FOREIGN Minister Julie Bishop has enlisted the support of the Queensland Labor government to kill off a push by conservatives to partially regulate the sale of sugar, saying it would breach Australia's international trade obligations and jeopardise future free trade agreement negotiations.
In a letter to Queensland's Agriculture Minister Bill Byrne, obtained by The Australian Financial Review, Ms Bishop urges him not to allow two private members bills, presented respectively by independent Rob Katter and Liberal National Party Opposition, to pass in the Queensland Parliament.
Mr Byrne responded in support of Ms Bishop against the move which is also being pushed by her federal Coalition colleague, Queensland LNP MP George Christensen, who holds the seat of Dawson.
"As you will be aware, the Australian government has established an ambitious economic and trade agenda to support the prosperity of all Australians," Mr Bishop's letter says.
"We are pursuing bilateral, regional and global trade agreements that not only open up new markets for Australian exporters, but help build a strong, rules-based architecture for global trade.
"Accordingly, it is important that Australia continues to maintain a credible reputation for being an effective and reliable partner with an exceptional record of compliance within the terms of our international trading agreements."
A proposed mandatory code of conduct for the sugar industry put forward by the Liberal National Party taskforce on sugar marketing would give canegrowers control over the sale of two-thirds of raw sugar produced by foreign-owned sugar mills in Queensland.
Wilmar International, which invested $1.75 billion in the industry in 2010, has claimed that the code of conduct amounts to "an expropriation of its property" and is in contravention of the Singapore-Australia Free Trade Agreement.
When the draft code was released, Wilmar's Australian representative Shayne Rutherford said: "Government expropriation of a manufactured product would have serious financial implications for the future viability of mills and set a concerning precedent for Australia's processing sectors".
"Why would anyone want to invest in an Australian
manufacturing or processing business if it doesn't own and control the product it makes?" Mr Rutherford said.
In his response to Ms Bishop, Mr Byrne said "you can be assured of my personal support and commitment to Australia's obligations within the present international trade agreements" and it was his preference that "this matter be resolved at a commercial level".
Mr Byrne said since the Howard government deregulated the sugar industry, "the sector has attracted significant investment and as a result of ongoing industry consolidation, many milling companies are now foreign owned".
"The scale of global investment has been substantial and this has facilitated capital replenishment in both cane farming businesses and mills at a rate that has not been seen for decades."
Mr Byrne says he is "well aware of the risks" posed by the private members bill proposed by Mr Katter, who holds the balance of power in Queensland's Parliament and says he is "equally concerned" about the proposed bill by the LNP opposition.