3 May 2008
Interview with Edward Davies, Reuters and Naila Firdausi, Bloomberg, Bali, Indonesia
Subjects: ASEAN-ANZ FTA, Food crisis, China FTA negotiations, Doha, coal, iron ore pricing
Mr Crean: As you know this is a free trade agreement we are seeking to negotiate between New Zealand and ourselves with the ASEAN group of nations. If we succeed it is essentially the first for the ASEAN group with two countries that many acknowledge share the model FTA - comprehensive, covers all sectors etc, so you can see that we go in with a lot of ambition with a group of nations that are experiencing a lot of growth, but at different stages of development, so that complicates the negotiations, it is multi-level, it is multi-stage development and there are obviously competing levels of ambition.
There are still outstanding issues, but we've made progress in each of them today - outstanding issues on goods, services, rules of origin, competition policy and government procurement. Obviously all of those are important in their own way, but I think it is pleasing that in relation to all of those, agreement was reached today for the officials to seek to find the common ground in the gaps. There is a meeting in Hanoi, negotiations in the beginning of June, so the intention is to use the time between this meeting and then including immediately today and tomorrow, to narrow the gaps. The aim is still to try and complete this agreement by the August meeting of the Economic Ministers.
Bloomberg: This is in August?
Mr Crean: Yes, in August, in Singapore. It is 28th August. I think the good thing about today, even though we haven't resolved the outstanding issues, Ministers didn't identify any issue that was beyond resolution. There is a genuine desire on both sides to conclude this and as I say they've given instructions to the negotiators to work creatively to narrow the gaps.
Reuters: Can I just ask a question on the role that Australia is having in this food crisis that is happening at the moment?
Mr Crean: Well I think the food crisis is the big jolt to Doha at the moment, quite frankly, if we are to address the food crisis, we can talk about all sorts of improvements to productivity and all sorts of aid assistance, but unless we are liberalizing markets so that people can trade more freely the available surpluses, we're not going to address the problems. So getting an outcome in Doha is an absolute bedrock position for addressing the food crisis in the future.
But also, the food crisis, in its own way, we would hope highlights the ability to demonstrate that surpluses can help solve problems, not pose threats to the domestic agricultural industries. Confronting the problem of food crises and food shortages and the need to address food security for the future, one would hope that this would help facilitate what are always difficult sticking points in any trade negotiations, whether they be at the multilateral, regional, or the bilateral level.
Reuters: This idea that some countries suddenly talking about restricting exports because they're concerned about their own domestic markets and talking about self-sufficiency more - is that worrying for Australia?
Mr Crean: Yes, but we're not finding that issue coming up in these discussions. It is a broader worry, the fact that countries think they can solve food shortages by restricting their exports, by erecting another barrier, of course that's a worry, but that's why the broader thrust in terms of Doha needs to be driven much more…well, we are driving strongly, but it adds weight to our argument as to why we need to achieve a successful outcome.
Bloomberg: How are FTA negotiations with China progressing?
Mr Crean: It's good, we've had discussion in Beijing a couple of weeks a go, it's back on track, negotiations are taking place in June. We're hopeful of getting a revised tariff offer, either at that meeting or shortly thereafter. We are trying to schedule another couple of meetings this year, but again, there is a strong political commitment to try and conclude an ambitious, comprehensive, mutually beneficial free trade agreement between our two countries. But that was a very constructive and positive meeting as well.
In all of these, yes, we've still got problems. I'm not trying to pretend there aren't issues and differences – there are. But, with this today, as with China, we're confident that by working constructively we can address those problems and sort them out.
Reuters: Going back to Doha, I mean, what do you see the timetable as looking like now, and are you worried about it?
Mr Crean: Well, you see, I think that good progress has been made on a number of things in the last few weeks. It is frustrating because we would like the progress to be sooner, but the fact that we're running into difficulties because we are trying to make progress, is itself a positive sign. It is impacting on the timetable, but we are very conscious of the need to bring this to a conclusion this year, and for that to happen, we have to move into the resolution of the modalities between agriculture and goods by the middle of the year. You can't get an outcome that's ambitious on agriculture, the sort of things that we're talking about – all part of the solution to the food crisis – unless you are also ambitious on goods. It's the complexity of it, it's the interaction of it, because these things can't be dealt with in silos, it's going to all be part of a single undertaking, but the fact that negotiations are proceeding in parallel to try and get to a position in which the modalities can be resolved by the middle of the year… that is occurring, and progress is being made. So I'm encouraged by the progress. We're frustrated that it hasn't been made sooner, but important progress is there and it is absolutely imperative we get an outcome. Not just because of the food crisis, but also because of the global economic uncertainty.
Reuters: Is this May 19th date for the ministerial meeting that's been bandied around is that still realistic?
Mr Crean: Probably… that precise date is not. Probably not. But we are hopeful that a date very soon after that is.
Reuters: I've heard we've got the European championship coming up, so all the hotels are booked.
Mr Crean: We'll pitch tents if we have to…negotiate on the soccer field...but I mean this is the problem with these negotiations, because something can always come up in the calendar of events, so it's hard, and we're not deliberately…there aren't desires, I don't think, to try to keep slipping in the hope that it just slips out of sight. People understand that they have to try to resolve as many of the differences as they can, if there are to be meaningful and effective discussions amongst ministers. That's the task. Progress is being made in narrowing some of those differences, but there are still important areas in which that narrowing can still occur.
Reuters: There have been quite a few developing countries here. Do you get the impression that they are moving or they are (inaudible).
Mr Crean: Well, we didn't have time today to go into a discussion… in terms of the bilaterals that we've had, there is support for the countries, but quite frankly the main purpose of the time here is to get progress on the FTA.
Bloomberg: I'd like to ask about the coal, with the carbon trading, how will that affect Australian trade?
Mr Crean: Well, I mean, we are a big coal producer, big coal exporter. We have recently, with the election of the Rudd Labor government, ratified the Kyoto protocol. We've said, as part of that, that we've got to develop an emissions trading scheme. The timetable for that is progressing. There's still got to be a lot of consultations. There is the international framework that we're also participating in. We're also looking to important measures for clean coal technologies in Australia. So we still see the coal industry being an important energy provider within our country as well as an important export earner, but we understand the pressures that we plus all other countries are under to ameliorate greenhouse emissions. But there is no point in us taking steps alone, if the emissions still occur. It's a global problem, it requires a global solution.
Reuters: Just to go back to the food crisis, I mean the US has announced a large sounding food-aid program and, is that something that you're reviewing for the region of ASEAN?
Mr Crean: We are, and I think last Thursday we announced a commitment of $30 million as part of the contribution. Certainly the Cabinet has approved it and formally it has been announced. So that's the immediate response to the call, but as part of that immediate response, we're also ramping up the effort to say ‘this is why we need a Doha solution'.
Bloomberg: With the higher food prices, are there talks to relax minimum excess requirements, eg, on rice prices with Japan?
Mr Crean: Which requirements are these?
Bloomberg: Japan must import a minimum amount of rice, but now because of the rice prices being too high, there are talks to reduce the requirements…inaudible.
Mr Crean: Well as you know we are going through an FTA with Japan. Japan has clearly signaled to us that one of their sensitive products is rice. It will be interesting to see how this issue evolves, not the least of which is this issue of food security. It has now become a much more prominent issue. It means that countries are going to have to look at how they meet their needs other than through trying to be self-sufficient because a number can't be. But interestingly if ever there's to be the ability to reduce production subsidies for agriculture, it has got to be at the time in which farmers are experiencing record prices. So out of the crisis, if you like, there's a dynamic that is helping drive the direction of a successful outcome in Doha. It needs all the help it can get at the moment. The fact that these issues are driving the search for a successful outcome and a successful conclusion is a good thing.
Reuters: You've had some bilaterals today, did you deal with the US?
Mr Crean: Yes, I've just had a good discussion with the US, and we spoke a lot about Doha but they're having their discussion with ASEAN as well this afternoon.
Reuters: Obviously for you, I imagine that the sensitive issue is agriculture for the US and European Union?
Mr Crean: Yes, well as you know, the key to Doha starts with agricultural market access and what the US and the EU both do is critical to that. But we won't get ambition from them unless there's ambition from developing countries as well. And that's got to be ambition in agriculture and goods, NAMA and services. That's what the framework for the negotiations is about.
I think it's fair to say that both Europe and the US have signaled a preparedness to move, but they're not going to make concessions that don't result in some level of reciprocity. No negotiations will work that way, so this brings you back to the complexity of the negotiations, not only are you dealing across sectors, agriculture, goods and services, but you are dealing with a hundred and fifty one nations, all of whom have got different levels of development.
That's why it's called a development round, and it's a much more complex round than was the Uruguay Round. But the big message out of this is that trade matters, because world trade grows faster than world output. Any country, whatever its level of development, if it is to sustain its economic prosperity, build its economic prosperity, has got to engage with trade.
Part of the difficulty we constantly find is that people in crisis tend to revert to protectionist measures, you know, they just look within. In many senses, convincing them that there is merit, despite the challenges…the challenges to more liberal trade, there are huge opportunities that present themselves in it. That being said, we've also got to recognize that because developed countries have got significantly more complex economies and more opportunities, what's expected of them, there's different levels of commitment from developing countries within the framework of the negotiations.
Bloomberg: Do you have any comment on China and Rio/BHP iron ore prices discussions?
Mr Crean: Leave it to the market. And we've told China that. They wanted market economy status, they've got to accept the market determines the negotiations. No one likes paying higher prices, so China is not unique in that regard, but we've said, that they have to accept that market principles determine it, so they need to negotiate those through. I don't know how those negotiations are going at the moment. We don't seek to intervene in them, we like to be kept up to date with them, but it's up to them, and they'll play their cards pretty close to their chest, I suspect – both sides.
Reuters: (Inaudible) where you are in the biofuel debate, the big thing now in Europe (inaudible)?
Mr Crean: Yes, well that's… I mean, I think that's a very important question in the context of food security interfacing with, you know, environmental solutions. We've been a supporter at home of the development of a biofuels industry. We think that we do have to look for alternate sources of fuel and renewables, but I think we do have to be conscious that if it is having such a dramatic impact, as some suggest, on the price of food, that itself can't be ignored. It does require some further consideration.
ENDS
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