Senate Foreign Affairs, Defence and Trade Legislation Committee, , 8:54:59 to 9:44:21
Final questioning focuses on dairy tariffs, luxury car tax implications, and the practical benefits of Australia joining the Horizon Europe research program.
Topics: EU free trade agreement, Tariffs, Agricultural research and levies
Speakers: George Mina, Hon Matthew Canavan, Cathy Raper, Senator Raff Ciccone, Senator Varun Ghosh, Dougal McInnes, Hon Don Farrell, Patricia Holmes
>> Uh, thank you, Chair. >> Now, the European Union in 2025 was one of Australia's largest sources of foreign investment. Um, with that number being something in the vicinity of I think 966 billion. uh how will this trade agreement affect investment uh both from Australia into the EU and from the EU into Australia?
>> Well, Senator, this uh deal will have a major impact on two-way investment flows. As you mentioned, uh the EU as a single entity is our second largest investor. uh we've uh made provisions for facilitated investment screening arrangements for the European Union. We have uh made a range of improvements to good sectors in which the EU uh wants to invest including as the minister's already made clear in critical minerals uh in green energy in a whole range of uh uh energy resources infrastructure and related sectors. So we would uh hope and expect for a a continued uplift in uh that critical investment partnership with our European uh colleagues.
Wonderful. And uh you're speaking my language, Mr. Mayor, when you talk about critical minerals, energy and resources. Uh it's an enormously important part of the Western Australian economy. Uh and trade revenues from those industries are vital to both Western Australia and Australia as a whole. uh are you able to shed some light on uh access and and the impact of the free trade agreement in relation to Australia's seafood
>> Jenna Reinhardt also supports the critical minerals element if I'm not mistaken. Minister,
>> um hello Senator. Um Kathy Raper, chief negotiator, Australia EU free trade agreement. Um so the um Australia EU FTA will eliminate EU tariffs on Australian seafood at entry into force um subject to rules of origin on that Australian seafood being qualifying under those um under those rules of origin.
>> And are you able to just summarize very quickly those rules of origin or or that that condition?
>> Um well the rules of origin um differ depending on where the seafood um is caught. Um so seafood that is farmed or caught within Australia's territorial seas up to 12 nautical miles from the coast qualifies as originating um seafood caught further offshore in Australia's EDZ or in the high seas qualify as it subject to certain additional rules relating to the registration of the vehicle and the flag under which it's sailing and the ownership of the vehicle. So they're a little complicated those rules.
>> Thank you very much for that summary. Uh now I think services the services sector accounts for give or take roughly 2/3 um of Australia's GDP. Are you able to offer some insight into the impact of the EU trade deal on um Australian service provider access to European
Um yes uh Senator the uh the agreement um will definitely open up opportunities for Australian service suppliers uh into uh into the European uh uh union. Um it will make it um um easier and more accessible for a range of um Australian professionals to enter into the EU into corporate transferries, contract service suppliers, um independent professionals and so forth. Um it also contains um a recognition of qualifications for um Australian professionals under the free trade agreement. Once an Australian professional qualification is recognized in one uh EU member state will be recognized uh in another EU member state without a need to re-qualify. Um we also have a particular provision in the free trade agreement called the innovation mobility pathway which will also make it easier for um researchers um and uh technicians um to travel to and work
Now, Australia has sort of increased the number of bilateral trade agreements um that we've entered probably in the last two decades uh and and the importance of them has probably never been higher as the um global system or global trade system comes under pressure and faces some significant barriers. I guess how do how do the outcomes in [clears throat] this negotiation compare to other free trade agreements we've concluded in the past? Um, and I'm thinking sort of front of mind, the United States, Japan or or China.
>> Well, the first two points you made, Senator, I can only wholeheartedly agree with. This is a very consequential agreement. It lifts our coverage from 79% of Australia's trade covered by free trade agreements to 88%. uh it puts us effectively in the position of having one of the best if not the best free trade network on the planet both in terms of coverage and In respect of your point, Senator, about the uh the significance of the moment and the turbulence in global trade, I'd tried in my opening statement to point to the significance of this deal in that context and again wholeheartedly agree. This deal allows for a new commitment by both these major rule rules-based players to the rules-based system at a time that it's under major stress. So it is a joint reaffirmation and re and reconfirmation of our commitment to rulesbased trade. In respect to the comparative assessment you've asked me for senator there are a number of comparisons one could make uh with the US FTA which was a very high quality Even that FTA did not cover all agriculture sectors did not liberalize all agriculture sectors. Of course, famously, sugar was not a part of that final FTA deal. That's not the case here with the European Union. We have managed an uplift in every agricultural sector. In respect of other uh developed country free trade agreements such as Japan, uh Japan started with a coverage of 76% of tariff lines at the entry into force. We're starting here with 89.7% of tariff lines covered at entry into force. So I mean we know we are dealing with countries that are traditionally protectionist on agriculture. So we understand that. Uh but even with respect to another major agricultural uh protectionist country, Japan, this deal is legs ahead. So uh it's a highquality deal by all of those
this is just an area of um interest to me which is in a slightly different direction but uh the Australian government's policy is now to exclude investor state settle dispute settlement provisions from new trade and investment agreements. How does um how do these fair in the EU trade deal?
>> Um senator this FTA does not include investor estate dispute settlement
>> Wonderful. Uh can I go back to some of the questions that you were dealing with or some of the issues that you were answering earlier? Um and it relates to uh the that I think the word you used Mr. Mina was affirmation um of Australia's um Paris Accord and net zero commitments. Um can I just ask so just to clarify that does does the EU FTA lock Australia into net zero in any way? No, it doesn't
in it.
it does it create any new obligations in respect of um net zero?
>> No, it doesn't. Senator,
>> is it a is it a fixed in time proposition? So, if our obligations under our climate goals change, how does the EU trade agreement deal with that?
The individually nationally determined contributions under the Paris framework are just that individual and nationally determined. We retain the flexibility to change those commitments under the Paris Accord and we retain them under this free trade agreement. Uh in fact this free trade agreement explicitly recognizes that flexibility. Article 18.2 two of the agreement, and I quote, recognizes the right of each party to determine its sustainable development policies and priorities to establish the levels of domestic, environmental, and labor protection it deems appropriate and adopt or modify its relevant laws and policies in a manner consistent with its commitments under the international agreements and labor standards referred to. So uh even in the agreement text itself is that explicit recognition of the flexibility we have under the Paris
>> Wonderful. And this is I think my final question and it's really just taking advantage of of the expertise we have at the table. Uh we've we've discussed the services sector a little bit. We've discussed the resources sector a little bit. We've discussed agriculture. Um, is there a part or are there sectors in the Australian economy that we haven't discussed yet uh that you are particularly excited about in relation to this deal or are particularly game-changing or groundbreaking?
Well, Senator, there are a whole range of those sectors uh and you've mentioned many of them. Uh what we also mentioned earlier is the enormous potential as the minister's already referenced uh for us to work together with the EU on uh energy critical minerals and the uh resources sector more generally uh where the EU clearly has both the [clears throat] capabilities and uh and capital uh to contribute to our economy and to our our jobs an investment and we have the resources uh that can can seriously contribute to that partnership. So there are big opportunities for us in uh the green economy sector uh including the the tens of billions of dollars of of of uh potential uh investment that's available in respect of the goods and services related to the green economy. the agreement specifies in the uh sustainable development chapter a whole range of commodities which would be uh now subject to to zero tariffs uh and and they're a big part of the outcome of this deal.
>> I wonder if I could add too um of course Australia will be eliminating most of the rest of our tariffs for imports from the European Union. That will of course benefit um Australian u manufacturers and industry who use European inputs into those processes. Um it also benefits the Australian consumer who will be able to access a more affordable range of European products.
Now some of those uh items or or or materials critical minerals being front of mind uh also have strategic implications and there's been this concept as we try and secure global supply chains for strategically important materials of uh friend shoring or ally shoring. Uh it it seems to me that this represents an example of that. Are you able to elaborate on that at
Absolutely, Senator. In respect of our broader interests in critical minerals, what we want to do is work with uh all all of our friends and partners globally to build resilient supply chains, diversify those supply chains and make sure that we're not uh overly reliant on one uh supplier or one set of suppliers. uh and to to ensure that in Australia we can capture as much as possible of the exports relating to this sector and the uplift in processing that would be associated with this sector. So what we need is capital. C capital that invests in our uh processing uh of critical minerals and markets uh offtake partners uh and of course the enormous needs of European industry and European manufacturing including the high-tech sectors but not only also in uh uh more downstream sectors uh is only forecast to grow massively. So we have an opportunity there not only to attract the capital and and uh and expertise but also as an export partner to work with European Union on these issues.
>> Thank you chair. Thank you very much.
>> Okay. Uh more questions. Thanks if there's nothing else. Um back to this modeling. Um uh the uh the ambitious scenario I was mentioning before uh in the EU commission modeling that we have relied on for our $10 billion figure um uh it includes a removal of non-tariff measures uh in manufacturing from the EU and Australia I should say the relevant one is Australia here in their list of non-tariff measures that would be removed uh the the the EU commission makes reference to the fact that Australia levies are 33 3% sales tax known as a luxury car tax on all imported and domestically produced cars valued over a specified threshold. Does the EU free trade deal lead to uh Australia removing
Um Senator um no um the uh agreement does not uh lead to the elimination of the luxury car tax but as part of the package agreed with the EU um we have agreed to introduce a new new luxury car tax category um and that is for zero emission vehicles and that will have a threshold of $120,000 Australian
dollars. So why why if the agreement doesn't abolish the luxury car tax does the government rely on a modeling figure that's based on it on the luxury car tax
>> I think as Mr. Mina has uh has explained um this was EU modeling done on a scenario that um was much earlier in the process and we are now doing modeling on the concluded agreement to give accurate information. Um
>> but you you put this figure in a fact sheet, you promoted it and ministers repeated it. Why didn't you at least put in the footnote that hey uh uh there's elements of this $7.8 billion increase in real GDP which won't be realized because the deal doesn't remove things like the luxury car tax which it's based
>> Well, I think the footnote did refer to the report and all of that is is contained in that report.
>> I mean if if this was a private company, you'd be in trouble for misleading deceptive conduct. No doubt. No doubt. I mean, you put in the information to the public that this would deliver a $7.8 billion increase in real GDP. It is clearly based on changes that are not in the deal. How would why has the department put out or again the government put out misleading and deceptive information the Australian people on the EU free trade
>> Well, I think I think Senator uh our evidence is as Mr. Mr. Rabber has said is that we were very transparent about the source of this early modeling result. Uh it was nothing more than that and I think we have explained also our effort to update based on recent uh negotiated results. So we we we will be in a position a better position >> to uh to equip uh you with with those results once that once that modeling is concluded. Uh and it's important to note that that economic modeling of all descriptions as you know well Senator does rely upon assumptions. Those assumptions have been updated and we are therefore updating our analysis. Can you
point to me anywhere in the information that was released by the department about and the government about this EU free trade deal where you have referred to those assumptions or referred to the fact that these figures may not reflect the uh deal as signed? >> Have you got any
>> Well, I think Mr. had just made the point that the
>> before my questioning tonight
>> that the that the
>> before that had you ever actually indicated in a footnote uh uh in in an asterisk that uh look actually these figures don't necessarily reflect the dealer.
>> As I said Mr. rap evidence earlier, we have referenced the report to which uh you refer and we have referenced uh in that footnote uh where one can access that report including of course >> to the extent that it that it was available in 2020 2021 uh what those
assumptions includ So Senator a couple hours to read that's why we're doing this updated and it's very disappointing to see uh Australian government mislead the Australian people. I guess it erodess, trusts and institutions uh when uh departments and others sign off information which is clearly misleading. It is clearly misleading to the Australian public uh is this this all of this information is publicly available, easy to access. The report also claims under this uh scenario you've relied on that Australia's rice exports will increase by 113%, sugar exports will increase by 123% to the EU and dairy exports will increase by 86% to the EU. Do you stand by those increases? Will that happen under the EU
free trade deal? Senator, I can um uh first make the point as I have many times already that this modeling is getting updated. But I would als but in respect of dairy, what we can do is talk to the outcomes. Now we had a sector that had miserably low access into Europe. We had
>> Can I just bring you back to the question? I'm happy. Can I bring you back to the question though? The question was, look, you said in the factory it would increase, it could increase GDP by up to 7.8 billion. >> That relies on an 86% increase in dairy exports. Is that going to happen?
>> Minister, you want to add something there?
>> Chair, this was a week in which we were trying to improve respect um in the parliament. um the witnesses trying to give a genuine and honest answer um to the question that um Senator uh Canniban has raised. Can I sort of request that we try and maintain that respect and at least give the witness an opportunity
>> on the point of order? >> On the point of order, respect is not given and is not helped when when public officials and the government present misleading information. [snorts] That is that is why people are disrespecting our parliament because there are lies being told time and time again about about all sorts of things. >> This is just the pattern of gaslighting.
>> All right. Thank you. All right everyone and as chair I'll enforce the standing orders as required by the Senate and as adopted by the Senate. Now >> Mr. Mina did you have anything else to add to your evidence? I I did. I did,
Senator. I think um the senator has just made uh some comments about dairy. Uh we had an average dairy tariff of 2.4%. The European Union had an average dairy tariff of 27%. Now that's largely gone to zero. So we have a massive leveling of the playing field on dairy. we are going to eliminate 87% of the European Union's dairy tariffs and uh one can draw one's own conclusions about the benefits that that will provide our dairy sector but the the predominant point is that this is a massive uplift.
>> Do those tariffs include the are they tariff equivalents including the subsidies that the EU provides to its
dairy industry? Uh Senator, they do not include subsidies because as you know subsidies >> are not typically negotiated in bilateral free trade agreements.
>> Neither is neither are climate agreements. Neither are climate
agreements. Neither labor government has been a consistent. The Australian government has been a consistent supporter under both sides of of politics of agricultural subsidy reform and we have been continuing to press our European counterparts for subsidy reform including in dairy for many years through the can.
>> Are you aware just on the topic of dairy then are you aware that the EU commission modeling under its conservative scenario which does not include um uh the removal of agricultural uh non-tariff barriers. It's more accurately describing the agreement. The dairy industry in Australia would be one of six to see production falls as a result of the agreement. Our production would fall. Are you aware of that?
>> Well, you you're uh you are citing I take it from the European Union's analysis
>> that you've relied on. Yes.
>> We we will conduct your own analysis and and be
>> that might explain why the dairy industry is ropable about this. Um just uh I might leave it there given time um and move on to another issue with this deal. Um are you aware is the government aware that a Dutch environmental organization known as both ends has lodged a formal complaint with the European Commission alleging that New Zealand has breached its climate agreement climate obligations under the EU New Zealand free trade agreement. They lodged this on the 29th of September.
>> We are aware of that report. Senator,
>> what's your um uh awareness of the basis
>> Um Senator, um this is um a complaint made under a private um uh mechanism of the European Union, not directly related to any mechanism in the EU New Zealand FTA and certainly there is no means under the Australia EU FTA for a private person or organization including an NGO from the EU to bring any dispute against Australia under our FTA. The complaint
specifically challenges New Zealand's decision to reduce its 2015 methane reduction target from 24 to 47% to 14 to 24%. what's stopping a private group making a similar complaint uh on the EU Australia free trade deal?
>> Um because there is no mechanism for them to do so under the Australia um EU FTA deal.
>> Is there such a mechanism under the New Zealand free trade deal with EU? um that
would be a matter for the New Zealand government but um this is as I said it's under a commission domestic mechanism that this complaint has been brought.
>> Both ends have also identified New Zealand's reversal of its offshore oil and gas uh exploration ban. Uh it's cited the New Zealand government investing $200 million in a gas security fund. Uh it's also challenging New Zealand's decision to remove the legal requirement that its ETSs align with the Paris agreement targets. I I I mean I've been assured time and time again that Australian laws can't be used or weaponized by climate activist groups and we've seen them do that. Surely there's a risk here that similarly what we're doing here is giving license to European courts uh to make rulings on Australian government decisions.
>> This is a matter within European processes unrelated to our FDA.
>> Well actually both ends have also publicly identified that their next target will be Australia after New
>> Um no senator.
>> Okay. Well, that they are going to pursue this and as I say I I I I mean h how can you give a guarantee about what European courts will decide on these matters? Can you give such guarantees?
>> Uh there is no connection between this process and the dispute settlement provisions in our FTA. They're completely unrelated processes.
>> But it's a it's a treaty and an agreement that the EU has signed up to. And it and I'm no international lawyer, but quite often these international agreements are weaponized through international law courts and through European courts. We've seen that in the past. I I I mean European court is beyond the purview of the European Commission presumably andor our own government to decide uh what it may on Australian government on the details of
is there a question there, Senator, on
>> well just yeah how how do we we we presumably cannot dictate or control what a European court may decide here
>> but they have no jurisdiction over us.
How do we know like >> well they have a juris potentially have jurisdiction over the agreement though >> why couldn't they rule that the EU has to enforce its deal as it does as those courts have ruled international courts
witness to answer the question
>> I don't think I was interrupted I thought she was finished but anyway
>> well well the witness was attempting to honestly answer the question Senator Canavan you continued to talk over her I repeat
>> I apologize for that I wasn't intending
Okay. Well, then that's all right.
>> All right. Well, we're getting close to dinner, so let's just keep marching along to 6:30.
So, Miss Holmes,
>> if I could just add, Patricia Holmes, our first assistant secretary, trade law and economic security division, uh, as um, uh, was, uh, given in evidence previously, there's no investor state dispute settlement provisions in the EUFTA at all, which means that, um, only the EU as the state can take a state-to-state dispute settlement um, process. So um all the provisions regarding enforcement need to be done at a stateto-state basis. The the reasons that motivate a country to take a dispute vary but the actual dispute action can only be taken between two um the two states.
>> So what's stopping a European court directing the European Commission to
The basis on which a government may take a dispute or not is independent of the FDA.
>> Not sure that answers my question. Uh I mean European governments are subject presumably to European courts just as we are to Australian courts. What would stop a European court ruling then that the European Commission, the European officials uh uh have to take that state-to-state action you refer is available to them under the this
>> The point is it's not something that is covered in the FDA. So the basis on which the state in question in relation to to a dispute action takes that decision is not addressed in the FDA. >> So that is a matter for the Australian government or the
>> that doesn't reassure me at all. I mean particularly given our own experience where just recently uh uh New South Wales court stopped a coal mine and we've been assured time and time again that these uh provisions wouldn't affect scope 3 emissions. uh it happens all the time in our own system. I don't see what would stop it happening in Europe, particularly given uh probably their activist class is even more uh weaponized than ours. Um just moving to the details of this then and how long do we have?
>> Well, question like um
>> Oh 6:30. Okay. Okay. So So no, plenty of time. I'll keep going. >> Yeah. Yeah, I'm happy to. Or bit on your hands chair. >> Um just just going to these provisions then about the Paris in particular at at [clears throat] the June estimates. Um when I asked about this uh DEFAT did refer to the exceptions that are available in chapter 23 that would potentially um um provide the Australian government uh with flexibility in regards to uh things like climate agreements. On notice though, it would appear um uh DEFAT has confirmed that article 23.1 does not apply to the trade and sustainable development chapter. Is that
>> That's correct, Senator.
>> So, we can't rely on the the general exceptions of 23.1 uh to uh defend ourselves against any any potential breach of chapter 18.
>> Um yes, there are other exceptions that apply, but not that one.
>> Yeah. So there's the other exceptions are 23.2 which I'm just going to bring up the my text of the agreement here. A lot open. Sorry. Um 23.2 which is relating to national security and really focus on things like arms control, fisionable materials and and war time. 23.3 you've identified which is taxation um particularly taxation agreements with other countries 23.4 which is about the treatment of information that may or not be confidential under the agreement uh and 23.5 which relates to waiverss on um other WTO agreements. I'm struggling to see how any of those subsections or sub clauses of chapter 23 would give us an exception to chapter 18. Can can you take me through how that
>> Well, I think it would depend on the circumstances of the particular issue to analyze whether any of these exceptions that you've just referred to apply. Um, but of course, we have to look at the agree agreement in its entirety. So, as Mr. Remina said earlier the environment chapter the trade and sustainable development chapter itself does already provide that flexibility very clearly in article 18.2 for a party to um adapt or modify its environmental policies.
>> Right? But say we wanted to adapt or modify is different. Say we wanted to just we decided we'd pull out of the Paris agreement. That's it. We're out. Um what what of those exceptions would give us protection in that event?
Well, Senator, once again, um, this agreement simply reaffirms Paris. So, in that respect, the
>> Does it lock us into it, though? That's my question.
>> If if your uh if if your question is does it lock us into the particular targets under Paris? >> Uh, of course not. But if it if it
>> I appreciate my questions aren't
reframed. No, no, but if but if if it's relating to enforcement in relation to uh uh whether to be a member of Paris, uh I think the the answer there is simply there are enforcement provisions here. Quite evidently that's the purpose of uh of the relevant provisions relating to Paris. Uh but the important point there Senator is that the enforcement action can only take you back to where you were before the FDA. In other words, the enforcement action is only
>> Sure.
>> is only a denial of the benefits of the FDA. You don't you don't go backwards from where you were before the FDA.
>> It does. It does. As the government has said, as you have said, it binds us then. It's a binding situation. That's the word. It's the verb you've used uh when announcing this deal because I can't see I mean obviously I suppose if we're in a war, we can get out of Paris and we can rely on section 23.2, but uh that's a fairly extreme uh scenario. uh but I don't see how any of the other provisions the taxation provision the information sharing provision the WTA waiver provision throw us any defense from uh having flexibility around uh our agreement to Paris or not
>> as to membership of Paris itself >> we're already bound and this is a reaffirmation a repetition of that nothing more than that
get out of Paris we've seen that with the US there's no there's no raific there's no ramifications to the Paris agreement there is to this this is how this is different. This is a this is binding Australia in a way we haven't been before.
>> What I'm trying to explain is >> the only consequence. >> Under this agreement is it a denial of the benefits under this >> agreement. In other words, you go back >> where you were before the FTA was
>> but it's fundamentally different than what we signed up to when we signed in Paris. you know, we we were I was there at the time and I have I have the full transparency never said uh or never um have now maintained that look, we should um be okay to stay in Paris, but only if it doesn't bind us uh in a in a legal fashion, which this now does, which if
>> No, Senator, it is not fundamentally
>> and this is the the core problem we have with it. Uh it goes well and beyond what we signed up to uh under the Paris
agreement. No, Senator, it does not fundamentally differ from the re the Paris commitment. Uh, nor does it go substantially beyond the Paris commitment. >> We were bound before
>> disagree with that. I
>> we were bound before the FDA. We reaffirmed repeated that Paris commitment in the FDA. >> Uh, so we're bound before and through
this FDA. I disagree. It is not a fundamental difference. >> Unless you can tell me in fact a simple established that we pay there is [snorts] a penalty the denial of the benefits of this free trade agreement if we get out of Paris, right? That well that is something you've you've you've established. What is the denial of benefits to Australia under the Paris agreement if we to remove ourselves from
that? >> Sure. on the first part of your question that is accurate. On the second, we would need to refer that as I said earlier to experts in the Paris.
>> That's the difference. That's the difference. Uh and and it's why we uh are fundamentally against this. Uh
>> well, Senator, you go back to where you were before you signed the FDA. In other words, you don't access the significant uplift in economic opportunity.
>> We should be binding ourselves with things as you don't energy security. Um
>> Senator, if I can finish on this point, it is quite important. What we do not do is impose any uh penalty on Australia uh beyond that which is contained in this free trade agreement. It is contained to the uplift, the economic uplift this deal provides us. Yes, we wouldn't be able to access those benefits. That's uh an important reason for uh why we are taking advantage and and taking the full opportunity of this of this package.
>> Okay.
>> I've got a few questions myself but if you got one more I'll give you take
>> Look it's on the broad topic but it's going in a different direction so I'm happy to hear to you a different
direction then. Um Mr. mean I was just um just hoping you could then um also talk us through about the engagement in this deal around the horizon. Um I know there's a lot of um uh interested people particularly in the national security space, defense space, uh even in academia. Um could I have one of you or one of your officials just talk to us about the benefits that arise out of this free trade deal with respect to
>> Um thank you very much um Senator. So um European Commission President Bondelion when she visited in March um made three important announcements uh in during that visit. One was the conclusion of negotiation of this free trade agreement between Australia and the European Union. The other one was around Australia's association with Verizon Europe and the other one was conclusion of a security and defense partnership. Um all of these um uh three pillars of the uh advancement of the Australia European relationship are complimementaryary um and the free trade agreement will help operationalize um the other two parts of uh this relationship uplift. Um so specifically the the free trade agreement will provide the um mobility provisions which will enable academics and researchers to be able to travel to the European Union and and live and work in order to access those research and development opportunities and funding uh under Horizon uh Europe. Um it will also allow our services professionals to be able to to do similar and be able to uh take advantage of uh of those uh of those benefits. Um relating to uh the security and defense partnership, we see um provisions such as the uh investment u improvements that we've referenced, the elimination uh of tariffs and the and the government procurement opportunities will also um from the FTA help complement the the other benefits in these uh arrangements between Australia
to the the the the the funding pool I guess that's available um um could you just um elaborate for me then around the the access that we all would be able to have in terms of um you know advanced computing space you know um supply chain security uh etc and and critical minerals like um what will it mean in practical terms for for the sectors that in Australia that would benefit from having access to that um pool which I understand is quite
>> Uh chair Doug McGinness, first assistant secretary of the Europe division. Uh the funding package for Horizon Europe at the moment 21 to 27 uh is around 95 million
>> euros 95 billion >> million million euros. Yep.
>> Uh so it's the largest uh innovation and research scheme of its kind in the world. uh and Australia's going through that process of uh uh entering into that Horizon Europe scheme.
>> So what does that mean then for innovation or productivity gains here?
>> Well, I'd probably have to defer questions on particular innovation uplift to uh colleagues at DAEA Department of Industry Science and Resources. But just to say that it's it is a large scheme with uh huge
>> But you you'd expect to see a much greater um engagement and stronger research collaboration between the academics or the academia and and the Europeans in terms of greater um investment in space for instance.
>> Yeah, absolutely. and and uh one of the other elements that Australia's entered into is the security defense partnership which goes to some of those areas like defense industry innovation, space dialogue, uh critical minerals. Yeah, a range of those innovative sectors uh would be encompassed.
What are you um expecting I guess uh that would also add value in terms of our national security with our national security agencies um having access under this deal. What are they expecting to
Well, I think under the security and defense partnership that the government announced earlier this year, there would be uh opportunity as there has been already in uh economic security and there's been a uh security dialogue that uh officials have held. So there'll be a range of opportunities to progress uh economic security uh space and other
concrete examples or examples like what what are the things that that you know will come out of this? Surely you've got some practical examples you're able to provide with us.
>> Well, I would say that uh at this stage uh we would enter into the first phase from January next year. So we're we're still going through that. uh and any other concrete examples would have to defer that to department of industry science resources
>> because I understand the um obviously when we mentioned earlier from I think Senator Go around critical minerals um you know there'd be a number of uh I think businesses over in Western Australia but obviously across Australia that would stand to benefit immensely. Um uh is it Arafora the rare earth miner has publicly supported the deal including minerals council of Australia? Um why is it that they are so supportive of this free trade deal?
>> I think it goes precisely to the to the reasons you've just set out senator. First the innovation pathways this provides Australia. uh we have a very fast growing uh sector on space and high-tech uh exports which has a huge potential through our research collaborations, industrial partnerships and indeed university partnerships uh to take advantage of European expertise in this area. Second, uh with the resources that we have and the opportunity this deal presents for companies like Arafura uh and for other players uh associated with the minerals council uh to find partnerships for both offtake and investment to diversify those supply chains we've been talking about. uh we have a major opportunity here to embed uh our resources industry in one of the fastest growing industrial sectors anywhere and third of course the investment uh that comes with the above two features. So if you like the the horizon package and the free trade agreement uh nestled together to provide big opportunities for the Australian resources sector.
So in terms of the uh science innovation sort of grants did you say it was $95 million Australian million? It's 85
euros.
>> Okay. I was under the impression was
>> billions2 Australian dollars.
>> Wait. Yeah. What's that?
>> I don't have that be about >> figure then it's 13 million million Australian dollars.
>> Will that then allow not just universities but others to tap into that research uh or that pool of money for research and development? Is that your understanding how that would operate?
Yeah, it would give access to Australian researchers. Uh,
>> and will that be managed um through the department or one of the agencies that fall within DEFAD or is it a direct application uh to um to the Europeans?
>> The point of contact within the Australian government would be Department of Industry, Science and Resources to manage that interaction.
So then I guess fast forward, what are these next steps that will make sure that we do end up having um access to funding like this? Like what are the next steps to ensure that the trade deal is in force?
>> Well, we need senator on both sides to bring this deal not only to signature but then through our domestic ratification processes. >> Uh we need to do that as soon as possible. We need to make sure that we have in place uh a treaty entering into force as soon as possible uh so that the tariff reductions which are done over a period of years as as always is the case with free trade agreements can can can kick in. Uh the investment uh facilitation I've spoken about earlier can kick in and indeed the benefits of these industrial partnerships under horizon uh can also start to to flourish. those benefits are are available to us as soon as ratification commences.
>> And in terms of that process, I think we all understand go to our uh committee that looks after treaties. But before that process start, is it correct that the Europeans need to sign off and then it comes to us for signature? Is that how that works?
>> Yes, Senator, both sides need to complete domestic processes to get to signature, which is the next step that we're working towards. On the European side, a council of the European vote is required in order to approve European signature of the FTA.
>> And how long will these processes take?
>> They're currently underway. Um these processes um the um European Commission has not yet submitted um this FTA to their council, but we understand that
>> And then once that happens, it comes to us. Uh does the minister
>> on on our side? We have an XCO process to um give authority for signature. Once both sides confirm that we have our domestic authorities, then there'll be a range date for signature of the agreement. After signature, then we will table the FTA in the Australian Parliament which will trigger the um the 20 joint standing days uh and the operation of the joint standing committee on treaties. Um we also will have legislation that will need to pass through the parliament next year. on the European side after signature they have a parliament parliamentary process to approve the ratification of the deal for
>> and sorry just just to go back earlier too it was just uh in terms of um the the deal um will it also look at um abilities for us as a nation to tap into either resourcing or uh other measures to help develop you know artificial intelligence and and and other sort of advanced technologies.
>> Absolutely. Those um innovation mobility pathway that I referred to works two ways. So it will also enable um European uh experts and professionals to temporarily come to Australia in order to offer those skills uh in Australia. It will also help facilitate um greater European investment uh into emerging fields uh uh digital AI etc.
And is there anything there from a like a counterterrorism perspective as well too or is it purely um uh economic?
>> I I didn't hear your question.
>> Counterterrorism like is would this form part of um the arrangements um
>> so uh can you repeat the question please?
>> Well I just want to know is there anything there that that goes directly to counterterrorism arrangements? You know, I know it's not always a we mainly focus on economic matters, but are there other non-economic factors that uh cover or are covered as part of this EU trade
Uh
>> well uh I I won't talk to the deal particularly but to the broader announcements that the government made with the EU early this year including the security defense partnership goes to a range of sectors that we're looking to work with the EU on in terms of both economic security and innovation space as I mentioned but also in >> uh defense and security areas which would also include counterterrorism.
>> Look I'm mindful about time. Did you have anything from your
>> chair? Can I just um um clarify one one point on the funding for Horizon Europe? >> So the uh >> the funding uh in euros would be 95 billion which would be equal to 155 billion Australian dollars.
>> Sorry, can you say that again?
>> The funding for Horizon Europe 95 billion euros which would be equal to 155 billion Australian.
So, and is that just for Horizon?
>> That's for Horizon Europe for their whole scheme 21 to 27.
>> So, what other are there any other similar packages like that within the deal that I haven't come across like that academia or the sort of research and development folks would be interested in or critical minerals?
>> I I'm not aware of um
>> Mina, have you got anything to add?
>> The innovation mobility pathway does also
>> which one? Sorry.
It's within the free trade agreement. The innovation mobility pathway also um ensures access to other European research and innovation program pro programs such as um Euro access EU arasmus plus and the Maria scholar Devoska cure actions.
>> What was the Arasmus plus again? What's that? Is that the space?
>> These are research and innovation programs within the European Union.
Well, we'll break for dinner now and then we'll be back here at quarter 7. So, enjoy your dinner everyone and we'll see you here then.