10 December 2007

Media doorstop

Ritz-Carlton Hotel, Singapore

Subjects: Doha round, FTAs, climate change

MINISTER - OK, well you’ve got the speech [10 December address to the Australian Chamber of Commerce (AustCham) Singapore] and that outlines the direction of our trade policy. But the other significance of this visit is that it’s the first of the bilateral visits that I’ve made. Indonesia and Singapore have been the priorities, in that they‘ve bookended each side of the trade ministers’ dialogue at the UN Climate Change meeting in Bali, Indonesia.

What the visits really do is to signify the importance of the bilateral relationship between our countries. In the case of Singapore, we have had a very strong relationship over the years. We have, in essence, a model FTA, which is multilaterally consistent. We’re keen to work with Singapore, not only to develop a bilateral relationship, but to use the strength of it to enhance trade liberalisation in the region. I believe that this can be achieved through the ASEAN group plus Australia-New Zealand, or APEC, or both, and obviously our shared commitment to a successful outcome in the Doha Round.

So, the significance of the visit speaks for itself, but I’m very keen to strengthen the relationship but not just from the bilateral perspective. I believe the best opportunity in terms of trade liberalisation is from a successful outcome to the WTO Doha Round. I know Singapore shares that view, so does Indonesia for that matter. And we’ll be working closely to do it. I hope this visit isn’t just an exercise in introductions soon after the change of government, but also sets an ambitious agenda for the future.

Q: There has been a clash between the US- EU versus Brazil-Pakistan over the weekend about the green trade plan…inaudible… really supports the plan, but developing nations are saying the real intention is to boost exports for rich nations. How do you respond to that?

MINISTER - Well, I think this is a discussion that still needs to progress and it can progress as part of the Doha Round. I think all trade ministers were at one in accepting the argument that if we were to go forward in addressing climate change it makes sense to ensure that we liberalise trade access in environmental goods, including the technology, the services etc. There is clash in that Brazil wants ethanol on the list but presumably that’s an issue that can be progressed in that discussion. The important thing is to get the commitment to move forward, and that’s what we’ve got. As always, I thought the important thing here is it’s easy to concentrate on the negativities, the difficulties. There are difficulties; difficulties in trade negotiations, that’s why they’ve taken so long. But there are also opportunities; great opportunities and if we’ve got the political will, commitment to the solution, then I think we’ll find the way through.

Q: In your opinion, should Ethanol be included in the list as requested by Brazil?

MINISTER - I want to take further advice on that. I think that these issues need to be thought through. The list, after all, was compiled by the World Bank. Why didn’t the World Bank include Ethanol? That’s a good question; let’s have a look at that. And the list was put forward only a week before the meeting. It was never intended the meeting, over the last two days, would finalise it or commit to it. We’ve said that it deserves serious consideration and it will be given serious consideration.

Q: May I ask about the free trade agreement with China you’ve been pushing for? China’s trade surplus is coming out this week. Are you concerned about its ballooning surplus?

MINISTER - Well I think that China presents a huge opportunity for Australia and the region. China is an economic powerhouse, as is India; it is in our interest to develop open trading relationships with those countries. That’s the whole purpose of what an FTA should be about. The negotiations on a free trade agreement with China have dragged on. There is a new minister yet to be announced, but I’m looking forward to early discussions with China to just get my own assessment on the status of that. I take the view that our priorities should be the Doha Round, but when the previous government announced its intention to develop a free trade agreement with China, we supported it. But we wanted to be kept abreast of the details, we need to catch up with it now.

Q: May I ask about the yuan? Mr Henry Paulson is visiting Beijing this week. What’s your view on the appreciation of currency?

MINISTER - I don’t have a view of the appreciation of the currency at this point. It’s not my role to comment on that.

Q: Minister, in your speech this morning you talked about ‘a clean sheet’ in Australian trade policy and reforms. We in Singapore are especially keen to understand, from you, how Singapore’s trade ties with Australia may be augmented, enhanced, affected by this clean sheet outlook of yours? And if you could comment especially on the lucrative air route between Australia and the US and Singapore’s participation in that.

MINISTER - OK, well, I got asked that question before about the air route. This is a discussion that I obviously have to have with a number of other colleagues in the cabinet. I haven’t had that discussion yet obviously. We’ve only been sworn in a week ,so until such time as we’ve had that discussion, I can’t make any useful comment. On the question of the relationship with…

Q: Sorry Minister, if I may, but what will the nature of the discussion be, based on the clean sheet approach, will you review the previous decision of the…?

MINISTER - No, no, no, I don’t think you should read…inaudible… the clean sheet that I talked about, if you looked at what we’re saying there, is the clean sheet that asks the question – why in the resources boom have we been underperforming in exports? Why, if you like, are we able to perform better without a resources boom? What are the policy initiatives? What are the trade promotion aspects we need to review? Now, I’ve already signalled that one of those areas doesn’t need the review. It’s the question of one of our mechanisms at home and I’ve already made some announcements to that.

But the business community in Australia is also concerned about Australia’s trade performance and had called for such a review. But you expect a government coming in after almost 12 years to undertake this. But I think we can be a better export performer. We have been in the past. What I want to do is to get back to that position. Trade negotiations are an important part, trading relationships are an important part, trade promotion is an important part. But I would like to see the greater enhancement of the two-way trade between Singapore and Australia as well. I think there is potential in that particular end – in services.

Q: Could you elaborate what areas that might be?

MINISTER - I just think the legal services, the engineering services, the combined work on water. I have just been speaking to Singapore Ambassador at Large, Prof Tommy Koh, about the Chairmanship he undertook in Japan last week. I think the opportunities exist for not just trade, but solutions. You see, water and water security is vital for Singapore. Drought proofing Australia is vital to us. Together, we can use the strength of our bilateral relationship, maybe to look for trading opportunities but more importantly, to drive the solutions.

Q: If I could ask about China-Australia relationship again. An interesting development on Baosteel, although they said they have no money again bidding for Rio Tinto. Do you think Australian steel makers would allow or would like Chinese companies to take over?

MINISTER - Well, I think if you ask the question like that cold, probably the answer would be no, strongly no. And I don’t know how serious the proposition is. There has been media speculation. In our country, there are processes that need to be gone though if such a proposal is made, to determine whether such a proposal should be met. But Australia is a very resource-rich country. It’s in our interest to develop national security, but it’s also in our interest to ensure regional security for other nations in terms of energy supply. And I think that if we can try and approach it that way, from a trading perspective, rather than in the intensity or the difficulties associated with take-overs and foreign take-overs, we’ll be better off. But there is no proposal, there is nothing before us. I’m not going to respond to a hypothetical. But energy and energy security is vital for us as it is for the region.

Q: On the Kyoto protocol, the Rudd government signed it right away…

MINISTER - No, it’s the previous government that signed it but wouldn’t ratify it; this was the duplicity of their position. Australia ratified it as the first act of the incoming Rudd Government, and this has itself produced an important dynamic to the climate change convention this week. That climate change convention was never meant to be a body that finalised the facts. It was to establish a roadmap, the future. The end of that road involves the targets, commitments. And so let’s get the perspective right in terms of what the expectations are and where it goes forward. But I do believe that the commitment of the Australian government provides a huge dynamic and the challenge to all the nations is to work off that dynamic. Not trying to box people in to positions ahead of time, and trying to understand the complexities involved in negotiating one of these agreements.

Q: When can we expect Australia to make a commitment to finding practical reduction numbers? You haven’t really come out with how many percent by the end of…

MINISTER - No, because we’ve been quite clear about that. We’ve set up a review. Professor Garnaut, will be at the conference, is producing a report and we will determine our position following receipt of that report. The report is not due until, I think, the middle of next year, July.

Q: And your view on the US. Can you give us a comment, now that Australia has ratified it (the Kyoto protocol), leaving the US as the only nation which hasn’t ratified…

MINISTER - Well, to be fair, they are leaving themselves as the only nation that hasn’t ratified. That’s a decision for the US, but this issue requires a global response. We’ve consistently said that. There’s got to be, if you like, common but differentiated responses. We accept that in terms of developing countries, that there have to be commitments from all countries for this to work. Now will the US change its position under this administration? Probably not. Will it change if there is a change in administration? Probably yes. Given that the timetable is to work towards a conclusion at Copenhagen in 2009, I think we have to understand that, as crucial as this is an issue to resolve, it is going to take some time.

But provided we’ve got a roadmap that moves us down properly in the right direction, driving on the same side of the road, all of us, but knowing what the timeline is, we’ve got time to reach there. And not trying to rush through or speed it, otherwise we’ll crash. And I think your question may be answered more immediately if America, if the US, takes a position out of this conference, reviews its position. Or it may just be a question of time in the future. Who knows? That’s the uncertainly of these negotiations.

Q: But you remain optimistic that there could be common ground between developing and developed nations about the...

MINISTER - There has to be. You see, what I’m convinced about is, having sat down with the trade ministers, in that amongst ministers, amongst ministers of trade, there is a view that achieving our objectives in trade and aid, our objectives in terms of climate change, our objectives in terms of sustainable economic development, there is compatibility between the various mandates. It doesn’t necessarily guarantee a conclusion – we know better than anyone how hard it is to get an agreement on a multilateral framework with trade. But I remain optimistic that we can get such an outcome in trade. And quite frankly, if we do get an outcome in trade, its not only going to be very important for trade liberalisation purposes, its going to send a clear signal that multilateralism can work in solving other problems such as climate change.

From our point of view, we argue very strongly that the climate change agenda shouldn’t just be seen as environmental. Encoded within it are also economic and trade opportunities – hence the importance of trade ministers. It’s also important that whatever directions climate change policy takes doesn’t undermine trade liberalisation objectives. So those interlocking relationships are all important. As for the negotiations, I’m optimistic that, if there is political will, we can get an outcome. I think that the political will has been given a huge boost in the last week because of Australia’s decision, and I think that political will has to be tapped. But there has to be a political will that’s based on a mutual commitment to solving the problem.

Q: …concerned about the strength of the Australian dollar... do you see an interest rate cut?

MINISTER - I can’t comment on interest rate cuts as you know, nice try. But as you know the Reserve Bank is independent, so that’s a call for the Reserve Bank, and the level of the Australian dollar is a call for the markets. That’s the environment in which we operate, and that’s the environment that the previous Labor government created, so we’re not going to meddle with it because its sets us on par to sustaining economic recovery. I think that recovery under the previous government stalled and we lost opportunities because we failed to invest in infrastructure, skills and innovation et cetera.

Our task is to try and pick that agenda up again and position us for sustaining the growth beyond the resources boom. That’s not to argue that the resources boom is going to end soon, I don’t think it will. I think that China and India are going to keep it strong. I think it is important that we sustain our position, grow out our position and sustain as a trading nation while these prosperous times exists. And the difference between this government and our last government is that the prosperity has been long-lasting. We had to create a climate for it when we came into office last time and build upon it. We retain a very prosperous economy, but one that is significantly underperforming on the export front.

Q: You mentioned investing in infrastructure.

MINISTER - Well, I mean this is what Infrastructure Australia will do. It will prioritise and it will put pressure on the priorities so business, regions, all of that will have an ability to say, this is a priority that we’ve got to address. Why it wasn’t done by the previous government is beyond me. Why they didn’t develop the national energy policy is beyond me. But they didn’t. So it’s up to the new Government to do these things. Now that Australia’s got one, we’ll get on with the task.

Q: Can you stress a couple of points, you mentioned today in your speech about reforms needed to ensure APEC plays a bigger role?

MINISTER - Well, I think APEC has a couple of important roles to play and where it needs to really focus attention. One is ensuring that free trade agreements are multilaterally consistent. And that means looking at some benchmarks, some standards etc. Second is that it needs to focus much more these days on what I call ‘behind the borders’ issues. Not just the reduction of the physical trade barriers, but the regulatory regimes and the way in which countries apply things or don’t apply them will frustrate the openness that liberalisation would otherwise demand.

I think the third area is in the area of governance. Now as you know, India is not in. We believe India should be in. But that raises the question of size. But significantly, it also raises the question of governance under APEC. So whilst we’re looking at the question of expansion, I think we’ve also got to look at the question of governance.

ENDS

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