PRIME MINISTER:

Look, I haven’t at this stage, Laura, given any great thought to that. I’ve only just come out of Cabinet to talk to you and to keep that flow of information that’s so important to the democratic process. But as to how I explain and extol the virtues of this we’ll have to wait and see. But this is really good. I believe in it. I am going to campaign very strongly for it because I think it’ll add economic strength to our country.

Thank you.

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