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OWEN BENNETT-JONES: We are doing a little half hour on the emerging economies and how strong they are and just wondered what we could learn from your experience of trading with these economies. How important to Australia has been the strength of these emerging economies? 

SIMON CREAN: Well it’s been very significant not just in the immediate circumstances of the global financial crisis but in the lead up to it. Australia took the view over twenty years ago that not only did we have to engage more with our region and therefore those economies but we had to become a much more competitive nation. Hence the decision to float the dollar at the same time as a whole lot of structural reforms internally. 

Asia has been terribly important for us over the last decade. It has been the fastest growing region in the world and will continue to be so going into the future.  China within that region is the fastest growing country in the world and is likely to be for a number of years to come. Our engagement with China has sought to go through a vehicle of a trade agreement. We have been frustrated in concluding that. But we have gone directly to the regions where there is enormous growth happening in the regions. We have concluded a Free Trade Agreement with ASEAN as a group of countries. And as important as China is to Australia in two way trade, ASEAN as a group is just as big.  Now we have a Free Trade Agreement with ASEAN.  Market liberalisation commenced January this year and will progressively see barriers come down in the years to come but importantly it’s an agreement that doesn’t just cover agriculture and goods, but also services. 

OWEN BENNETT-JONES: Is it fair to say then that Australia, and I think everyone would agree, has survived the recession better than most and that the reason for that is because of your relationship with China? 

SIMON CREAN: No I don’t think it’s it can be narrowed down to just that because…

OWEN BENNETT-JONES: China and ASEAN? 

SIMON CREAN: China and ASEAN but also Korea. And in recent times importantly Japan. Japan has always been an important trading partner, but even with Japan in recession, its fiscal stimulus package, just like all the countries in the region, what is it, it is about infrastructure, what does infrastructure need - it needs resources. So I think it’s too simplistic to say it’s just about China. But it’s also the case that the structural reforms that drove competitiveness, drove our ability to compete with the world. There’s not much point in opening markets unless you are competitive enough to take advantage of them. 

OWEN BENNETT-JONES: I take the point that it’s Asia more generally than China, but what I was trying to get to really is that it’s China and Asia more than India and Brazil? 

SIMON CREAN:  No, because our fastest growing trading partner has been India of recent years. It has been our fastest growing market for exports in both goods and services. Now true it’s off a low base. Our relationship with India has been underdone in our view. Our government took the view when we took office a little over two years ago that we had to concentrate more on the relationship with India and we are doing that. 

OWEN BENNETT-JONES: You have been, if you are, deriving such benefit from these trade relationships you have to worry about, could they go wrong? As you look ahead, could they? 

SIMON CREAN: Well of course they can, but I think that we haven’t just put all our eggs in the basket. We have concentrated more because it is the fastest growing region and it is near to us and we have competitive advantage in so many different fields not just the resource, but the way in which we produce the resource, the way in which we ship it, the logistics, the whole chain, the whole value added chain. 

OWEN BENNETT-JONES: But as you assess the risks ahead, what would worry you most?  What would be the vulnerabilities in these emerging economies? 

SIMON CREAN: I think the vulnerabilities is if they are impacted because of  the failure of Europe and the US, or the inability of Europe and the US to generate back their own economic growth, because they are still the wealth drivers. There might be huge populations in Asia and in China, but the great wealth is still in the US and Europe and so what we have to be really aiming for is recovery, the effectiveness of stimulus packages, the regeneration of those economies, but understand the fact that this has been and will continue to be a decade of advancement by developing countries. How quickly those developing countries move to developed is going to be a function of their preparedness to look beyond agriculture, look beyond manufactured exports to understand the significance of the services sector, and investment. Now therein lies another problem for us because the more you move into services and investment, the more you are getting into the behind the border related trade issues and that we have to be concerned about. 

OWEN BENNETT-JONES: Thank you very much. 

SIMON CREAN: My pleasure.

ENDS

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