Transcript - Ministerial Statement
16 October 2009 (Australian time)
Doorstop interview Washington DC
Subjects: US FTA, dairy export subsidies, sugar exports, Doha, Australian dollar, Australian economy.
SIMON CREAN: Today was – well the meeting we’ve just had – is AUSMINTT, the Australia-US Ministerial Trade Talks. There is a mandatory requirement under the Australia-US Free Trade Agreement to have annual dialogues about progress on the free trade agreement. What we initiated last year, and what the new administration has accepted is the need to take the opportunity to broaden the dialogue beyond just the direct bilateral relationship and issues under the FTA. The first of those meetings was held with the predecessor, Susan Schwab, last year. This is the first meeting with the new administration under this format. So they’ve realized the opportunity, the potential to, and the strength of the opportunity to broaden the relationship. It was a very constructive discussion. Obviously there are bilateral issues, market access questions. There’s the issues of regional focus, the Trans-Pacific partnership, APEC, the East Asia Summit, and of course, there’s Doha. We’ve also had very useful discussions about environmental goods and services, and the way in which that agenda can be advanced, which obviously links in with that broader climate change debate. But I think the end result of it is a realization on both of our counts that despite the fact that there are still outstanding issues and points of difference – the outstanding issue on our part, sugar, for example, their use of the dairy subsidies, which again, we’ve taken the opportunity to raise and press upon them – despite those issues, I think it’s also accurate to depict that the strength of relationship goes beyond the bilateral, that there is a lot that both of us can do in common within the regional fora, as well as our shared common interest in getting Doha concluded. So in all, it’s been a very good conclusion to a pretty packed three days.
JOURNALIST: Did you make any progress on issues like dairy?
SIMON CREAN: ...we’ve pushed them strongly in terms of the fact that they shouldn’t be reverting to this.
JOURNALIST: On the issue with Doha, what is more likely to happen. A North Melbourne Premiership or a conclusion of the Doha Round?
SIMON CREAN: I used to liken myself to always wanting the double. I remember that the great North Melbourne victories were 1975, 1977, 1996 and 1999. And each one of those years, Labor got beaten in the Federal Election. I was always going for the double, then, so I obviously continue to go for the doubles. But North will do an important rebuilding, but I think we’ve done significant rebuilding to position Doha for a conclusion over the past four months – the point I think I went through with you the other day.
JOURNALIST: And did he say anything today –
SIMON CREAN: We’ve got a new coach. We’ve got a new coach for North, and we’ve got two new administrations – three new administrations – India, US and Australia and we’re seeking to exploit all the opportunities from that freshness, an invigorated approach and the commitment inherent in it.
JOURNALIST: You mentioned sugar, which is sort of a long-term issue. Is there any shift on that?
SIMON CREAN: There’s no shift on them. I mean this was, a problem we inherited, and we criticised the FTA at the time. We weren’t against the FTA, but this was one of the criticisms that we made. Like all of these things, you have to deal with what you inherit. We continue to make the point that this is a major continuing problem for us in terms of the bilateral relationship because we didn’t get improved access, and we continue to prosecute the case for such improvement. Whether that comes through Doha or the bilateral relationship, we don’t actually mind, so long as we get improved access.
JOURNALIST: Do they see it as closed off because it was excluded from the FTA?
SIMON CREAN: They say we’ve got an agreement. You’ve done the deal.
JOURNALIST: On procurement issues, as far as the Free Trade Agreement functions, are we satisfied with the sort of level of access we have to their government procurement?
SIMON CREAN: There are 31 states that have signed up. We would like there to be more. Obviously, in the current climate, it’s harder to get the more, especially with the “Buy America” push. But as you know, we took a strong position when the “Buy America” was announced. We’ve got a level of protection because of the FTA, but we continue to urge circumstances in which we facilitate more states signing up.
JOURNALIST: And just generally, we’ve had the attempts by Congress to bring in “Buy America”, you know, there’s been lots of talk about limiting stimulus funds to various American projects. I think the car package has a limit on foreign investment. Can you tell us, did they reassure you at all that there hasn’t been sort of ....and we had the tyre decision – did they reassure you at all, that there hasn’t been a change in philosophy on the part of America?
SIMON CREAN: There’s no question in my mind that they are committed to a successful conclusion of the Doha Round, if the negotiations present them with the opportunity, they’ve got something to sell to Congress, and that they are committed, that they do understand the importance of trade both as an economic stimulus, a strengthened WTO, to stem the tide of protectionism, and they see the benefit of what trade liberalisation has brought where it’s been embraced.
JOURNALIST: Was there anything in specific or practical that emerged as far as the next stage is concerned?
SIMON CREAN: ...if we’re to conclude it within the timetable set by the G-20 – 2010 – then we have to develop a horizontal process on services and rules. Now, that might sound Double Dutch. Why is it a horizontal process? Because the Hong Kong agreement, which is the last time there was a ministerial meeting, set the sequence for concluding Doha. It said you’ve got to conclude modalities on agriculture and NAMA before you move to services. Now again, that’s a framework that all of us inherited. What we’ve worked creatively at is saying, we’re not going to change the sequence, because that was agreed by all ministers, but if we’re going to meet the deadline, we also have to engage in progressing the other outstanding issues. So, services, which holds really important opportunities for both developed and developing countries is a really big opportunity for us to do some further work on. The conference that was held here, which I participated in a couple of days ago, was very important in reinforcing that, but the interesting thing that came out of it is that not only is services important in its own right, as a sector of opportunity for developed countries, services is also the enabler of comparative advantage in both manufacture and agriculture - Land management, water usage, mining technologies, smart, manufacturing. So, the extent to which we can also look at the way in which the smart manufacture and smart agriculture that is an important opportunity as well. And combine that also with the trade and environmental goods and services, because not only is this an opportunity for developed countries who have this technology, it’s also the technology that developing countries say they want to help them meet their objectives and their challenges on climate change. So if we can be creative about saying let’s understand the dynamics, the interaction of these big global challenges, and see whether there is a creative way through that, that I think has been a potential creative way out of this week.
JOURNALIST: And was there anything that the Americans raised with us that they’re not happy with under the FTA? Are there still burrs under the saddle from their point of view?
SIMON CREAN: Yeah, I think you’d be aware that they’d still be arguing the case for the pharmaceutical industry. But we’ve made the point that whilst we understand it, this was the agreement struck, and as far as we’re concerned it hasn’t created any difficulty for the pharmaceutical industry here. There are some – you know the quarantine-related issues that both of us have got, but we both are very strong on the point that these should be based on the science, not political decisions. I think that’s an important threshold that both new administrations if you like – our government and their administration – have agreed to work forward on.
JOURNALIST: What are the quarantine issues?
SIMON CREAN: We’ve got them in a number of horticulture areas. They of course have them with beef and they’ve also got some horticultural issues. Now, there are risk assessments and all of those things that have to be gone through, but important issues for both countries in the agricultural field.
JOURNALIST: Why did the talks run a bit longer than anticipated?
SIMON CREAN: Because we were engaged in good, constructive discussions about how to take the Doha Round forward.
JOURNALIST: How long did you talk for?
SIMON CREAN: Three hours.
JOURNALIST: Any working group or anything set up between you?
SIMON CREAN: There will be ongoing work done – we’ve worked in close cooperation with them. I think it’s fair to say that Australia not only is well regarded by the US not only in terms of its input and its thinking, but we do share the common objective of wanting greater ambition. And the US has certain offensive interests that some of which might gel with ours, but to the extent to which it’s important to try and advance this round, it’s also important to try and work to close some of the differences.
JOURNALIST: Did you have any discussion about their concerns about Chinese competition. Was that part of your –
SIMON CREAN: Yeah, yeah we compare notes about engagement with China. It is a big issue, and you know the tyres thing, the tyres thing of course was invoking a remedy that the agreement allowed. And that’s the US position. So, I think we know, as does everyone know, that it is really important for the US and China engagement and sorting out the respective imbalances in terms of the relationship. It’s in everyone’s interest. That’s why it’s good to see the bilateral exchange that the framework now envisages and encourages. Of course it has to come back within the multi-lateral framework, but it nevertheless is an important step forward. We’ve just got to – not just urge, not just create the framework – but to urge constructive engagement, creative engagement, and an appreciation that the place has changed since the global financial crisis.
JOURNALIST: Was there any discussion about Mr Rudd’s Asia-Pacific Community?
SIMON CREAN: In terms of the regional dialogue, we’ve talked about APEC we’ve talked about the Trans-Pacific Partnership. Within that, we’ve talked about the options around APEC and beyond. But, as you know, there’s a lot of interest in the Community, but there needs to be continuing dialogue, and we’re proposing the one-and-a-half track meeting in Oz later in the year, isn’t it? They’ve set the date haven’t they?
JOURNALIST: I don’t – have they set a date? I know they were talking about it.
SIMON CREAN: I don’t know.
JOURNALIST: And one more general question. You know, the Australian dollar looks like it’s going to hit parity with the American dollar. Is that going to affect our trading relationship with them? I mean, are we now going to struggle to sell our exports and our services…
SIMON CREAN: No, I don’t think so. I think that it’s very interesting that it almost became an automatic stabiliser for us with the global financial crisis, because there was the big drop in the dollar and export volumes – not just iron ore – export volumes actually increased. The value came down because the value of the commodities which were record highs – but even what we settled on in terms of value for the resources were still the upward trend if you’d taken out 2008 was still higher than 2007, what we’ve settled in 2009. Now that the dollar’s gone up, of course that presents difficulties for exporters, and I must say, this gets raised with me in all the sort of engagements I have with business. But you know, Australia has had to deal with the floating dollar now for 25 years. It is seen as one of the great policy decisions that set Australia’s economic growth up. And whilst there is this volatility that makes things difficult, people have over that time, in the main, I think, adopted more longer-term views about it, and so adjusted hedging strategies, or they’ve factored in a volatility. So, yes it’s a problem, especially when there’s the big volatile movements, and if you look over the last twelve months, they’ve been down by 30, up by 30. But the flip side of the coin of course is that the strength of the dollar is in large part determined by the demand for our commodities. And that demand, people see as being strong well into the future, and they’re right because all the fiscal stimulus strategies are inherently built around infrastructure, and not just China. So that’s big demand for our resources, and, when you look at the Gorgon development, and the long-term contracts for gas that are now not only entered by Japan, they’ve traditionally had long-term contracts, but now China, Korea and India have entered long-term contracts. That’s never happened before. And why is gas important for us? Like uranium, the cleaner fuels will attract a premium going forward, because of, whether it’s market mechanisms or pressures at home for cleaner fuel options. So, I think, I’m very confident about the importance of Australia’s commodity base going forward which nurtures more than just the sale of the commodities. It’s the services dimension of the resources industry. Because what’s our comparative advantage? It’s not the fact that we’ve just got the resource, it’s because we’re the most efficient extractor, converter, and in a number of cases, value adder, anywhere in the world. So this is where I’m sort of making the connection between services as the enabler of the comparative advantage, the enhancer, if you like, of the comparative advantage – of our natural base. Same is true in agriculture with food processing and with land management techniques. So, the final point I would make is, the important thing about the strength – if the strength of the dollar is driven by commodities that in turn is having an impact on higher national income.
JOURNALIST: Just on that point, are you finding that in these international councils that you’re getting a more respectful hearing because of the good performance of the economy?
SIMON CREAN: I think we certainly are getting that. People are looking to us and saying this is a really strong economic performance in very difficult times. But I think the other thing that’s happened. We didn’t know that was going to happen. But before that was happening, Tony, I think they were respecting the fact that we as a government had much more of a commitment to the multilateral engagement. It started with Kyoto. That was the first big statement. That was well before. But it also started with, amongst other things, our reengagement and reinvigoration of Doha Round. It’s also the fact that we’ve sought a seat on the UN Security Council. And subsequent to that, it was the practical, constructive, creative engagement, and the persistence that was put into things like the G20. So, I think it’s a combination, and I might just say finally that whilst I think the fiscal stimulus package was a really important part of us avoiding the recession and getting the strength of economic growth – we got the sequence right, we got the balance right, and what we’re investing in, 70% of the stimulus is going into infrastructure, and given its important role, innovation, skills that will enhance our productivity. But I think the other reasons that we were able to weather the storm and bounce back quicker was because we’d undertaken the big structural reforms from the 80s onward, and we had understood the importance from 80s onward, with actively engaging with Asia. And we are the fastest-growing developed country in the world positioned in the fastest growing region in the world. This is the time for us, if we’re creative, to grab market share.
ENDS
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