Transcript
10 November, 2009
Press conference, APEC Singapore 2009
Subjects: Global Economic Crisis recovery, progress of APEC, Burma, Free Trade Area of the Asia-Pacific, Australia-China economic relationship
JOURNALIST: Minister, can you give us your assessment of the global economic meltdown? Where are we now and what kind of recovery is taking place in the Asia-Pacific region? What pitfalls lie ahead?
SIMON CREAN: Well, I think there are very positive signals in the Asia-Pacific region for recovering countries such as China, India, Vietnam, Korea, Australia, of course. But there is confidence, I think, that the strength of economic recovery is starting to emerge but there have been some important lessons learnt from the crisis.
Importantly, from a trade perspective, even though there have been instances of reversion to protectionism, they haven’t been profound. Mostly people are of the view that we need to continue the pace through the trade liberalisation agenda. There is the importance of correcting or putting in place a new financial architecture. This has proven to be more difficult but the G20 Finance ministers meeting last week have expressed cautious optimism about the pace of recovery but it’s not the time to be talking exit strategies but to keep the pace going. And apart from the economic impact of the global financial crisis, there have been important reassessments by economies about the way forward. The meeting this week will provide an important backdrop to that assessment.
JOURNALIST: How do you think the global economy will re-position in its recovery from the recession?
SIMON CREAN: I think essentially we have to understand that there was a global financial crisis which impacted globally, therefore the solution has to be global. I think that’s the first, most fundamental point. Whatever the solutions, there has to have a global perspective. There are ways that you can achieve that. One of them is through the G20 mechanism, so an attempt to get political will, much more representative of the global power shifts than say the old G7/G8. So the emergence of the G20 has been a very important plus.
Secondly, there’s the realisation that if we are to move forward, it has to be with economies, not just being prepared to embrace more liberalisation in terms of markets, but also of undertaking important structural reforms. Trying to make themselves more competitive. No point opening up the markets, unless economies are competitive to take advantage. What does that do? It brings into play a number of different aspects. Firstly, the stimulus measures and how that enhances competitiveness, but also it fundamentally plays into the aid debate. The application of aid, not just to the poverty alleviation dimension - as important as that remains, but also to the capacity building of economies. So all of these issues have emerged and they themselves have also been complicated, because of the realisation that not only do we have to deal with a global response to an economic crisis, we also have to deal with a global response to the challenge of climate change. So there are a lot of issues, but nevertheless I think a realisation that they have to be approached in a global way.
JOURNALIST: After 20 years there are still questions about APEC’s relevance and criticisms of the organisation. What do you think are APEC’s weakest and strongest points?
SIMON CREAN: I think its strength has been that is has been a very positive force for trade and liberalisation and economic integration within the region over the 20 years. Is it as strong and as embracive as some of us would have hoped 20 years down the track? No. But it has still come a significant way since it was formed 20 years ago. I don’t think anyone is questioning the importance of the establishment of APEC. In many ways what they’re looking for now are different challenges in terms of closer economic integration. When it formed it was essentially about breaking down barriers to product markets. But what’s occurred over the last 20 years is fundamentally the realisation that economic development is built not only around product flows but services and investment so that you’ve got the challenges of reforms behind the border. But also interestingly enough now, there’s realisation of reforms across the border and eliminating borders, and this is no more graphically demonstrated than by the challenge of logistics and how we improve logistics flows within the region. So services, logistics, product markets; there has been big developments on all of those fronts so I hope that not just in the next 20 years, but even in the next 10 years, we will be able to reflect in a very positive way about the significant advances in those areas as well.
JOURNALIST: What are your thoughts on how APEC has reacted to the global recession?
SIMON CREAN: I think it is important, again to see APEC as understanding these issues as important. There is no point calling for the breakdown of the market barriers or for trade liberalisation if governance mechanisms are not facilitative, or to try to come to grips with the recovery out of the global financial crisis, unless we are looking at better governance mechanisms to avoid the problem happening in the future. Corruption is, of course, something all of us have an interest in ensuring is broken down. It is a challenge. The G20 Finance ministers have been looking at this agenda very strongly. We welcome that and I am sure that the statement that comes out of this meeting will give strength to their arm.
JOURNALIST: Do you think corruption is still at an alarming level?
SIMON CREAN: Well that is a matter for judgment, depending on where you come from in the commercial sense. What we are determined to do is to put in place mechanisms that stamp down on corrupt practices.
JOURNALIST: This is a bit political but has implications for trade: what do you think about President Obama’s new engagement abroad to Myanmar?
SIMON CREAN: We welcome it. We encourage it. But not just with Myanmar, we encourage the new engagement by the US President with the region at large. I think the US commitment to nurture and develop and see Pittsburgh emerge with the commitment to the G20 structure was a very significant step forward. Its engagement with Asia, the discussions that are going on there about the TPP are terribly important. The commitment once the health bills are through congress to engage with Doha. These are all very positive signs, not just in specific terms about Myanmar, but for the region as a whole.
JOURNALIST: What is Australia’s position on human rights in Myanmar and you have talked about doing trade with them?
SIMON CREAN: We have never seen sanctions as a solution against Myanmar because it hurts the people, but what we have been trying to do is to get the necessary political reforms and human rights reforms through pressure, through other forms of pressure, such as political pressure. So the fact that the US has embarked upon this new initiative is very welcome, we support it.
JOURNALIST: What will Australia push in terms of initiatives in the coming week?
SIMON CREAN: Initiatives that we will be pushing for are for strengthened economic integration within the region and also confidence or a strong message to conclude the Doha round as an important platform to underpin closer economic integration on the trade front. But to also understand that way in which the economies are developing coming out the global financial crisis means that we’ve got to focus much more on services, on structural reform and on improvements on logistic flows in the region. It is also a challenge for us on how we can advance the positive contribution to the climate change debate. These are all important issues, they are all on the agenda and I hope that we come out with some strong statements in respect to each of them.
JOURNALIST: What is your opinion of the Free Trade Area of the Asia-Pacific (FTAAP)? Because right now there are some proposals which have been thrown out. For example, there have been suggestions of an extension of the GDP plan linking and expanding the different bilateral activities. What do you think is the best way of going forward for the FTAAP?
SIMON CREAN: It has been a long term objective to try and achieve FTAAP but that is a very difficult goal given the numbers of countries involved. The Trans-Pacific Partnership initiative can be a very important building block in that direction. That is why we are supportive of the TPP initiative and we indicated this last year in Peru. So long that the initiative itself is a comprehensive trade agreement, it has to be consistent with WTO principles and it has to cover all sectors not just goods and services and investments. Clearly for it to advance it needs the United States to signal their support. They have been involved in discussions and there is strong support within the US for it. However, it is just one of a number of ways in which we can get closer economic integration. I think the agenda that we just talked about in terms of APEC itself, closer economic integration and driving that agenda forward on services, logistics and climate change, all of these issues, and then of course there are the other emerging regional architectures such the EAS, and we are very pleased that not only have we concluded a free trade agreement with all of the ASEAN countries, and it will come into force on the 1st of January next year, but as the next logical step to that there has been an agreement to look for advancing closer economic integration within the East Asian region, in parallel both through an ASEAN plus 3 and an ASEAN plus 6.
JOURNALIST: When do you think this FTAAP can be used better - in 10 years time in 20 years time?
SIMON CREAN: Well I’m certainly hopeful it is certainly going to be achieved within 10 years time but I don’t think it’s appropriate to try and put a specific time line on these things. I think the momentum is there; there is enthusiasm and there is strong support for moving in this direction. What we really need to do is to garner a stronger political will to understand the importance of it. I think out of the global financial crisis has been the realisation that the reversion to protectionism is not the solution, even though there are a number of pressures that argue for that. The way out of the global financial crisis is to not only get the architecture in terms of financial regulations better-developed, and learn the lessons of the crisis in terms of what precipitated it and what needs to be put in place, but also the solution lies in greater trade liberalisation. Trade is itself an economic stimulus. Trade is a multiplier of domestic and economic growth and the more that we can encourage the opening up of trade the better. But also a realisation that trade is these days is different from trade say 10-20 years ago. It was mostly about product movements then, it is increasingly about services and investment. And quite frankly if you look at the developed countries around the world and what distinguishes them, it is the size of their services sector as a contributor to GDP. So for developing countries to make the biggest step to development our task is to convince them that embracing a bigger services engagement, a bigger opening of opportunities in the services sector, is in their interests for developmental purposes.
JOURNALIST: Mr Crean you hold talks on the progress of the FTA in discussion with China. When do you plan to continue?
SIMON CREAN: I’ll be meeting with my Chinese counterpart Chen Deming later this week but interestingly we have Chinese officials in Australia also this week. This follows the visit last week of Vice Premier Li Keqiang where there was a very strong statement of their desire to try and advance the economic relationship. It has been difficult to advance essentially because of problems at the Chinese end in relation to agriculture. We understand those difficulties and we want to work with them to attempt to resolve the bigger opportunity for our relationship with China, which is this challenge of services and investment flows; a two way investment between the two countries. So I’m confident that it is in both countries’ interests for a strengthened economic relationship, and that that message will ultimately prevail. We have got to be patient, one always has to be patient with these exercises, but the political will that I talked of before is crucially important in this Australia-China relationship. I think much has happened in the last few months to strengthen that political engagement and I hope that this will bear fruit.
JOURNALIST: Any idea of the time frame in mind to hold these talks?
SIMON CREAN: The time frame is, as I say, officials are coming down this month. We had our officials go up there following my meeting with Chen Deming in Singapore back in September.
JOURNALIST: So this is part of ongoing…?
SIMON CREAN: This is part of the ongoing reengagement, yes.
JOURNALIST: Minister, are you planning on raising the issue of Rio Tinto with your Chinese counterparts?
SIMON CREAN: We always raise that issue with our Chinese counterparts.
JOURNALIST: So are you planning on this time to raise again the issue?
SIMON CREAN: As I said we always do, so we will on this occasion as well.
JOURNALIST: This last question will be on the Australian dollar parity. Is this a concern for you?
SIMON CREAN: This was the question that was asked before. Clearly the strength of the Australian dollar is testimony to two important things in Australia. One, the continuing strength and demand for our commodities. And of course that brings with it an important increase in our national income going forward. Secondly, it’s a reflection fundamentally of the strength of the Australian economy and out of all the developed countries in the world is performing the best. We have had two interest rate rises since the series of reductions, because we came out of the global recession better than other developed countries, so they have their impact. The other point that I would make that Australia took a decision over 20 years ago to float the dollar. It has been an unequivocally good decision for the country. It set us on the path for the resilience that we now experience for the way in which we competitively compete with the rest of the world on so many fronts. Not just on resources and agriculture but in an elaborate transformation also manufactures and in services. This is our future. As a nation of 22 million people we have to trade with the rest of the world and we have to trade on as many fronts as possible. The higher dollar does make it more difficult for our exporters, particularly our manufacturing exporters. That’s true. But these are also exporters that none of them, that I am aware of, are calling for a reversion to fixing the exchange rate. Many of them understand the volatility within the dollar and the way in which they have experienced that volatility over the course of more than a 20 year cycle. So they take other measures to deal with it, whether it’s new hedging procedures or simply building it in longer-term into their plans. So Australia looks forward with confidence to the future. Australia clearly has no plans to move to any sort of re-regulation in terms of its exchange rate. We understand the significant decision taken 20 years ago in terms of the dollar and what that has done in terms of the nation’s competitiveness and its resilience.
ENDS
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