Transcript
22 July, 2009
CNBC Asia Pacific interview, Shangri-la Hotel, Singapore
Subjects: APEC, ASEAN, Doha, China, Stern Hu, competitiveness.
Interviewer (Amanda Drury): So, first of all Minister thanks very much for joining us here today. Please tell us what you, as Australia, hope to achieve here while here in Singapore.
Minister Crean: It’s the APEC meeting, 21 countries and they meet at the Leaders’ level every year, and importantly they have a strong business connection. So, it’s a unique organisation. It’s the fastest growing region in the world. The APEC economies collectively are responsible for half of the world’s trade. So it’s a significant forum to advance issues of common interest, but also the objective of promoting freer flow in trade and investment and therefore the liberalisation of the markets necessary to accommodate that.
Interviewer: I would imagine on the point of liberalisation, that it is a very difficult thing to do; to open up your markets at a time when everyone is essentially being more protectionist in a time of economic hardship. So how can we work towards, for example, a Doha deal, which just seems so difficult to achieve when there are so many ‘buy local’ campaigns out there, even President Obama saying “Buy America”?
Minister Crean: I think to answer the first part of your question is to demonstrate the importance of trade, and trade is an economic stimulus. When you look at the history of it, world trade has grown over the last 50 years three times faster than world output. Any country – doesn’t matter what stage of development it is in, if it wants to sustain its economic growth going forward – has to engage with trade. And, it’s in everyone’s interests, if they think about it, to open the markets to achieve that.
APEC has been at the forefront of this trade liberalisation agenda. When it was formed 20 years ago – we’re meeting for the 20th anniversary this year in Singapore – it was set up to build upon the last trade round that was negotiated in the WTO – called the Uruguay Round, And, there was an enhancement of that outcome, an enhancement called the Bogor Declaration, a commitment to greater liberalisation within the region. And, of course, the very strong determination of APEC to drive much harder for the achievement of a Doha conclusion is a demonstration of the fact that it hasn’t lost any of the zeal. It gets the argument and it wants to promote it.
The other point that I would make is that last year we concluded with the ASEAN group of countries a free trade agreement between Australia and New Zealand – 600 million people, collectively Australia’s biggest trading partner. And, this was a commitment to further liberalisation within the ASEAN group of nations.
Interviewer: You raise a really good point, because I would imagine that the zeal, the sentiment is there to get a Doha deal done, but essentially all the practicalities and the real political will doesn’t seem to be there. So, do you see therefore bilateral deals as opposed to multilateral deals as being much more realistic?
Minister Crean: No, I don’t. I think that the political will has been re-engaged to conclude the Doha Round. We saw it in Bali last month and again reinforced at the OECD meeting in Paris.
This APEC meeting has injected a new vigour into that political will. In fact, it has taken it further. Instead of just a general commitment to our officials to get it done, it’s been a lot more specific about the work that it wants its officials to focus in on in Geneva to get the differences done.
So there is a clear understanding as to what remains to be done. Bear in mind that when the talks broke down last July, we were 80 per cent of the way there to concluding Doha. The challenge is to get that extra 20 percent. It won’t happen, as you say, without the political will, but this meeting, like the two previous ones that I mentioned, are about reinjecting that political will and we will continue to do it.
Interviewer: Talking of bilateral relations, obviously Australia and China are increasingly synergistic and interdependent, which leads me to the situation of the Rio Tinto detainees in China – a very thorny issue. How do you feel the relationship, trade or diplomatic, has been harmed by this situation between Australia and China?
Minister Crean: I don’t think it has been harmed, but it is an issue that has to be dealt with and China needs to understand that. It needs to be more open with what the reasons are and, in fact, if charges are to be laid, they should be laid.
But, you know, the relationship is robust enough; not just because of the interdependency, but because we have been working at it for a long time. There can be these differences of interpretation or concerns without impacting on the broader relationship.
Interviewer: Do you need to quarantine the Stern Hu issue in favour of protecting Australia’s trade with China?
Minister Crean: No, not at all. I am saying that we can walk and chew gum. I don’t understand why you would think that one is going to have so much impact on the other that everything stops until one is settled. I don’t.
I do believe that the Hu Stern issue does have to be addressed. It is a consular issue case. It is an Australian citizen arrested in a foreign country. We have to deal with those every day of the week, in every country in the world. That is what we have a series of diplomatic posts around the world for.
It also means understanding the law in the country in which the people are operating, and it also means trying to get a better understanding of the processing of that law.
They are the issues that are problematic at the moment, but they can be addressed. They can be addressed with good will and persistence. But why does that mean that you should stop the other important part of the relationship, which is furthering the economic relationship?
Last week, in the middle of all this I was in China. I was visiting two important regions, Anhui and Hubei provinces. Between them: 125 million people. There is huge development going on there, huge opportunity at the commercial level for more opportunity. There was no denial of access, no halting in terms of what our agenda was because of this issue. There was preparedness to move on and secure the outcomes.
Interviewer: So you do not believe that is not going to undermine the commodities growth story for Australia in the broader economy?
Minister Crean: Our commodities growth story, of course, is going to be a function of world demand. And, China is one of the leading countries in that world demand. Part of the reasons for the high prices that it thinks it is paying, is supply and demand. It is as simple as that.
Interviewer: And, what is your sense on Chinese demand? One of the things that BHP said this week, they said that there is a possibility that China’s restocking of commodities may have come to an end, which doesn’t fare well for Australian commodities
Minister Crean: Well, that depends. They are assessments that those in the commercial world have to make. Those resource companies are better placed than anyone else, better placed than governments, to make those assessments. But it hasn’t stopped them supplying in large numbers. In fact Australia’s exports in volume terms have increased partly due to that.
It is not just China. Think about it. A lot of these countries, particularly in Asia, are investing heavily in fiscal stimulus packages. A lot of that is going into infrastructure. A lot of that means steel, therefore it means iron ore, it means gas, it means coal. These are all things that Australia has a comparative advantage in. It’s not just the fact that we’ve got large supplies, but we can extract it efficiently, it is a high quality and it is closer to the market.
Now these are the things that are part of Australia’s comparative advantage. The other, of course, is the leading edge technology, and the other dimension to the mining sector isn’t just the transport of commodities. It is understanding that we can and want to make investments in other countries, and that the value added end of the mining sector, the services sector, and investment are important foci for our trade relationship.
Interviewer: Talking of the competitive advantages of Australia’s commodities exports, well any exports for that matter, are you concerned about the recent strength of the Australian dollar? I know it’s not at the record high it was say this time a year ago, but it has moved considerably much higher since the beginning of the year.
Minister Crean: Well, that’s true, but so what? I mean that is the decision that we collectively took 20 years ago. You need to understand why Australia is better positioned than any other developed country in the world. It has got a lot to do with the fiscal stimulus packages that the Rudd Government has introduced, because they are focussed on consumption on the one hand, which is a big portion of our economy, and investment: investment in the drivers of economic growth, in skills and infrastructure and innovation.
But the other factor in terms of why we are better cushioned than other countries is because we undertook the big structural reforms 20 years ago, to make ourselves more competitive. Part of that was the floating of the Australian Dollar, so that we didn’t have governments having to always step in when difficulties happen. People had to understand the market and engage with it. That is what happened.
Interviewer: So you are not concerned...?
Minister Crean: I’m not concerned because I can’t change it. The government is not going to introduce any change of policy that would seek to change it. Now the way to deal with it is to try to continue to drive that competitive edge, but to also understand that the reason the dollar value increases is fundamentally linked to what’s happening with commodities. And, in relative terms commodities are still in strong demand. So it cuts both ways. It might make manufacturers less competitive than it does with a higher dollar than a lower dollar, but the high commodity prices also improve the nation’s income.
Interviewer: Minister, I do need to press you with some of the issues with regards to the arrest of Stern Hu, because you were mentioning a moment ago that the issue needs to be addressed. The problem is that there are critics, mainly from the opposition, that believe the Prime Minister has not been addressing this issue hard enough. Do you think the government has done enough to help Stern Hu?
Minister Crean: The critics are wrong. He has. The government is making the strongest representations. Beijing is in no doubt about the strength of our concern for Mr Hu’s wellbeing, for the fact that he should have regular consular access and access to his family and he should have legal representation and that charges, if they are to be laid, should be expeditiously processed. We also believe, and we have also said to the Chinese Government, that they should not just deal with it expeditiously they should be more open about what the nature of the charges are. There is no doubt about the strength with which we have put that case.
Interviewer: If indeed Mr Hu and the others have in inverted commas ‘stolen’ state secrets, which of course is the charge being laid here...
Minister Crean: No charge has been laid yet.
Interviewer: Yes, but the allegations are, according to the Chinese, that he stole state secrets, and perhaps by Chinese definition, who knows, we’ll have to just wait and see. But if he has stolen state secrets by Chinese law and there is a due legal process as the Chinese say there will be and he is charged, what can Australia do?
Minister Crean: I think the truth is Mr Hu would like to know and so would we, and that’s what we are calling for. We are calling for greater information being made available and if charges are to be made, to lay them. But it is very difficult, and I won’t be drawn into responding to speculation. That would be the stupidest thing to do. That is why the Opposition is being so far off the wall.
The truth of it is that those in senior positions in the previous government would be handling this issue exactly the same way if they were being honest.
Interviewer: Are you concerned that it might deter foreign companies from operating in China?
Minister Crean: Well, I think that is a judgement that the foreign companies themselves have to make, but I must say that in the midst of all of this there has been no withdrawal as far as we are concerned, or aware, of any foreign companies’ nationals from their businesses.
Thank you.
[ENDS]
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