Transcript
5 June 2009
Media Briefing: Parliament House Canberra
Subjects: Cairns Group Meeting in Bali: Doha round of trade talks; Chinalco, BHP and Rio Tinto negotiations
SIMON CREAN: Well, I'm going to Bali tomorrow for a meeting of the Cairns Group, which I'll be chairing along with Mari Pangestu, my ministerial counterpart from Indonesia.
It's an important meeting because it will be the first opportunity at an informal level to discuss with the new US trade representative and the new Indian Commerce and Trade Minister how we can progress the objective that all counties' leaderships have given us to conclude the Doha round.
It's obviously important to conclude the Doha round. It's been elevated as one of the key planks of the G20 mandate, if you like, to deal with the global financial crisis.
Two important reasons. One is that trade is a stimulus, and if we're to generate stronger economic development, trade has to be part of the equation, and liberalising markets is a key component in achieving that.
Secondly, of course, is that the new disciplines in a rules-based system are going to be a much more effective constraint on any of the moves to protectionism.
The Cairns Group has been actively pursuing liberalisation and greater ambition on agricultural market reform. Australia has been in the chair for many years and it has been a key contributor to urging progress in the Doha round.
This will the first of a number of opportunities that present themselves going forward, in which we can engage the political will which in my view is essential to conclude the Doha round.
We need to run a parallel-track approach in terms of concluding Doha. One is to continue to give instruction to our senior officials to get greater transparency, greater clarity as to what that which is on the table actually means and how it translates in terms of true liberalisation, and understanding what that means.
The second track - and so that's at the technical level, we still have to resolve the issues of the safeguards measure and we have to resolve issues on the NAMA front associated with sectoral activities and what the implications of that are for market access.
But parallel to the technical level, and it will only progress at the technical level if at the same time the political will keeps driving ambition. This will be the first opportunity to collectively engage, to see where that political will is and how far forward we can drive it.
I'm looking forward to this meeting. It will be followed up soon afterwards by a meeting on the margins of the OECD later this month.
So, we hope we can get some momentum going forward out of this meeting in Bali, and I'm looking forward very much to co-chairing it with Mari.
QUESTION: Minister, will you be continuing to be the Trade Minister or is there a chance of you becoming the Defence Minister?
SIMON CREAN: I am going to Bali tomorrow as the Trade Minister. I'm going to Paris a couple of weeks later as the Trade Minister.
QUESTION: Are you interested in the Defence Minister's job?
SIMON CREAN: I am interested in getting a conclusion to the Doha round. I am interested in concluding the free trade agreement with Korea, with China, with all the other ones, to seeing what the opportunities are in terms of the Trans-Pacific Partnership.
This is a huge agenda and, as the national accounts figures have significantly demonstrated, getting the trade equation right is going to be important to economic growth going forward.
And so the more we can liberalise the markets, as well as undertake the structural reforms at home, the things here that are going to improve our productivity by investing in infrastructure, in skills, in innovation, the meeting that I'm participating in today with the Prime Minister and other ministerial colleagues, the Science Council, how we - the Science and Engineering Council - how we can drive innovation and productivity to improve our competiveness, amongst other things, these are all challenging agendas, exciting agendas.
We're making some progress but we need determination and drive to conclude them.
QUESTION: The Chinalco-Rio [indistinct]. What are your thoughts on that, and it gets the Government out of a tricky political decision, doesn't it?
SIMON CREAN: Well, I still haven't seen the full details. I've seen the announcement of the joint arrangement between Rio and BHP but not the full details of that. I've seen newspaper reports as to what Chinalco does. So I can't really comment without knowing the full facts.
But I do make the point that this was a decision that had to be considered, like so many others, in a one-off context against the national interest test and the Foreign Investment Review Board guidelines.
And so it had to be considered in that context, and if there's no proposal to consider, it becomes a question of what the commercial arrangements are and what drives it.
But on the broader front, it has given a spotlight to the importance of investing in our future, and how we undertake that which is going to secure our economic future.
Investment and foreign investment is going to be a key component of that, and that's why we have been so active in all of the trade negotiations, in not just seeking to deal with market liberalisation and market access questions for goods, but also for services and investment. And we will continue to do that. It is important to our future.
QUESTION: [Indistinct] fallen over, does that have any implications for the China-Australia free trade negotiations?
SIMON CREAN: No. No, I've said before and I'll repeat again, that in all of the discussions that I have had with China on the FTA, the Chinalco deal was not linked to the FTA by us or by the Chinese.
The Chinalco deal had to meet the tests if it was still going forward. If it's not going forward, the FIRB doesn't have to make a decision.
But from the point of view of the Free Trade Agreement, given the importance of investment between the two economies, my firm belief is it's important to get a framework going forward that better clarifies the investment relations.
QUESTION: It must be a bit of a relief for the government though because even though [indistinct] going to make that decision, inevitably it was going to be politically tricky with China, wasn't it?
SIMON CREAN: No, I think that provided the national interest tests are - and the discussion of the national interest issues are understood and engaged - understood by the parties seeking the approval, and the FIRB in their deliberations, I don't think - whatever the outcome was, I don't think it would have been tricky.
I think that the explanation would have stood on the justification or the merits of the case. I think that what was needed was, because of the complexity of this deal - and it's not just iron ore, it's aluminium, bauxite - and it was complicated by the fact that the shareholders had issues.
Now you can make your own judgements as to why the decisions - what led to the decisions that are announced today, I still haven't seen the full details of them, but this wasn't just an issue that involved the Foreign Investment Review Board or the Government.
QUESTION: Is there a competition issue though if you have closer links between the two by far largest providers of iron ore out of WA, working together but China's - one of the reasons Chinalco made its initial move was because of that concern.
SIMON CREAN: Yeah, there could well be the competition issues, and that would be a matter here for the ACCC.
Again, I have not seen the details of the announcement between Rio and BHP. But remember, the ACCC had approved the previous proposals for the merger - or the merger proposal that - the proposal to acquire Rio by BHP.
Now I don't know how much the new arrangement differs from what that arrangement contained, that's a judgment that others will no doubt assess, but it needs to - it needs to get the ACCC proposal.
But on the face of it I couldn't see, given that it was approved previously, there'd have to be a compelling argument as to why this wouldn't be by the ACCC.
QUESTION: There are concerns within the WA State Government, particularly about royalty payments and how they can be royalty payments and how they can be drained down if these - if the two countries work too closely on price negotiations.
SIMON CREAN: Well then…
QUESTION: [Inaudible question]
SIMON CREAN: Yeah, well then that's - they're considerations if they do go to competition. If in fact there are efficiencies that result in greater productive expansion, I would have thought by the definition of the royalty payments they'd get more.
QUESTION: Would potentially be a boom for Australian exports in the sense that it strengthens the negotiating position of Australian iron ore exporters?
SIMON CREAN: Well that's a matter for commercial judgements. I think the last few years have shown that what determines the strength of the negotiating position is the fundamentals of supply and demand.
That's why we had the huge spike last year and whilst the trade figures of yesterday showed a big drop in exports by value and bear in mind yesterday's figures were only value figures and even the balance of payments figures the day before, which people were seeking to contrast, showed in value terms that exports over the quarter had come down.
Where they've gone up is in volume. And that's because there is still demand for our resources and not just from economies in growth. Sure, China's having an impact, but there's been huge increase in demand from both Japan and Korea, for example, for our iron ore.
And why is that? Because those economies, just like us, are being urged to invest to get economic activity going at home and a lot of that investment is in infrastructure and that infrastructure requires a lot of resources.
QUESTION: Don't you think - wouldn't you say though with the Rio-Chinalco proposal that it poses a problem on the economic front and the diplomatic front, if it was rejected. And then if it was approved, a challenge on the domestic front to voters who have already voiced anger over such…
SIMON CREAN: But see these are hypotheticals. I can only deal with the facts. I believe we can make the argument as to why Chinese investment is good for this country if that investment is expanding our productive activity, if that investment is enabling us to better capitalise on our comparative advantage.
That's been the history of this country. Our development, our strength, our sustained economic capacity has been fundamentally because we've been open to foreign investment.
I think what's changed in the last few years is the extent to which Australia is now much more confident not only about attracting foreign investment, but being itself a stronger foreign investor.
Why? Because it understands that it's got to get closer to bigger domestic markets, or because it's got to participate in global supply chains.
I think this is the real manifestation of confidence that Australia has in its own future, an understanding as to what its comparative advantage is, an understanding that its resources and its agriculture sector aren't just about commodities. They are about the services dimension as well of those two great comparative advantage sectors.
Our ability to take our expertise in resource development and sell it to the rest of the world, our ability to use the technology that makes us amongst the most efficient producers in the world, and either sell the technology or go into joint ventures into other countries to develop their resources.
The same is true of agriculture. Look at the challenge of climate change and food production. Look at the circumstances of the last few years where food shortages were occurring and the huge spikes in food prices.
What are all countries looking for? They're looking for sustainability in their food produce. How do you get that? By improving the productive base, not just by exporting the commodity.
Sure, we've got to open the markets and try and get the freer flow of goods. But a much bigger component, or as equally significant a component perhaps is how do we improve the productive capacity of the globe to meet the challenges.
And that's where Australia can really position itself and they're the services dimension of what the quarry and the farm is. But it's modernising, it's taking to the world our comparative strength in a new form.
So this whole question of investment I believe we can explain to the Australian public. It is in our interest. It is what is going to secure our economic future.
But if we're prepared to be more open and accepting of investment for the purposes of expanding our productive capacity, it's got to be a two-way street. And the convincing argument, the argument that we have to articulate more effectively to those countries is why our investment is important to their economic future.
QUESTION: You seem to be having trouble explaining part of this to the ACTU this week. It's a procurement proposal that came out yesterday. What do you say to the - what is demonstrably a protectionist angle taken by the union?
SIMON CREAN: I must say I've not seen the final words from the ACTU congress. Matter of fact, I hadn't seen them. I was looking yesterday in the papers. Is it out today is it?
QUESTION: Oh they sent out something yesterday on the [indistinct].
SIMON CREAN: See I don't - let's understand…
QUESTION: …you to [indistinct] program.
SIMON CREAN: - well I don't have a problem with Buy Australia as a promotional and as an awareness issue. People given knowledge about where things are, who want to make the choice to buy Australian, and where particularly where Australian is competitive, why wouldn't you? Either out of pride or because it's the competitive thing.
What I object to is the mandating exercise because that's protectionism. And there is no way I'm going to cop an outcome that says we mandate when we've just attacked the US for that very thing. We can't be hypocrites and I don't care who says it. We will not be hypocrites.
So let me have a look at the resolution, but buy Australia and promoting Australia's strengths, that's what I want to do because I think we have got great strengths.
But I think the big challenge for Australia is to get a business brand identity. Why is this a good place to invest it? Why is it a good place to do business with? Why are the people good to engage with? Why is it a better place to live and develop business and undertake investment? That's what we've got to sell a lot better.
QUESTION: How hard are you going to go [indistinct] in Bali on this protectionist issue, given what the Americans have just done in a deal?
SIMON CREAN: I think we'll go hard on the protectionism stuff. We have gone hard and you know, we won't pull back. That's not the issue.
QUESTION: What will you say?
SIMON CREAN: Well what we've said publicly. I mean basically this is what we warned them would happen, why they had to join with us in criticising the EU, that they shouldn't join in the retaliatory action. But it's happened.
What we've got to do is to try and develop the outcome that prevents it happening. And the most effective way to do that is to conclude Doha.
QUESTION: Just on Doha…
SIMON CREAN: But I think the more important thing in terms of the discussion with Ron Kirk obviously is to try and find the way forward, to engage constructively as to how we implement what his president has signed up to.
QUESTION: [Inaudible question]
SIMON CREAN: India and…
QUESTION: The US.
SIMON CREAN: Yeah, well I've had good discussions with Ron Kirk on a number of occasions now and obviously the opportunity in Bali presents again for a face to face meeting. The face to face meetings are always the important ones.
I've had a telephone conversation with the new Indian trade minister. It was a very constructive discussion. He's looking forward to coming to Cairns. I'm delighted - to the Cairns Group meeting - I'm delighted that he has accepted our invitation so soon after him having been sworn in. I think - I take that as a positive sign.
But you know, that's not to say we haven't got difficulties to resolve going forward. We still have to address those issues with India, with China, with all of our - all of the participants in the WTO.
But I think what is significant is the chairing of this meeting in Indonesia. I think it is a very bold, courageous and determined call on the part of the Indonesians to host it. It's - they're in the middle of elections, they chair the G33 group within the WTO which is the group of developing countries.
So I think it's a strong signal that through their leadership they want to see a conclusion. But I come back to this point, Tracey: we can carry all the resolutions we like saying that there should be a conclusion. We won't get it unless the political will is driven.
What's the purpose of these meetings? To try and use them constantly and as many times as we can going forward, to develop that political will, that commitment, that direction to our senior officials to try and resolve the sticking points.
QUESTION: [Inaudible question]
SIMON CREAN: Well [laughs]. Good try in terms of coming with the hypotheticals. You should - it is a very hypothetical question now.
QUESTION: That's not a hypothetical though, is there…
SIMON CREAN: It is.
ENDS
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