Interview - ABC South East SA, Limestone Coast Morning
Subjects: ASEAN Free Trade Agreement
Transcript
20 January 2010
STAN THOMSON: More and more goods from our region are finding a very welcome market overseas: food, fish, wine. Australia's largest free trade agreement, the ASEAN Australia New Zealand Free Trade Agreement, came into effect this month, and it's expected to open up huge opportunities for Australian businesses in the lucrative Asian market. And it's certainly hoped that exporters here in the Limestone Coast will be amongst those to benefit. Simon Crean is the Minister for Trade in Adelaide today to promote the new deal. Good morning, Minister. Welcome to the program. Welcome to South Australia, by the way.
SIMON CREAN: Okay. Thanks Stan. It's always good to come back.
STAN THOMSON: Now you're here for the federal cabinet meeting today in Adelaide, is that right?
SIMON CREAN: Correct. Cabinet and a community cabinet out of the Norwood High School.
STAN THOMSON: Oh right. Now we asked our listeners earlier today to call in and give us their comments and questions and concerns about this free trade agreement, and out of that we have selected, too, which I put to you shortly. But can you tell me what's so special about this new trade agreement?
SIMON CREAN: It's an agreement that covers the fastest growing region in the world. And it's a market of 600 million people. And our two-way trade with that region is already worth $80 billion. Now these new market openings, which means tariff barriers coming down, which is a major barrier to entry - because when you've got tariff barriers, it puts prices up. These new barriers coming down opens up huge new opportunities for a whole range of goods and services. It's a comprehensive free trade agreement, so it doesn't just cover agriculture, it covers manufactures, it covers services. But for example, in the Limestone Coast area, things such as wine, beef, seafood, cereals - all of that sort of thing is really, they're good examples of where there will be some immediate reductions and progressive phase down to zero over the years. So the key challenge, for the exporters is to - because it's too complex to explain the specifics on a program such as this. But to get them to contact the Austrade office to identify the sector that they're interested in and what this agreement means for them.
STAN THOMSON: Okay. I would imagine that few would argue that what you've just told us about the ability for us to get in there, enhance existing markets, and find new ones. But I want to go to Pat from Mt Gambier, who posed this comment and question to you. Pat says, I believe that free trade is just an excuse to allow inferior, cheap products into our country to the detriment of workers and industries. And instead of free trade, we should be talking of fair trade.
SIMON CREAN: Well there's no question we've - this is the vexed argument that goes on forever. But there is no question, Stan, that us liberalising, if you like, opening our markets and urging other countries to do likewise has had a significant beneficial impact on Australian living standards. We released a study last year that showed that the results of trade liberalisation over the last 20 years had added 3700 - up to $3700 per annum to family income.
STAN THOMSON: How do you draw that correlation?
SIMON CREAN: On the basis that consumers do benefit if they can get cheaper products. It means the cost of living goes down. But also if we can get into markets that we're previously been restricted from, that raises job opportunities because Australia is too small a market - with 22 million people - to simply produce and sell to itself, Stan. The big opportunity for us is getting into markets. As I said, ASEAN is 600 million people. It's got increased living standards as a result of their very rapid growth over the last two to three decades and continuing now. That's creating the rise of a middle class who purchase things today that they never dreamed of purchasing before - things like nutritional and quality food from us which they can't compete with because our product is better, provided they're in a position to be able to pay for it; they will go for our product if there's not a prohibitive price barrier on it. Same with wine. The same with cereal. It's the quality of Australia as the food basket for Asia. And this is the big potential. When you look at South Australia as a whole, their food exports now to the rest of the world is $2.4 billion. And it grew 18 per cent last year despite the global financial crisis.
STAN THOMSON: But is it not a case of - when you look at what we're expected to do through this agreement, is it not a case of, well, we've actually opened our doors, but we are still only knocking on the doors of the other countries.
SIMON CREAN: No, we had effectively already opened our doors. This was the big opening that we made in the '80s that really set Australia up to be a more competitive and a more export driven economy. It's one of the reasons we survived the global economic crisis in a way no other country did. The stimulus package worked for us, but so too did the fact that we were an open, competitive economy and we had targeted Asia. What this agreement does is to target Asia better and to get more immediate access. And I might also say that the import argument, not only does it provide cheaper options for consumers, it also, in terms of the manufacturing sector, provides important cheap import costs so that manufactures with strengths in smart applications, if you like, clever manufacturing, logistics, software, all of those sorts of things can add value to those products and re-export them.
STAN THOMSON: Aken from Naracoorte asked me to pass this comment onto you: cheaper imported goods mean our industry closes down with job losses, we cannot compete. How does Minister Crean reconcile this with Mr Rudd's call to work harder and smarter?
SIMON CREAN: We do have to work smarter, there is no question about that. But the opening of our markets has - whilst it may have closed specific industries, it has certainly opened up new opportunities significantly for other industries. Take the automotive sector. The automotive sector is now a huge exporter and it will have improved ability to export - and this is very important for South Australia - because tariff lines on a whole range of automotive products will start coming down under this agreement. The automotive sector in South Australia can't survive simply by producing cars to sell to Australians. It has to sell those cars overseas, and the componentry that makes us competitive in the automotive market. So the big openings that these agreements have facilitated have been very important in securing the future for those industries.
STAN THOMSON: Well, just finally Mr Crean, and I just want to hook back a little bit to what Ken was saying, asking what incentive is there to invest or work to produce goods which cannot sell in the face of cheaper imports. And given what you've said today and from what I'm reading, we can expect a lot more cheaper apples in our shops, but they're apples that will come from China a lot cheaper than what our people on the Limestone Coast can produce them for.
SIMON CREAN: What we can produce far better and more competitively and penetrate those markets, is our cereal products, our seafood, our beef, our wine. In the manufacturing sector, the dairy industry, in the manufacturing sector, the automotive sector and in, for example, the services sector, which is a significant part of our economy.
STAN THOMSON: But what do you say to an apple farmer in Kalangadoo right - just a few miles from where we're talking now, who is already struggling to actually sell their fruit on an ever-competitive market with imports and not just from other countries, but from other states, when the likelihood - whether it's scaremongering or not I don't know - the likelihood of China being able to dump a lot of their fruit on our doorstep which will make it so hard for the consumer to ignore?
SIMON CREAN: This was the same argument I recall over a decade and a half ago that was used with the orange growers on the Riverland and yet the citrus industry has, by a combination of diversifying its crop operation and competing in the fresh market and producing the quality and Australian branded product, has really gone from - gone on to stronger prospects.
I suppose my best answer to Ken is this - with change there are always going to be impact but we have to embrace. We should not fear change. We've got to take the opportunities. And what we're trying to do is to open up markets for our products and if what we can get is horticultural products into those markets, given that they're on the other side of the equator most of them, we can have a seasonality issue associated with fresh produce, in which we import off-season and export on-season, not just sell in the domestic market.
STAN THOMSON: Simon Crean, thank you very much for your time this morning.
Media inquiries
- Mr Crean’s Office: (02) 6277 7420
- Departmental Media Liason: (02) 6261 1555