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SIMON CREAN: Today is an important week in negotiations into important trade areas. First of all, the Trans-Pacific Partnership (TPP) negotiations get underway here in Canberra this week*. This is a very significant potential trade negotiation. It has the basis for being the bridge to a free trade area for the Asia Pacific. It's something that the US President has swung his very strong support behind. Essentially, the countries that are already in the TPP have combined GDPs of close to $18 trillion, and have 470 million people. So, in its own right it's a significant grouping. Clearly there are other countries that are interested in the progress of this. The important thing to understand is that it's intended by the eight parties to it for it to be a high quality trade negotiation; comprehensive in that it covers all of the sectors - agriculture, goods, services, investment - and that given that a number - of the countries themselves in one way or other have existing trade agreements with other parts of the eight, I think is an exciting prospect looking forward.

The other negotiations that commenced this week are the fourth round of negotiations with Korea. Korea is a big trading partner - Australia's third largest - some $21 billion in two-way trade already. The negotiations with Korea have gone extremely well to date. There are some still difficult issues that remain, but of the free negotiations that we're having in North Asia - China, Japan, and Korea - Korea is the one that holds the most prospect at the moment.

Final point that I would make is there's an interesting report in the papers today that China accepts that the failure of the Chinalco deal was economic related. I think that's an important concession if it's true. We welcome that, and hope that not only was it a learning process but it provides the basis for moving forward with our relationship with China on a more solid footing.

QUESTION: The Trans-Pacific talks - is this kind of - could this be seen as a model for the WTO? Are we looking at the same kind of hurdles, agriculture and manufacturing subsidies, that have stalled the WTO talks?

SIMON CREAN: The purpose of the talks obviously is to liberalise trade further. All of the eight partners themselves are committed to that view, and all have shown tendencies to be strongly open in their approach. What is welcome about the eight is that Vietnam is one of the eight, and the fact that it is prepared to be a participant in the exercise I think is encouraging in terms of the developments within Asia itself. We want it to be very much WTO plus, that's why we have said that we not only are committed to it being comprehensive and covering all of those sectors that I mentioned before, but that we want to establish the foundations on which anyone seeking to join in, comes in on those terms - comes in on the terms of understanding the comprehensive approach and the fact that we want it to be a quality FTA, a WTO plus FTA.

Now I don't want it to be taken that we're going in this direction because we've given up on Doha. I certainly haven't given up on Doha. Doha in many ways still holds the best and the quickest approach to trade liberalisation in the short-term, if we can find the political will. Trade is an economic stimulus. Completing Doha will give that stimulus. It will give the stimulus without impact on the respective budgets, and as we come out of the global recession, countries are looking for that. So we'll continue to pursue that, and we will argue that when President Obama comes next week. But I think it is interesting that at the same time as we're jointly committed to still finding a solution to Doha, the opportunity opens up on a new front with the Trans-Pacific Partnership.

QUESTION: (Inaudible question)

SIMON CREAN: We approached this on the basis that everything is on the table. That's what we mean by a comprehensive approach, a new approach to this Trans-Pacific Partnership. No exclusions. Now what the final result is remains for the negotiations, but clearly we understand the fundamental importance of investment as part of the new trade equation. We want to open up the opportunities that facilitate investment between the respective countries included, and we will be arguing for it to be as comprehensive as possible.

QUESTION: Notwithstanding Washington's decision to come onboard, and to look at the TPP positively, you wouldn't be expecting anything quickly from Washington would you, given that it's also a very obstructionist mood in Congress and there's still a very protectionist sentiment.

SIMON CREAN: Well, let's understand, this is just the first of the negotiations, but it is a significant negotiation if it proceeds and the ground rules on which it's proceeding has found common cause amongst all of the eight - including I might say the Congress when it's been reported to. The Congress, whatever its difficulties are with the individual FTAs that still haven't been ratified, doesn't have the same degree of concern. It sees itself going into these negotiations with a government, the Administration, more committed to a quality comprehensive outcome. I think we've got to let the negotiations proceed, and I think it was a significant breakthrough last year in Tokyo when despite all the difficulties with all of the other trade negotiations that the Administration was experiencing, it was prepared to make a commitment to this.

QUESTION: Mr Crean, can you please outline the potential agricultural benefits in the Korean FTA?

SIMON CREAN: Well obviously there's opportunities in terms of two markets such as beef, dairy. I think that the approach that we take in terms of these areas is obviously important for agriculture. But by far the bigger potential going forward rests in terms of elaborately transformed manufactures, value-adding if you like - which after all is what dairy is - the extent to which we can project ourselves into the food processing chain, given the desire of that economy - like so many - to be continuing to look for food security going forward.

The other opportunity is obviously on energy, but importantly services. Korea has ambitions to become a significantly developed economy. It is undeveloped if you like when it comes to its agriculture sector; it's very developed when it comes to its manufacturing sector. To round out the equation it has to expand its services base. And I think the fact that it understands the importance of services in that equation is an important reason why some further progress is being made with this trade agreement.

QUESTION: Minister, there's also a report out of China today that Chinese steel makers want Premier Wen Jiabao to be involved in the iron ore talks. Is there a role for government in these talks? If Premier Jiabao - if Premier Wen does get involved, is there an imperative for Australia to do the same?

SIMON CREAN: Well we won't be getting involved. We've made it quite clear to China, and I repeat the point - we recognise China's market economy status. All we ask in return is it act in accordance with market principles, not seek to get government involved.

QUESTION: The story today about China and Chinalco - does that give the Government some more confidence that the charges against Stern Hu weren't in any way politically motivated or somehow retaliation against this deal falling through?

SIMON CREAN: The charges against Hu stand in their own right. We never sought to link them or make the connection between those charges and what happened in relation to the Chinalco deal. I think what's important today, in terms of the report, is the affirmation if you like, by the Chinese Government that they see them as commercially related. They understood, having done the analysis, understand the reason why the deal fell over. As for the Stern Hu case, we continue to make the representations. The next consular visit for Mr Stern Hu is 19 March. We will be there accordingly. We continue to urge the Chinese authorities to be not just transparent in their dealings, but expeditious in bringing them to a conclusion.

QUESTION: Do you know when the case will be heard?

SIMON CREAN: I've got, have no information as to when it will be heard.

QUESTION: Mr Crean, on the TPP - what are Australia's main priorities in terms of increasing market access for Australian producers?

SIMON CREAN: I think that what we want is to open up the areas further, but still have restrictions between them.Obviously we have a strong FTA with the US, but we were critical in Opposition of certain elements of that. They were critical of certain elements too. So this is not going to be an easy negotiation. But we go in with a determination, with a new administration, and with us firmly committed, not just to the principles of trying to get the Doha agreement up, but to understand that free trade agreements are not a surrogate for multilateral agreements.

We continue to pursue most vehemently, most aggressively, the multilateral outcome. That's why we've concluded the ASEAN Free Trade Agreement. It's why we see real merit in the Trans-Pacific Partnership. It's why we continue to pursue the Doha round of negotiations. What we say in relation to the free trade agreements - whether they're individual or grouped, on a regional basis - is that they build upon the multilateral platform. That they don't detract from it. They're if you like, WTO plus, they're based on the same principles, but they extend the liberalisation further.

What I would like to see come from the Trans-Pacific Partnership is not just dealing with the difficult areas that still remain on agriculture, and certain product markets, but to see the great potential going forward for services and investment to economic development and strengthened economic relationships between the countries concerned.

QUESTION: Minister, do you think that the - do you think that China's concession is any sign that perhaps some of the political heat though is coming out of iron ore negotiations?

SIMON CREAN: Look, the iron ore negotiations are always going to be robust negotiations. The truth is, market principles say when there's more demand than there is supply that will have an impact on price. What we want to do is to address the supply equation. That's why I am one of those that actually has welcomed foreign investment in our iron ore industries, including by China, when it is about expanding our productive capacity. It's why as a government we've made sure that a number of the infrastructure initiatives - that Infrastructure Australia is required to have regard for - one of the key principles is infrastructure that includes our international competitiveness. It's why I've been arguing that we really need to develop the skills base so that we're developing the capacity in physical infrastructure, in human infrastructure, to ensure that that productive base can be advanced.

So I think that there are a number of ways in which this issue can be addressed, but it won't be addressed by governments intervening in the marketplace. We reject that. We have said it on each occasion. It's been raised with us by the Chinese, and I might say, in the recent visits I have been there, it doesn't get raised. I think they do understand our position on this score.

As for the steel makers, in terms of being dissatisfied with the way negotiations have been run in the past, their solution doesn't lie in getting the Government to intervene. The solution lies in understanding and being transparent and open about what their needs are going forward, and being creative in the ways in which those needs can be met.

QUESTION: Mr Crean, increasingly too, trade and currency issues are being compounded. Is there any role for the WTO on currency matters?

SIMON CREAN: No, it's not a matter for the WTO. It's a matter to the extent to which it needs to be discussed - and I think it does - it is a matter for the G20.I have made it clear to all of the countries that I have been involved with in negotiations, that by far the single most important decision we took as a country, many years ago, that improved our international competitiveness was to float the dollar. And I have also pointed out that we are the only developed country in the world to have avoided the recession, and despite the big hit to exports last year, Australia was one of the very few countries to have posted an increase in export volumes.

Now I believe that is because we have pursued sensibly at various stages, and sometimes the two of them, much more aggressively together, trade openness and structural reform at home. And that's a message that I continue to convey to all of the countries that we have dealings with - including China.

When it comes to developing nations, it's also become apparent to me that we can't just talk trade liberalisation and structural adjustment to economies that have a structural adjustment deficiency - in other words, haven't got the capacity to make the same sort of structural reforms that we as a developed economy were capable of back in the 80s. And that's why a big focus in terms of negotiations these days, in my view - and what I've injected into the negotiations - is our preparedness as part of the discussions to look at the capacity building equation.

It's what was essential to secure the ASEAN Free Trade Agreement. It's the nature of the change that we've now embraced with the Indonesian FTAs, so that we're not just talking free trade agreement, we're talking economic partnership that clearly has within it the notion of further capacity building initiatives. It's the message I took to Africa in terms of the, our mining operations, and the desire to work more closely with mining companies, as to how government and mining companies can better address the capacity building question. It's fundamental to what we're doing in the Pacific with PACER Plus - the capacity building dimension.So, I think it's important to try and reinforce constantly the twin pillars, if you like, trade liberalisation, fundamental in its own right, but structural adjustment, also fundamental.

No point opening the markets unless you're competitive enough to take advantage of them. It's the extent to which that competitiveness needs to be assisted by certain focuses on capacity building, that's the space that we want to get more actively engaged in.

QUESTION: You've had Bill Heffernan in your ear as you gave a press conference about beef.

SIMON CREAN: You haven't got him walking out today have you.

QUESTION: You mounted a strong case defending the Government's position, and then you change it to exactly what Bill Heffernan wanted. What changed?

SIMON CREAN: I think the fear campaign worked. I still very firmly believe that the protocols that we had in place were absolutely capable of ensuring that this country did not import any BSE-affected product. But given that the fear campaign took off, given that the IRA was seen as another important point of insurance, that was what the Government also added.

QUESTION: Doesn't that give you, create a problem in the future if there's a fear campaign on any policy that you guys will cave?

SIMON CREAN: Well, I just say, this was one that was unlike others that I have experienced. It was frustrating because it - people weren't prepared to listen properly to the facts, despite the point that there'd been I think three or four Senate hearings in which people had given evidence, to the effect attesting to it. But look, that's the decision that the Government has taken, and it's the decision that we will operate under.

QUESTION: Has there been any backlash from our trade partners? Will there be any backlash?

SIMON CREAN: There has been no formal complaint lodged by any of the countries, or the regions. There have been, there have been queries, and there have been representations made by the US, the EU, Canada - informal representations - essentially seeking further information. And we are dealing with those.

QUESTION: Did the Government's decision have anything to do with an outbreak of BSE in Canada about the same time?

SIMON CREAN: No it didn't, and I think it's important to understand that. I've got no doubt that that case could have added to the fear campaign, but it did not itself affect the Government's decision.The truth of it was that the case that's been identified in Canada happened in the same area in which they had had a case before. It was not a different type of BSE. It was able to be located and disposed of, so they're tracing traceability system worked, and the truth is we don't important from Canada now because of the previous ban, nor had there been an application to import from Canada since the decision that was previously taken was announced.

ENDS

* TPP negotiations are taking place March 15 to 19 inclusive in Melbourne

Media inquiries

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