Transcript - E&OE
23 July 2009
Interview: BBC World News with Rico Hizon, Singapore
Topics: Stern Hu, China FTA, APEC and US interest in South East Asia
Mr Hizon: Minister, we really appreciate you talking to us on BBC World News.
Mr Crean: My pleasure.
Mr Hizon: First up, you met with your Chinese counterpart Chen Deming (Minister of Commerce, China) during the APEC meeting. Any discussions, any updates on the Stern Hu case?
Mr Crean: Well the Stern Hu case, of course, was raised with Chen Deming. It had to be. He is not the responsible minister, but I have highlighted the concern that we have about the way this case has been handled, the same points I’ve made before - the consular access, the expedition in terms of dealing with it, the detailing of charges if they are to be laid, the access to lawyers. I’ve also indicated that if in fact the issue isn’t handled appropriately, it could damage our relations.
Mr Hizon: Is it already damaged, the relationship between Australia and China?
Mr Crean: I don’t believe so. And, it certainly didn’t prevent any of the other important other discussions that were involved in the bilateral - the FTA, our common approach in terms of the multilateral agenda of course Doha, but other areas of interest.
Indeed, his point was that they were separate issues. I said that I acknowledged that they were separate issues. I’ve consistently acknowledged they were separate issues, but in the true spirit of the relationship and what I would like to think was a friendship and I’ve got a good personal relationship with Chen Deming, then we did have a pretty frank exchange about it and we did.
Now, he’s undertaken to ensure that my concerns and those of the government are passed on to the foreign affairs office and a response will be communicated back to our foreign affairs minister.
Mr Hizon: Minister, so far there’s been no impact on bilateral relations, but what if it drags on? Could this have an adverse impact?
Mr Crean: Well, let’s hope it doesn’t drag on.
Mr Hizon: Are you giving the Chinese a deadline?
Mr Crean: No, I do not believe that deadlines in these circumstances work with China’s legal system. People that do business in other countries have to understand that that legal system, in the case of China, in many countries, is different from the countries from which they come. So, there’s no point giving deadlines, I think what you’ve got to be is strong in your concerns, and I have been, strong in the suggestion to them, the strong propositions that they need to be clearer in terms of what the allegations are.
And, if those allegations warrant charges being laid through their system then lay them. But, this uncertainty and this having to respond to speculation, I don’t believe that is helpful. What impact this whole exercise will have down the track remains to be seen, but if in fact they are to be treated as separate issues then they should send a very strong signal about expeditiously dealing with it.
Mr Hizon: Has there been any hint of Stern Hu and his colleagues being released without charges?
Mr Crean: There’s been no information given to us either way about further detail of the nature of the allegations or of the process. Now, Minister Chen Deming is not the responsible minister in this area. That we understand. But, it is part of the commercial relationship. And, so therefore the issue was raised, it was raised strongly, and I’m sure the message will be conveyed back. In fact, they’ve indicated that they will convey it back.
Mr Hizon: But, this ongoing friction between Australia and China, what kind of signal does this basically impart to Aussie companies who want to do business in China?
Mr Crean: You mean the friction because of the Hu Stern case?
Mr Hizon: Yes.
Well, as I’ve said, we’re trying to deal with that as strongly as we can because of that concern. But, if you’re asking the question as to whether it’s had any impact on other business? No. On all of the advice we’ve had so far, it has not.
What does it mean in terms of the broader economic relationship? That has not been affected either, because we continue to talk with them both at the national level, about the FTA and multilateral issues, the participation in this APEC meeting for example, we continue to engage at the most senior levels in terms of the provinces etcetera. But, this issue of Hu Stern, is a separate issue, that needs to be addressed.
Mr Hizon: Do you think that the arrest of Hu and his four other colleagues is related to Rio Tinto walking out of its USD 19.5 billion dollar deal with Chinalco?
Mr Crean: I don’t think that, but I don’t know. Until such time as there is further information given it is really hard to speculate on any of the circumstances. Well, actually, it is not hard to speculate. You can speculate as much as you like. It’s hard to give clear answers. I am prepared to give the clear answer if I am in command of the facts. I am not in this case, because those facts have not been forthcoming. They should be and that’s what we have been urging and we will continue to urge it.
Mr Hizon: Have they at least given any hint or insinuation as to when they will give the Australian Government some clear signs of when this will be resolved? It has taken several weeks already and it is still hanging in the air.
Mr Crean: And, that’s the nature of the system. That is the Chinese legal system. And, I think it is a reminder to people that this can happen, because it happens under their system. There is no indication as to when it will be resolved, but there is a very strong statement from me that we want it progressed expeditiously, and the fact is that they have taken that message amongst all the others very strongly on board.
Mr Hizon: What about the Prime Minister? Isn’t he starting to open the channels, starting to put more pressure on the Chinese Government to come up with some definite answers, at least a deadline, to resolve this whole issue? As this whole case is prolonged, then it really hurts relations between both countries?
Mr Crean: All of us are doing that. The Prime Minister, the Foreign Minister, myself, our Embassy, we are all doing that. It is exactly what we are doing every time we engage with them. Now, if you want us to sing from the rafters and go public at every occasion, we won’t do that, because I personally do not think that is the way to resolve it. I think it requires strong, respectful diplomacy on both fronts.
We are dealing with a serious situation. My concern, as is the Prime Minister’s, as is the Foreign Minister’s, is upper most for the welfare of Mr Hu. What we don’t want to do is to jeopardise that. What we want to do is to advance his welfare at the expeditious dealing of his case. We will find our own way to make those representations as vigorously as we need to.
Mr Hizon: Both countries have had a wonderful relationship up until this event. Why do you think the Chinese are playing hard ball?
Mr Crean: We will have to wait and see their explanation for that. Their argument is that there’s been involvement in the access to state secrets. Let’s wait and see the details.
Mr Hizon: Usually under the Chinese Government, the law, charges are expeditiously laid down, very efficiently. It has taken such a long time…
Mr Crean: Well, you obviously have a lot more experience with the Chinese law than I do. This is the first occasion as minister that I have had to deal with it in relation to an Australian citizen. This is the first time, I think, that Stephen Smith Australia’s Foreign Minister has. But, he would always deal with the consular cases.
What I am saying to you is that this is an issue that I have taken this opportunity to raise with the Chinese at a very senior level.
Mr Hizon: Moving now, Minister, to iron ore prices. It’s seems the likes of BHP Billiton and Rio Tinto can’t seem to agree or can’t really meet eye to eye with the Chinese steel manufacturers regarding prices. And now there’s really talk that prices should be now negotiated on a quarterly basis rather than on an annual basis. Which do you favour? Should prices really be negotiated on an annual or should it be now seriously negotiated on a quarterly basis?
Mr Crean: Well, welcome to the market. China wanted to be recognised as a market economy status. It’s got to deal with the market accordingly. Now, as to whether the arrangements are quarterly, annual or spot, it’s a matter for the commercial partners.
It’s not a decision of government, and we’ve consistently said that. We won’t intervene in the commercial activities. We will not intervene in the marketplace in relation to prices. And, we’ve made that clear to the Chinese ever since we’ve been in government, the previous government did too. We’ve vigorously made that point, because it’s really been over the last 12 months that we’ve seen this huge spike in the prices.
So, I think it’s interesting to see that people in the Chinese steel mills are looking at alternate ways to enter contracts. I think that’s a healthy thing. It’s an evolution in terms of the market but leave it to the market to determine.
Mr Hizon: But, in your view, what would be the best interests of the Australian Government and for Australian resources companies: to negotiate it quarterly or annually?
Mr Crean: It’s got nothing to do with us. What is in our interests is ensuring that we continue to be a reliable supplier of a quality product that the fastest growing economy in the world needs.
But, China’s not our only market. I mean, our iron ore is being sold and demanded not just by China, in the current circumstances, and they’re in growth phase, but Japan who is not, Korea who wasn’t and a whole range of countries. Why? Because all of the economies are undertaking important fiscal stimuli, including investment in infrastructure and that is resulting in strong demand, continuing strong demand, in volume terms for a number of our commodities. It’s not at the same price return as we were getting last year but in volume terms, they are still strong.
Mr Hizon: But do you think, Minister, that by negotiating on a quarterly basis, it makes the industry more transparent?
Mr Crean: I think the industry is transparent. It’s the question of when you set the price. Now, you can do that in a number of different ways. You can do it annually. You can do it on a quarterly basis. You can do it on the spot market. Oil is sold on the spot market. Iron ore, interestingly, has had this tradition of the annual contract benchmark prices. Well, it’s what the parties have either gotten used to or continue to favour. If the current circumstances are forcing a rethink, let them rethink it. But the government is not going to tell businesses how they should enter their contract prices. Do you suggest we should?
You asked me the question three times. I can’t answer any more times. I’m interested to know why you keep asking it. I’ve only got one answer and that’s: let the market decide. Isn’t that the appropriate answer? Do you disagree with that? Because if you don’t disagree with that, please accept my answer.
Mr Hizon: So, Minister, Hillary Clinton (US Secretary of State) has said in a number of her speeches that the Obama administration is back in Asia after it was basically snubbed during the Bush administration. What does this mean for Australia and the Asia-Pacific economies?
Mr Crean: Well, I think it’s a very good indication and a very strong statement of reality. I mean Asia is the fastest growing region in the world. It is a significant determinant of both world trade and world product. Asia has to be engaged. This is a decision that Australia understood the fundamental importance of over 20 years ago. It’s why we have focused on it in a significant way. Previous administration in the US has done so too. I think the previous administration didn’t give it enough attention and so the fact that the current one is, I think is a welcome but realistic and obvious decision for them to take.
So, we welcome it. We think it’s important because we’ve been talking at APEC, at which the United States participates. Ron Kirk (United States Trade Representative), my counterpart, had his first meeting of APEC. It was a very constructive engagement both with him and by him. Clearly, there is a signalling there of their intent to take an active role in developing this important organisation – APEC. It exists, it’s unique. It exists and it’s been in place 20 years. The United States was one of the original participants, with us, with Japan, with Singapore for example. It’s an organisation that is a sensible mix, a good mix between developed and developing countries, between donor countries and aid recipients, the fastest growing region in the world. It meets at the leaders’ level annually and importantly, it has a strong business network interacting with it. This is a structure that is worth strengthening and that’s why we continue to pay a lot of attention to it. We in Australia, the United States has, they were very strong participants of this meeting. It’s also true that this was a meeting that was given an important new impetus to try and conclude the Doha round, and when you think that the APEC countries between them are responsible for more than half the world trade, it’s significant statement.
Mr Hizon: And, everyone is keeping their fingers crossed it will indeed be concluded.
Mr Crean: Well we can’t keep our fingers crossed when we have got to work with each other in the meantime.
Mr Hizon: Final question, Minister, about Hillary Clinton saying that the US is back in business in Asia. Will this eventually lead to more balanced trade, more balanced growth and more inter-regional trade?
Mr Crean: Well, we want it to lead to more inter-regional trade. We want it to lead to more open trade and, of course, it has to be in a balanced outcome. All of us understand that. The whole complexity of trade negotiations has got to be finding that balance between openness and recognising the different stages of development. It is one thing to open markets. It is another to ensure that countries are competitive enough to take advantage of it.
Now in the case of developing countries, we’ve got to put more effort into building their capacity to do so. That means investment in skills and innovation, in infrastructure, for example. These are the important determinants of a nation’s competitiveness.
So, when we talk about greater regional integration, we’re not just talking about liberalisation at the border. We are talking about issues behind the border, the investment questions that we talked about earlier, and restrictions on those in certain parts of the region, and, also movement across borders.
What we’ve been talking about here in Singapore, for example, is the importance of getting efficiency, greater efficiency, into the logistics chain, if we are going to encourage greater movement of goods and services, because that’s the growth dynamic. Then we have to concentrate on more than just opening borders to really get the most out of it.
Thank you.
[ENDS]
Media Enquiries: Clinton Porteous 02 6277 7512 or 0403 369 588 - Departmental Media Liaison 02 6261 1555