Our Customs, Trade and Transport update of 9 September 2013 contained some predictions on developments in the Customs, Trade and Transport industry following the Federal election based on policy statements which had been issued by the incoming Federal Government.
New Ministers and Ministries
In the new structure for the Federal Government announced on 16 September 2013, responsibility for Customs and Anti-Dumping administration will move to Scott Morrison as Minister for Immigration and Border Protection. A new Trade and Investment Ministry has been created which will have responsibility for completing current FTA under negotiation, advancing negotiation with other trade partners towards other FTA and otherwise attracting foreign investment. The new Ministry will be led by Andrew Robb.
The FTA agenda and industry
As indicated in our last update, the new Government is planning a focus on completing existing FTA under negotiation and to institute and complete other FTA with other trading partners. As part of this focus, Minister Robb has already indicated that he wanted to boost the profile for foreign investors as a key to advancing delayed FTA.
However, this admirable aim does lead to some additional complexity as follows.
- The new Federal Government may have to move from the ‘pure’ position of the previous Federal Government which insisted on comprehensive FTA. Given the apparent inability to complete such comprehensive FTA, one option would be for the incoming Federal Government to compromise that position and focus on specific interests of the negotiating parties which can be agreed and then otherwise provide general commitments to improve trade and co-operation in other areas at later stages. For example, under the China FTA this could mean that China would provide increased access to Australian primary produce at the same time as Australia allows a more liberal regime for foreign investment to specifically include increased foreign investment by Chinese State Owned Enterprises (or as they are sometimes described State Invested Enterprises).
- The aim to liberalise foreign investment may create tensions between the Liberal and National Party elements of the Federal Government. From this perspective, it is relevant to note that the Nationals have lost their usual position as providing the Minister for Trade. This tension could immediately manifest itself in two areas by way of example. Firstly, the current proposed Chinese investment in the GrainCorp takeover and the recent announcement by the Indonesian Government that it wishes to buy millions of hectares of prime beef-farming land to support its developing beef industry. There have been significant levels of opposition to both types of investment. In both cases, while the investment opportunities may come under the auspice of the Trade Minister, doubtlessly the Nationals’ Agriculture Minister will express concerns although, ultimately, the decision on approval of such foreign investment is likely to reside with the Federal Treasurer.
- The incoming Prime Minister, Tony Abbott, has indicated that he will be taking a harder line against subsidies for the domestic car industry which policy will be implemented in conjunction with Industry Minister Ian McFarlane who last held that job under the previous Coalition Government which provided higher levels of support to the Australian car industry. It may well be that the revision or reduction in levels of support to the Australian car industry may also be tied to mechanisms to allow increased foreign investment and export of vehicles into Australia which would please both the Chinese and Korean Governments.