31 March 2009, Peninsula Hotel, Beijing
Press Conference - Beijing
SIMON CREAN: As you know, I was up here to try and reenergise the direction of the free trade talks, which I’ve referred to back home as recently having got bogged down. It was clear to us that without further engagement at the political level, proceeding on the basis of officials’ discussions wasn’t going to really advance the cause, and what we needed was a political assessment as to how we discharged the mandate that the leadership of both countries had given us to lift the level of engagement and to see the FTA as being an important component of that level of engagement. The discussions have been very productive, very detailed. We have met not just with Minister Chen Deming. I’ve met also with the Ministers and/or Chairmen of the regulatory ministries or agencies responsible in the areas that we are seeking priority in the services sector, so with education, the finance sector, obviously with the NDRC, with the Justice Department and with, obviously, the Minister for Agriculture – where we’ve just come from. I think it’s fair to say as a result of the meetings that we had last night with Minister Chen Deming, which went for close to four hours, we now have a much clearer understanding with China as to what’s needed to conclude a comprehensive FTA. There will be no deal without agriculture. There’s no deal without outcomes on services and investment, and there’s no deal without outcomes on goods. There is, as I say, not just a better understanding and acceptance of those parameters, but a desire to progress further discussions and to do that as expeditiously as we can. Neither of us have sought to define the timeline for it, and I think I’ve said to you on previous occasions we don’t believe in setting a timeline.
So far we’ve had thirteen rounds of negotiations. I’d just point out that it took New Zealand fifteen rounds and they are a less diversified economy than us. And we’ve clearly said that we need outcomes in the services area, not just on agriculture. I’m not pretending that this is going to be an easy path forward. It won’t be, but I do think that the dialogue at ministerial level was essential to generate the way forward. And both of us are going to be reporting back to our respective leaderships so that in their bilateral discussions, they can get and discuss in a proper and informed sense the state of progress and opportunity.
It was interesting that the Chairman of the regulatory body for the financial services sector accepts that financial services have to be an outcome of the FTA. It’s also interesting to note that in the education services area, there’s a willingness to engage going forward. And there was acceptance today by Minister Sun, the Agriculture Minister, that we do need to conclude an FTA and that that needs to be done as expeditiously as possible. We had a lengthy discussion about the importance of agriculture in that, and you’re probably aware that Tony Burke is coming here next month, and so there’ll be further dialogue at that level.
It’s also fair to report that in the context of the FTA discussions, there was mention of the foreign investment matters in Australia. Specifically, the Chinalco and the OzMinerals detail. And I think it was clear – and I haven’t yet met with the NDRC, I’ll be doing that later today – but in the discussions with Minister Chen, I think two things are important to report from that. One, he did accept the right of Australia to make these decisions, having regard to the national interest. What he wanted was clarification that we weren’t seeking to connect the decisions in relation to those case-by-case matters with concluding an FTA. As I’ve said back in Australia, on the record, and repeated categorically to them, we are making no such connection. The requirement by the Treasurer to consider these applications, having regard to the national interest, will continue to be made by him. What we have said is given now the importance of investment as a new paradigm, a significant new paradigm in the relationship between our two countries – quite apart from the case-by-case considerations, it is important to look at a new framework for investment within the FTA. And that we see as a very important part of progress going forward.
In the more immediate sense, as part of progressing the FTA, we have a number of commercial outcomes on the table that we have asked them to consider. And that has to be part, of course, of going forward if we’re to conclude an FTA and establish the framework going forward.
So, that’s where we are. We’ve undertaken to keep in touch. I think it was a very good meeting, in fact all the meetings have been good. But, I think a particularly good meeting with Minister Chen. We’re determined to try and conclude it – I certainly am, he is, we want to do that because we believe it’s important. But we also have impressed with the other interlocutors, certainly I have, the requirement for us to discharge the mandate that leaders have given us.
JOURNALIST: Mr Crean, could you have done without the atmospherics of the OzMinerals [inaudible]?
CREAN: No, I don’t think it affected the atmospherics at all, John, honestly. I made the point that this was a decision taken by the Treasurer because of the location of Prominent Hill, which was an essential part of this proposal in a defence testing area. We have said that, obviously, as I understand it, consideration will be given to a restructured proposal. The specifics of that was not raised per se – as I say, Minister Chen fully accepts the fact that Australia reserves the right to determine these applications, having regard to the national interest. What he did seek assurance on was that we weren’t linking it to an outcome on the FTA, and I have assured him in that regard and he accepts that assurance, because that is the position that we’ve consistently stated. It’s a view of the Cabinet, it’s been expressed by the Prime Minister, the Treasurer and myself. So, it was a good opportunity to clear the air in that regard, and I think it was important for providing the basis on which we could frame the rest of the discussion.
JOURNALIST: There were no questions about whether it was discriminatory towards China, whether other countries would have had..?
CREAN: No, because we’ve made it absolutely clear that we welcome foreign investment. There are guidelines in place that apply to investments in the national interest test, regardless of the source of the investment. The Chinese accept our ability to determine outcomes having regard to the national interest. What we have said though is, and I’ve made this point consistently, that the investment issue isn’t just a one way street from China to Australia. There are clearly investment issues that Australian companies want us to address in the context of a new framework, as well as commercial outcomes going forward. Investment is a two way street. There is a significant stock of Australian investment in China. We need to understand that the new form of trade is heavily built around investment in situ, not just transporting goods. We’ve made a point consistently since we’ve been in office that as much as agriculture, and non-agricultural market access, the goods market, is important in trade terms, we’re going to give greater emphasis to services and investment. We think that the nature of the relationship, the economic relationship, between Australia and China, and the interdependency of it, is increasingly going to create this issue of investment demands, country to country. We need to develop a better framework for accommodating that. And that can usefully be done, if we’re of a mind to do it, through the FTA.
JOURNALIST: Would that include direct investment, more direct investment by Australian companies in China?
CREAN: Yes, that’s exactly what it means.
JOURNALIST: What was the response of the Chinese Ministers to that?
CREAN: They accept that not only is there investment by Australian companies into China – they welcome it. Now, the fact is that there are non-tariff barriers, we argue, mitigating against expansion of that investment. We have a number of companies already established here that want to expand their field of endeavour, most significantly the financial services sector and the education services sector, the legal profession, for example. So these are all areas that we have previously put on the table for consideration. I think what has emerged, particularly in the last six months, is the significant new interest by China in investing in Australia, instanced by the specific proposals that we have sought to identify through the FTA, the importance of the commercial outcomes that we’ve outlined – but to argue, if investment is going to become increasingly important, let’s have a new framework through which we deal with it.
JOURNALIST: Mr Crean, was the issue of a level playing field for investment part of the FTA discussions? In that context, the Chinalco financing was announced this morning, and [inaudible] 21 billion is funded by Chinese state-owned banks, at quite a cheap rate, 90 basis points [inaudible] when companies like Telstra and Woodside are paying two to three hundred basis points above. Would that be an issue – level playing field?
CREAN: I’m not aware of the issue, that’s the first I’ve heard of that. Obviously the Chinalco deal is before the Treasurer and the Foreign Investment Review Board. Its outcome will be determined having regard to the national interest, and that is the Treasurer’s call. I think that what we’ve indicated is that we want a framework that is facilitative of improved investment flows between our two countries, and a framework for going forward on that. We didn’t go to the details of the specific proposals for the FIRB, that’s not my task.
JOURNALIST: But [inaudible] will a level playing field be part of the…?
CREAN: Well, that’s the whole purpose of trade negotiations, Colleen, isn’t it? To try and get a position in which you establish improved market access and address the non-tariff barriers. Now all sorts of countries provide all sorts of incentives one way or the other. The key question is – are they WTO compliant? The whole purpose of trying to get the new round up, the Doha Round up, is to get a new set of disciplines that strengthen the compliance, strengthen the test, strengthen the basis upon which we not just open the markets but we do level the playing field. And provide for trade and activity based on efficiency and competitiveness, not protectionism.
JOURNALIST: Minister, the Doha looks pretty dead at the moment. Is this now your main focus in terms of the best deal Australia can get in its trading relationships?
CREAN: I don’t believe Doha is dead, and I will fight every inch of the way to ensure we get Doha up. That’s why before I came here I visited the United States and the new Secretary, the Ambassador for the USTR, Ron Kirk – first opportunity we’ve had to meet since he was confirmed. I think that what is significant about this G20 meeting taking place in London is the commitment, amongst all of the other complex issues that are there, to do two things – one is to continue to conclude the round and secondly, to avoid the spread of protectionism. Now why is it important to conclude the round, Michael? It’s for the very reason that trade is a stimulus – there’s no point in putting all of this coordinated effort into fiscal stimulus packages to generate economic activity if you’re not going to work on the multiplier.
If you look at what’s happened to trade flows around the world, trade has not been a cause of the global financial crisis, but it has been heavily impacted by it. And whilst trade has been a victim of the crisis, it can also be an important part of the solution. That’s why we can’t give up on Doha. Part of the difficulty as to why Doha hasn’t progressed in the last couple of months is because of the transition in the United States, and the need for the new administration to take stock in terms of where we are. It was the purpose of the discussions last week to help, as constructively as we can, in that process. Now, so I’m saying to you, I haven’t given up on Doha, I don’t’ know how anyone who’s ever listened to me constantly would come to that view. But is this the replacement for Doha? No, it’s not. This is an important platform moving forward from Doha, and I think it does reflect the significance of the economic relationship between our two economies. I mean, at the moment, China currently is the second largest trading partner for Australia, it has over the last couple of years been the largest trading partner. I think it is increasingly going to become important. It has to be important in a comprehensive way. And the previous Government, we think, having initiated the process - late in the piece I might add, and didn’t really engage until three or four years ago - conceded market economy status and then forgot about it. Well, look at what we’ve done – within three months of coming to office, the Prime Minister reactivated the commitment to conclude the FTA with his counterparts. I’ve been up here now four times since then, to seek to move this forward. We’ve always said that, whilst the primacy of trade negotiations has to be at the multilateral level, we’re going to continue to push both regional agreements and bilateral agreements that are reinforcing of multilateralism. And that’s what we’re doing. We’re fighting and pursuing on a number of fronts.
JOURNALIST: Do you think that, are your Chinese counterparts aware of some sort of bubbling, anti-China sort of discourse in Australian public life at the moment? Or do they know that that’s just the cut and thrust of Australian politics and there’s really nothing in it?
CREAN: Well, I think it’s important to understand why China is significant for Australia’s future. I’ve made the point that it’s our second largest trading partner and at any time forward it could be our largest trading partner. That can’t be ignored. And anyone who thinks there’s something wrong in engaging in the most active way possible, and creating all sorts of avenues and openings, given the nature of the system here, to try and advance that interest – anyone who thinks there’s something wrong with that needs their head read, and shouldn’t be in public life or advocating a secure future for our nation. Now, I make no qualms about the relationships that we’ve had with the Chinese Government – from Opposition or into Government, this is an important trading partner. We’ve built strong relationships over the years – there’s respect there. But it’s a tough market to crack. It’s a tough environment to negotiate, particularly given the global financial crisis and the impact that that’s had on unemployment in this country. We’ve got to be sensitive to their sensitivities, but we’ve still got to move forward. My argument has consistently been, only through getting to know them better do we understand the nature of their sensitivities. But we can also be creative in finding solutions through them.
JOURNALIST: Do you think your Chinese counterparts are aware of these discussions going on in Australia at the moment?
CREAN: I think they get briefings from home, I think they read the press, but we’ve got to be confident about the nature of the relationship, not fear it. And people who whip up xenophobic feelings do not serve the country well. Now, at no stage have we been handmaidens to the Chinese. It’s been a constructive dialogue, both in Opposition and in Government, and that’s the way we’ll continue to conduct it. We need to have belief in our own capacity, we need to have understanding of the importance and of the interdependency of the two economies, and we need to forge a stronger, more mature relationship that’s reflective of it and secures the respective futures going forward.
JOURNALIST: So no harming of this current round of discussions for example?
CREAN: No, none at all. Now, I’m not pretending that the discussions themselves, that they’re going to be easy to conclude. There’s still a lot of hard bargaining forward. But none of the coverage, none of the dialogue that we’ve had, has been reflected as a setback to what we’re trying to achieve.
JOURNALIST: Mr Crean, I’m wondering if you had the Prime Minister in mind when you said that we’ve got to be confident about the relationship rather than fearful of it, given that he didn’t disclose that [inaudible] Zhou Yongkang, the security chief - although he allowed CCTV cameras in – same with Li Changchun, the propaganda chief, and last night we hear in Britain he went out of his way not to sit next to Ambassador Fu Ying – he looked quite uncomfortable when he did so.
CREAN: The Prime Minister, as I understand it, has met over two hundred foreign visiting dignitaries, in the time that he’s been there. What are we supposed to do, what’s he supposed to do, give a running commentary of everyone that he meets with? Let’s get real about this. I mean, we’ve never tried to hide anything in terms of our relationship with China or engagement with them. We’ve not done it with any other country, we wouldn’t do it with our potentially largest trading partner. It needs to be a mature relationship, it needs to understand the sensitivities at their end – we’ve consistently said that. Now we need to move forward in a positive and constructive way. I’ve got no doubt that that’s the basis on which, not only does the Prime Minister do it, but everyone within our Government will do it.
JOURNALIST: So, do you think that the Government would have kept the visits by the American Defence Secretary secret in the same way?
CREAN: Well, it wasn’t secret – it was splashed over just about every damn paper. I met with…
JOURNALIST: Only after Xinhua reported it though.
CREAN: Well, I mean, what’s the point here? I think the point that’s being made is that we tried to keep it secret. How do you keep something like that secret? And what does it matter if you’ve met, if it’s about developing a constructive relationship. Now why did I meet him? Because he is responsible for communications. We have an interest in getting the landing rights for the Australia Network service, which my department funds. But it was also a great opportunity, given the seniority within the Government, to also reinforce the important issues that we needed to get on the table as far as the FTA is concerned.
JOURNALIST: Did you meet Zhou Yongkang, in October last year?
CREAN: No.
JOURNALIST: Getting back to the FTA for a minute, can I just clarify the central point of this meeting in a way was to push forward the negotiations, but also you wanted to make the point that investment’s now a much more important issue between Australia and China and therefore we need a proper framework within the FTA?
CREAN: Yes.
JOURNALIST: It’s not a new initiative but you’re pushing this initiative in the visit, is this a central part of the visit?
CREAN: No it’s an important part of the visit because it’s part of the comprehensive FTA, Colleen. I must say, this is not the only economy, or the only context in which we’re pushing this point of view. I’ve been speaking about this literally from day one as Trade Minister. The nature of trade has changed, it isn’t just about producing and shipping goods anymore. Lots of companies are located in countries basically for two fundamental reasons – it either gives them better access to the domestic market, and what we get is the repatriation of profit and a global branding identity, and I think a classic case in point is a company like Billabong versus Pacific Brands. So that’s access to the domestic market and playing to your comparative advantage. The other is the need to locate there to take advantage of global supply chains, that’s where the global economy is going. That’s why we have to create the environment that’s far more facilitative of investment flows. That’s why in trade policy terms it’s not just tariff barriers that we have to deal with, we fundamentally have to understand the non-tariff barrier agenda and develop strategies to overcome it. And increasingly we’re finding, in Asia – not just China, but in developing countries – these are key issues around which we’ve got to focus. We put investment into the equation in terms of the ASEAN Free Trade Agreement. A Free Trade Agreement which we’ve negotiated on a comprehensive basis with ten countries, all at different stages of economic development. ASEAN, by the way, is collectively our biggest trading partner – it’s bigger again than our two-way trading relationship with China. So why are we doing it? We’re doing it because we have a better understanding as to where the trade opportunities and the economic development opportunities and the pursuit of Australia’s comparative advantage can position itself a hell of a lot better.
JOURNALIST: Can I ask a question about whether you got any insights from your counterparts about the latest on the Chinese economy – from Mr Liu or Mr Chen?
CREAN: Yes, we had very good discussions about that too, I mean, we didn’t just talk about the FTA, we talked about the G20 and the Doha which I’ve already touched on, but also a stocktake in terms of where the economic future here is concerned. They were very interested in reinforcing the strength of their banking system, reinforcing the fact that their stimulus package is having important impact, especially with regional development, regional economic opportunity. In previous discussions we’ve understood the importance of building the infrastructure. I’ve visited Guangzhou – the importance there of infrastructure, the port development facilities, the future direction in terms of its energy policy, and the future construction that’s in offing. They are of the view that their objective in terms of securing that eight percent growth can be achieved, and we see a lot of complementarity in the two economies in that we, better than most, are more effectively cushioned. What we’ve said, though, is that recognising those factors ought to be an added reinforcement for as to why we’ve got to better reflect the nature of the relationship going forward and reinforce the importance of trying to conclude this FTA sooner rather than later.
JOURNALIST: What’s the biggest bottleneck for the next round of FTA talks? [Inaudible] is it agriculture?
CREAN: I think there are issues on all those fronts. I’ve said we’ve got no deal without something on agriculture, without it on goods, without it on the services sector, and, importantly, it’s necessary to look at it sensibly and constructively on the investment front. That’s what a comprehensive FTA is about. And I think as a result of this visit that there’s a much clearer understanding of what it is we have to finalise to get an FTA and to discharge the mandate that’s been given us.
[ENDS]
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