Minority Report—Coalition Senators and Members
The evidence presented to the Trade Sub-Committee shows that
there is considerable unease amongst our key regional trading partners at the
lack of consultation on the proposed Illegal Logging Prohibition Bill and
subordinate legislation. In particular there is a real concern with the gap
between the Bill being passed and its regulations coming into force, over the
time allocated for consultation on the regulations, and on what form the
consultations on the regulations will take.
The evidence presented to the Trade Sub-Committee also
clearly shows that important regional trading partners believe this Bill will
harm their trading relationship with Australia and that there is legal
uncertainty as to whether the Bill is World Trade Organisation (WTO) compliant.
It is indisputable that as soon as it enters into law, the
Illegal Logging Prohibition Bill will cause uncertainty in Australia’s timber
trade because importers will not know what the precise impact of the
legislation will be until the regulations are enacted.
The Government has indicated that the regulations would be
developed in consultation with key stakeholders yet has done nothing to clearly
demonstrate how this will be done.
The Department of Agriculture, Forestry and Fisheries
estimate that they can produce the regulations within six months. Yet evidence
submitted to the inquiry indicated that little progress has been made on the
content of the regulations and that fundamental issues remain unresolved.
The Government has also indicated that the regulations will
come into force two years after the Bill receives Royal Assent and also
indicated that the regulations will be tabled in the Parliament within six
months of Royal Assent to give exporters and importers time to establish due
diligence. However, the Government also made it clear that parties could be
open to prosecution during this two year stand-off. This lag between the Bill
and the regulations is of genuine concern.
In giving evidence the Gillard Government highlighted how
its consultative process has been found wanting. While noting that it has been
consulting on the proposed legislation since 2008 it admitted that:
As the more detailed process of developing the regulations is
now underway, more in-depth consultation with stakeholders is being and will be
undertaken to assist their development and to ensure they operate as intended.
The Government needs to clearly set out how the
consultations on the regulations will take place with the Australian timber
industry and our international trading partners and the timeline for these
In its submission Papua New Guinea recommended that:
More organised consultations be held with trading partners
particularly the developing countries on the proposed legislation.
It should not introduce the legislation until the enabling
subordinate legislation is finalised and is released for public comment and a satisfactory
consultation period has taken place on both the legislation and the
regulations. Based on evidence submitted to the sub-committee that may take at
least 18 months to 2 years.
As well as concerns over the consultation process, there are
also real concerns being raised over the cost of compliance with the Bill and
its yet to be drafted regulations.
As the submission from the Canadian Government states:
Canada is concerned that third party certification schemes
may be too heavily relied upon as the means to addressing the due diligence
requirements set forth in the Bill, to the exclusion of other approaches for
meeting the due diligence requirements… ...Relying upon chain-of-custody
certification as proof of legality could present a barrier to trade for many
smaller producers or those exporting complex products.
The content of the Bill and the way in which it has been
handled to date has already arguably caused harm to our trading relationships
and if passed will very possibly lead to more harm occurring. The Indonesian
Government, already irritated by the way in which Australia placed a hasty and
ill-conceived temporary ban on live cattle exports, made clear in its
The implementation of the Bill is also likely to undermine
the development of trade between Indonesia and Australia based on our
respective mutual interests. In this respect, reference is made to the recent
efforts of the Government of Indonesia to accommodate and resolve the problem
faced by Australia during the self-imposed ban on beef exports to Indonesia.
It is self evident that this is a relationship which we need
to repair, not worsen. Indonesia is Australia's largest neighbour and a key
member of ASEAN. It is already Australia's most important beef and wheat
market. If we do not respect the relationship, it will not only be Australia's
trade interests that suffer.
The Government of Malaysia also raised its bilateral
relationship with Australia in its submission:
While Malaysia fully understands that the objective of the
Bill is laudable, Malaysia would like to see that the implementation of the
Bill will not in any way hamper the good bilateral trade relationship particularly
in timber products.
Countries that gave evidence referred to the actions and
measures they have taken to reduce illegal logging and to demonstrate to
purchasers of their timber products are legally procured. All requested that
these systems be recognized in Australia as demonstrating legality. They also
noted that the Bill will require Australian authorities to demonstrate to their
own satisfaction the validity of their schemes; in effect it has been argued
that this amounts to a vote of no-confidence by the Australian Government in
the capability of some of our key trading partners. This is one of the key
reasons why it is in Australia’s national interest to avoid using unilateral
trade measures wherever possible. The use of unilateral trade restrictions has
a long history of causing disputes between trading partners. Australia has consistently
opposed the unilateral imposition of trade measures by the EU and the US. Due
to the damage they can cause to trade relations between countries, it is against
our self interest to use such measures unless there are no other alternatives.
Evidence presented to the inquiry suggests the Illegal
Logging Prohibition Bill may be unsound in international law. Although legal
opinion is divided, there are indications the Bill is highly likely to face legal
challenge in the WTO.
In its submission the Government of Canada put Australia on
notice when it noted:
While Canada has concerns related to some of the potential
trade implications of the Bill, Canada is pleased that the Government of
Australia is committed to ensuring that the Bill and associated regulations are
consistent with international trade obligations, that they treat importers and
domestic processors of timber equally, and that they are not trade distortive.
This was a point reiterated by the Papua New Guinea Forest
The Government of Indonesia has already foreshadowed the
possibility that the Bill will not meet WTO requirements and remain
challengeable under the WTO. An expert legal opinion by Professor Andrew
Mitchell of Melbourne University indicated that the agreement would pose
problems with WTO compliance, as well as compliance with the
ASEAN-Australia-New Zealand Free Trade Agreement.
In summary Coalition members believe that the Bill and any
accompanying draft subordinate legislation need to be subject to the most
rigorous consultation process.
The Coalition members support recommendations 1 and 2 of
the majority sub-committee report.
While the Coalition agrees that the Bill, the penalties
and the regulations need to be aligned, the Coalition members do not support
the timing in recommendation 3 of the majority sub-committee report. The
Coalition members recommend that the Bill not be passed until the draft
subordinate legislation has been finalised and has been the subject of
extensive community and international consultation. In that respect the Bill
should not be brought on for second reading debate until the first
Parliamentary session of calendar year 2014 at the earliest.
Mrs Joanna Gash MP - Deputy Chair
|Senator the Hon David Johnston
||Senator the Hon Ian
|Senator Stephen Parry
|Hon Julie Bishop MP
|Mrs Sophie Mirabella MP
||Mr Ken O’Dowd
|Mr Stuart Robert MP
|| Hon Philip
|Hon Bruce Scott MP
Sharman Stone MP