Doorstop, Parliament House

Subjects: Australia-New Zealand relationship; regional trade negotiations; NZ apple imports; Paul Keating's comments; Tony Abbott as Grinch; Doha Round; Chinese leadership; business environment; allegations against PM.

Transcript, E&OE

15 November 2012

CRAIG EMERSON: I'm joined by New Zealand Trade Minister Tim Groser, who has to get a plane back to New Zealand, so we've got 10 minutes. But we'll make a short statement about CER and then open to questions. So, Tim.

TIM GROSER: First of all I'd like to say I've had a very interesting series of discussions on some big strategic issues that we have very, very aligned interests. And of course our two Prime Ministers will be going up to Cambodia next week on another big set of issues around this new regional trade agreement there. And we'll be meeting under President Obama; we'll have a discussion on TPP. So we've sort of done some very big picture stuff, and we've also done a lot of stuff on mind-bendingly technical things to do with our relationship.

So I have this idea in my head that you've all heard. China of course is very much in the news right now – of the Chinese, you know, when they talk about cross straits relations, one system two countries. My view is we're the opposite: we're two countries one system. So we've been discussing things like mobile roaming rates and highly technical matters where I think our officials are making excellent progress. So it's been a good meeting, looking at some big picture stuff and some very technical stuff.

EMERSON: And next year we commemorate the 30th anniversary…

GROSER: Correct.

EMERSON: … of Closer Economic Relations. Tim was telling me in strict confidence, so I'll tell you, that he actually was involved in the drafting of the original CER agreement. We've come a long way in that 29 years. So it will be a great celebration next year as we move even closer to creating a single market between our countries.

We did observe that in trade we're pretty well there, but increasingly this will move into the financial sector and other areas of business regulation to make it easier for our businesses to conduct their business across the Tasman Sea. So I think it is a time for celebration.

GROSER: Yes, and a good example of that is our banking system. I mean, 95 per cent of the banking assets of New Zealand are controlled by the four Australian banks. And let me be blunt about this: the fact that those four Australian banks are so strong by international standards has kept New Zealanders in jobs. You've got to worry most of all in this world about unprofitable, weak banks. So we've benefited enormously from the heavy corporate ownership of Australia in New Zealand, and I think the New Zealand public understands that.

EMERSON: And as we move – and then we'll go to questions – as we move to the meeting in Phnom Penh next week we will, as Tim said, be discussing a comprehensive economic partnership, regional comprehensive economic partnership, RCEP – it's already got an acronym; nothing is created these days without an acronym – but that's another possible way to a free trade area for Asia and the Pacific, as is the Trans-Pacific Partnership.

We'll have President Obama at this meeting; it's an East Asia Summit meeting but we will be having discussions about both of those trade liberalising groups. And this is all highly relevant to Australia's place in the Asian Century. We did discuss the Asian Century White Paper and the reception that it has received in the region, which has been very positive indeed. So we'll open to questions.

QUESTION: Can I just ask you, and both of you, but on the TPP you've been discussing it today, New Zealand will be hosting talks on that next month. Can I just ask, Japan's shown some interest in joining the negotiations on that: what's your assessment for success on that at the moment? Where are we with progress? And as host what are you hoping you can achieve?

GROSER: Well Auckland will be very interesting because it's the first meeting where two other major economies – Mexico and Canada – are joining this negotiation. So there's no question this TPP exercise is gathering very considerable momentum.

Now, Japan is obviously the biggest third country sitting outside. We're still waiting of course for the Japanese Government formally to say they want to join. We know there's intense interest and I think all of our leaders have said, 'look in the long run, since this is intended to be a pathway for trade and investment integration in the entire Asia Pacific region, an agreement that doesn't end up with Japan hasn't achieved its objectives'.

So really the only discussion is around the timing and the methods by which Japan will join in, rather than sort of a black and white philosophical question.

EMERSON: And there is an election that's going to occur in Japan. And it now seems that the ruling party, while it has expressed some interest in the TPP, this will be one of many issues that will be no doubt in a national conversation during an election campaign.

QUESTION: Minister Groser there's been some strong criticism from individual commodity groups like apples and potatoes about importation to Australia from New Zealand. Was that discussed today, and what's your general attitude towards that resistance?

GROSER: Yes, well look, we have had this stoush between Australia and New Zealand on apples for something like 80 years, and we hugely appreciated Prime Minister Gillard coming in as the first non-New Zealander ever to address our Parliament and making it clear where Australia stood. Australia has accepted the court decision. Australia will implement this decision of the WTO, and we're moving forward. I'm very comfortable with the way our technical experts are cooperating. There's going to be no flood of apples into this market – it's by consumer choice – and I think we're moving on, moving beyond …

EMERSON: And we take our responsibilities under the World Trade Organization seriously. If we are to be the beneficiaries, as New Zealand and Australia are, of a rules-based system where we expect others to abide by the rules, then we should abide by the rules as well. Those rules were made clear in the Appellate body decision on apples, and we abide by it and are implementing it.

QUESTION: Are you worried, though, that this is causing some concern in some of the markets where you're trying to grow trade? The resistance to apples and say, potatoes as well – it's having an impact on our trade commodities, like wheat?

EMERSON: Oh no, I don't think so. I mean, I think everyone has either a greater or lesser acceptance that we should play by the rules. Sixty per cent of our agricultural produce is actually exported, probably be even higher for New Zealand. And it is in our national interest and in the interests of farmers that we have a rules-based system so that we can use those rules to open up markets, and if markets are closed against the rules, to get them open again. So it's actually in the interests of Australian farmers. I can understand why some farmers feel grief about apples or potatoes or other products, but the fact is overall as a free trading nation and a beneficiary of that trade, we need to abide by the rules and to strengthen the rules wherever we can.

QUESTION: Minister on RCEP briefly: can you give us a sense, both of you please, on what you think the significance of it is? But more pertinently, what sort of timeframe are we looking at?

EMERSON: Well, that's always the inevitable question and the one that I like to avoid for very good policy reasons. Once you put time frames on the completion of negotiations that haven't yet started you end up being wrong. And no-one has control over the timetable for negotiations. What we should do and will do is enter those negotiations in good faith, the Regional Comprehensive Economic Partnership proposal, which is likely to be endorsed in Siem Reap, is one pathway to the mountaintop of a free trade area for Asia and the Pacific, and we'll be in there vigorously negotiating.

QUESTION: But do have an ambition though for a time?

EMERSON: Our ambition is a free trade area for Asia and the Pacific and for that to be achieved sooner rather than later, and as quickly as possible.

GROSER: But I think if I could just add my take on that: I couldn't agree more. I think what we've learned from repeated trade negotiations over the last 30 years is that what matters to our two countries frankly is to get the right result. How long it takes, honestly, is a secondary issue.

QUESTION: On another matter, another neighbour I should say: Indonesia. Paul Keating had some pretty scathing criticism of the relationship we've cultivated with Indonesia over the years – not just this government but previous ones.

EMERSON: Sure.

QUESTION: What do you say to Paul Keating? Is it time he butted out or…

EMERSON: Well Paul Keating's right in his assessment in that Indonesia is an extremely important partner for Australia – a neighbour, a friend, a partner. This is a country of 245 million people that routinely grows at 6½ per cent per annum. We actually do have a good relationship with Indonesia; you've seen the Prime Minister in Indonesia just last week with the President of Indonesia. We had a meeting only a couple of months ago.

QUESTION: Paul Keating said, though, he said [indistinct]…

EMERSON: Well we're entitled to our view, and our view is that the relationship is in good shape. You might recall that my counterpart, Gita Wirjawan, came here about six weeks ago. We stood in the Blue Room answering questions about the relationship. And he described it as being in tip-top shape. Never better.

QUESTION: His comments are probably fairly unhelpful…

EMERSON: Oh look, I'm pretty relaxed about a national debate about Australia's place in the Asian Century. The Asian Century White Paper has helped initiate that debate. I welcome contributions to the debate. Not everyone's going to agree on every observation. This is a complex century, but an exciting one to be in, and we are at the right place at the right time in the Asian region in the Asian Century.

QUESTION: Paul Keating…

GROSER: Can I just add my take: I was Ambassador for New Zealand to Indonesia 15 years ago, and I used to speak Indonesian. And I can tell you that when I lived in Indonesia the Indonesian interest in Australia was very, very strong. When I was there more Indonesians went to Australia for their tertiary education than to the United States. I think the – I'm not going to comment on former Prime Minister Keating's statement – but what is quite clear is that both New Zealand and Australia have got to develop their relationship with this great country.

It's the fourth-largest country in the world, the largest Islamic country in the world, and geographically very close to our two countries. I don't think anyone who's involved in foreign policy, in trade policy, in Australia and New Zealand would say that we've got our relationships exactly where we want them. We're building our relationships now. And I think that's the right way to look at it.

QUESTION: Paul Keating said last night that Australia should want to join ASEAN. Is that feasible? Do you think it's worth aiming for? Do you have any plan to do it?

EMERSON: We have done so commercially through the ASEAN-Australia-New Zealand Free Trade Agreement, a gold standard agreement again which Tim Groser, Minister Groser, was deeply involved. It is to achieve the purpose, really, of what we've sought to achieve through closer economic relations within Indonesia – sorry, with New Zealand – and that is economic integration; the free flow of goods; the free flow of services; and a very close investment relationship. And doing, making doing business in each other's country a lot easier. And this ASEAN-Australia-New Zealand Free Trade Agreement does that.

We will seek to build on it through both the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership, RCEP, as we continue to liberalise and create, you know, a diversity of career opportunities for our young people in the Asian century.

QUESTION: Can I just ask: apparently there's a report that some Coalition MPs are quite miffed that the Labor Party has used Tony Abbott's image as the Grinch in its invitation to its Christmas Party. And they say it's perhaps going a step too far. Is it do you think?

EMERSON: I haven't seen it, so …

GROSER: I think at this point I can go catch my plane, right?

EMERSON: Yeah, you'd better go and catch your plane, okay. Bye bye.

I just haven't seen it so I can't comment or not.

QUESTION: Well, I can tell you, it's quite simple. It's got a picture of Tony Abbott's face on the Grinch, and it's inviting all Labor staff members and Members of the Parliament …

EMERSON: Yeah, look I'd love to comment, but it's pretty sensible practice not to comment on things that you haven't seen. And I don't have anything to add, Alex. I do try to answer questions directly that are put to me. I don't try to dodge questions. But when I'm asked a question about something about which I don't know it's probably the right thing not to…

QUESTION: … question that I want to ask anyway….

EMERSON: Yeah, sure.

QUESTION: … that in the current political climate do you think it is harming relations with business in Australia at the moment, or harming business?

EMERSON: Well, let's look at the evidence, and the evidence says no. We have here in Australia economic growth which is faster than any major advanced country. We have a credit rating of AAA by all three ratings agencies. We are yet to see the peak of the mining investment boom which is expected sometime within the next two years. Mining total investment as a share of GDP is set to hit 50-year highs. We've got a cut in interest rates from the Reserve Bank from 6¾ per cent to 3¼ per cent. We've got inflation at 13-year lows.

So you put all those together, together with an unemployment rate of five … you know, a little under 5½ per cent which we'd want to get down over time – these are all indicators of a strong economy. What makes a strong economy? Business working with government. And that's what we've been doing, and that's what we'll continue to do.

There will be disagreements on policy matters from time to time. I'm not seeking to gloss over those, but let's look at what business is actually doing instead of just concentrating on the public conversation where we do have from time to time disagreements with business.

QUESTION: So you're not sensing any frustration among business and unions about the political hostilities at the moment?

EMERSON: Well, people haven't raised that with me directly, but I'm quite sure that those sorts of conversations will happen from time to time around Australia. Consumer confidence just yesterday hit 19-month highs. So every indicator that we look at looks and points to a strong economy where you know we've achieved economic stability on the back of the deepest global recession since the Great Depression.

Now, that is a tribute to businesses large and small; it's a tribute to the economic stimulus initiatives; it's a tribute to the strength of the financial sector in this country. I think we're – these – are causes for pride, but we need to continue building on all of that so that we can spread the benefits of this economic growth fairly around the country.

QUESTION: Minister, can I just ask you briefly – can I ask you briefly about the latest in Doha and the push from…

EMERSON: Sure.

QUESTION: … some developing countries to change some of the food subsidy rules to allow for stockpiling.

EMERSON: Yep.

QUESTION: Is that something Australia's receptive to?

EMERSON: Yeah, what we want to achieve out of Doha is an outcome based on what Prime Minister Julia Gillard set for Doha when we came to appreciate that there was an impassable blockage, and that was trying to conclude all of the negotiations concurrently. That's not going to happen, and therefore we develop this notion of new pathways, which the Prime Minister put to the Commonwealth Heads of Government meeting in Perth, to the G20 meeting, to the APEC meeting, indeed to the EAS meeting last year.

And it was endorsed by Ministers at the formal Trade Ministers' meeting in December of last year. Fresh and credible approaches as we seek these new pathways. What that means in practice is picking out a number of those areas of negotiation where we can bring them to completion early, and completing those and then moving on to others.

So we welcome practical initiatives where it is feasible to bring negotiations to a conclusion, and that's the yardstick that we apply.

QUESTION: So you don't think the food stockpile – you see that as part of the morass? You know, you don't…

EMERSON: No, I'm open-minded about countries putting up proposals where we believe that we can get them across the line, earlier rather than later. Otherwise we would – and I'm not commenting on this specific one about food stockpiles – but if we put everything back on the table we're effectively re-creating the impasse, and what we need to do is now we've broken the impasse, bring home those negotiations such as trade facilitation where there is an opportunity to do so.

QUESTION: The Chinese leadership is all but complete. Do you expect it to be …

EMERSON: Sorry?

QUESTION: The Chinese leadership looks like it's all but complete – the transition. Do you expect it under Xi Jinping to be business as usual? Or what can … what changes is the Australian Government…

EMERSON: Well we obviously recognise and congratulate Xi Jinping and the other members of the standing committee of the Political Bureau. This is a momentous time; leadership transitions don't occur often in China. He would take up the position of President in March next year, so this is a part of the leadership transition. And I think that it offers again, as has happened in the United States, the prospect of greater confidence in the global economy as this transition occurs over the coming months, as it has occurred, that is a verdict has been delivered in the United States in favour of President Obama. They will now move into, and have started the negotiations on, this so-called fiscal cliff. And so, perhaps, as a born optimist, I see really good signs in this for the future of the world economy, and therefore that's great news for Australia.

QUESTION: Do you think that the change, or the new leader in the Communist Party will start perhaps a more transparent – we'll see a bit more of a transparent China? Hillary Clinton during the week was saying that the Pacific is big enough for all of us in terms of the US and China. Do you think this could see a change in their relationship?

EMERSON: Well I think the relationship between the United States and China is sound. It's a strong relationship, and a relationship built on mutual understanding. And as the White Paper makes abundantly clear, the Australian Government's position is that there's room for everyone in this, the Asian Century in the Asian region – the United States, China, all of the ASEAN countries – India. Every country in the region has a great future if we continue to work together – that's what's been happening, and I'm very encouraged about it.

So we make it clear in the White Paper that there is no policy of containment of China; that we've never accepted that, and we don't. We think that we can all thrive in this region, in the Asian region in the Asian Century. And I actually believe that the relationship between the United States and China is in pretty good shape.

QUESTION: Do you think the leadership transition will bring any fresh momentum to the Australia-China free trade talks?

EMERSON: Well we'll continue those discussions. We had some informal discussions just earlier this week, and we would dearly love to bring those to a successful conclusion. It may now take that little bit of extra time as the leadership transition occurs, but we'll be there knocking on the door, and they come knocking on our door to see if we can resolve remaining issues. This is an agreement we would dearly love to see completed.

QUESTION: Mr Emerson, on the pursuit of Julia Gillard over [indistinct] when she was with Bruce Wilson all those years ago, what was your impression when you picked up the paper today and saw [indistinct]…

EMERSON: That's a lot of column inches.

QUESTION: … someone who thought they recollected something, actually may not have recollected that at all?

EMERSON: It's a lot of column inches, isn't it, to be devoted to not a single substantial allegation against the Prime Minister. And today's coverage says, well, all of those claims that have been made in the past about one particular aspect of this matter may now not have been valid claims. So, no doubt, there'll be another story tomorrow and the day after and the day after. I just think it's a lot of column inches devoted to a story which has involved not one substantial allegation against the Prime Minister. Why is there not one substantial allegation against the Prime Minister? Because she's done nothing wrong.

QUESTION: Is it reasonable to expect that she should explain how $5,000 was put into her account?

EMERSON: I think it's reasonable for the Prime Minister to say, as she has said repeatedly, she has done nothing wrong. And it may be in the interests of some, including The Australian newspaper, to keep this rolling and keep asking a set of questions. If The Australian newspaper has a substantive allegation to make against the Prime Minister, they should have made it by now.

QUESTION: Minister Emerson, can you just clarify whether or not you spoke to the New Zealand Minister today about the issue of importing apples and…

EMERSON: We did.

QUESTION: … potatoes. Yep. What was the basis of the discussion?

EMERSON: That, you know, what we're doing is bringing into effect the decision on apples which was made by what I think is a thoroughly appropriately named body, the Appellate body in Geneva. Thanks very much.

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