Interview, Bloomberg New Economy Forum 2021

  • Transcript, E&OE
Subjects: USA-China bilateral relations; emissions reductions; CPTPP; India Free Trade Agreement; supply chains.

Speaker: Minister, good to have you with us. We talk about geopolitics. We had that virtual meeting between Xi Jinping and Joe Biden, both trying to dial down tensions. Of course, Australia have been caught in the crosshairs. How do you see the bilateral relations at this point in time?

Dan Tehan: Well, can I just say how wonderful it is to be here in person with you. I flew up commercially from Australia last night, I’ll fly back commercially this evening. I won’t have to do two weeks quarantine. We’re able to see people in person. It’s just wonderful to be here. So can I just say how much I’m enjoying this chat already and being able to do it face to face.

Look, geopolitical tensions are there but I must say it was very good to see the two presidents be able to have a dialogue over the last 24 hours, and a very meaningful and significant dialogue, and that’s what Australia wants to be able to do with China itself. We are looking for constructive engagement. We want to be able to work through our differences and our issues because we understand how important, especially our economic relationship is — it’s helped lift millions out of poverty in China, it’s helped us maintain our standard of living. So, we're very much looking forward for that constructive engagement, and we hope that that will come over time, because we’ve seen what dialogue can lead to in the last 24 hours.

Speaker: And, Minister, you’re joining me here at the New Economy Forum just days after your Prime Minister was under heavy criticism for the lack of commitment when it comes to fighting climate in Glasgow. Your thoughts on that? I mean, what do you make of what the world thinks about the inaction of Australia?

Dan Tehan: Well, I mean, Australia is playing its role and playing its part. We’ve committed to net zero by 2050. If you look at what we’ve actually done, we’ve met our Kyoto commitments, we’ve met our Paris commitments, we’re going to meet and beat our Paris commitments. If you look at our emissions reduction, we have reduced our emissions at a greater level than New Zealand, the US and other major economies so we’re very much playing our part. Not only that, a $20 billion investment over the next decade to work in partnership with countries, in particular, in the region, to reduce emissions with a real focus on technology. So, we’ll continue to play a significant role in reducing emissions but doing so in a way where all countries will benefit from it.

Speaker: But, Minister; how is that a plan? By your own calculations, by your own modelling, you’ll be emitting 250 million tonnes of CO2 by 2050. That’s a huge amount for a country especially that’s been saddled with natural disasters.

Dan Tehan: So, net zero emissions by 2050 – that is our commitment and when Australia makes a commitment like that it will meet it. We are one of the few countries that made commitments when it came to Kyoto and met those commitments. We’re one of the few countries who’s made commitments when it comes – came to Paris — and we’ve met those commitments and we will beat them. And we’re investing significantly in making sure that we will get to net zero by 2050.

And I’m incredibly confident that we’ll be able to get there because when Australia makes a commitment it honours it. And not only will we that commitment, but we’ve made a commitment to work with all other countries to help them be able to achieve it through technology partnerships. I met with the Singaporean Trade Minister earlier today where we’ve got our Green Economy Agreement which we’re negotiating at the moment, and that’s to help Australia and Singapore meet that commitment to net zero by 2050. And that agreement will become, I think, a world-leading agreement for the Indo-Pacific, and our hope is that other countries will join us because we’ve got to have a path and a plan to get to net zero.

Speaker: What would it take for Australia to be more aggressive in getting to net zero, bring the timetable forward from 2050?

Dan Tehan: Well, I can tell you already when you look at our Paris commitments, we committed to a 26 to 28 per cent reduction on our 2010 emissions. We’re already on target to meet and beat that, and probably hit at least 35 per cent. So, we are already being ambitious and trying to get ahead of the game when it comes to emissions reduction.

But, importantly, we understand, as all other countries do, you have to take your industries and your economy with you. The easiest thing to do would just be to turn off the switch and you’ll get no emissions, but you would ultimately have no economy left. The key to this is to take your economy with you. We understand that we have to do that. We understand that all other countries in the world have to do it and that’s why our technology approach will lead, we think, to getting to net zero by 2050 and enable other economies to do the same.

Speaker: Minister, let’s talk trade. CPTPP, China has said it wants to be a member of that grouping. Of course, some may say, it’s especially the US saying, “You know what? China should be part of it”. What are your own thoughts? Because this could be among the discussions that you have with US Commerce Secretary Gina Raimondo later today.

Dan Tehan: So incredibly important regional trade agreement, CPTPP. It has the gold standards. I think it’s the best trade agreement in the world. So, we’ve made it very clear that any country that wants to accede to CPTPP would have to meet those gold standard rules. Now, the UK is the first country going through an accession process at the moment, and that will set the guardrails for other economies to follow.

But, most importantly for us is, as we’re showing with the UK, you have to be able to sit down and work through, especially, your market access issues when it comes to goods. So, we would need some sort of ministerial dialogue to be able to work through that market accession. Obviously economic coercion, trade disputes, those types of things, would all have to be dealt with and we’d have to work through those but also there would have to be that firm commitment to those gold standard rules.

So, we’re going through the process at the moment with the United Kingdom, and that very much will set the guardrails as to where we will go with future accessions.

Speaker: Of course, Taiwan wants to be part of CPTPP as well. Do you think – what are the risks that Taiwan’s membership perhaps would be stopped by China?

Dan Tehan: Well, every economy that seeks to join CPTPP – it’s obviously consensus-based decision-making, so all countries have to agree on what those guardrails are and what will be and what will be required — so, we’ll continue to work through that with the membership, whether it be –

Speaker: Have you had conversations with Taiwan on its potential membership in the CPTPP?

Dan Tehan: Look, I haven’t had discussions since they formally decided that they want to join CPTPP. I, obviously, have previously but like any accession the same rules will apply to whatever economy, whatever country wants to join CPTPP, and that’s a process that we’ll follow with all the other members. And ultimately it will be consensus-based decision-making which leads to those accession processes.

Speaker: You’re currently in negotiations for a free trade agreement with India. What’s the latest?

Dan Tehan: Well, I spoke with my counterpart Minister Goyal the day before yesterday. We had very good discussions, so we’re going to have an exchange of offers next week. So, that will be a significant future step. We’ve now agreed to a path for when our negotiators will sit down and start talking. So, my hope is we’ll have a first round of negotiations beginning early next year and we’ll have preliminary discussions in the next couple of weeks. So, we’re making progress. Obviously, these FTA negotiations are tough. They always are but we are really working towards a commitment to have meaningful progress made before the end of the year and then a substantive agreement concluded by the end of next year.

Speaker: Minister, one final question before I let you go: we’ve been saddled – the world has been saddled — by the congestion of ports, bottlenecks. Is there a sense when you think supply chains disruptions will end?

Dan Tehan: When it comes to global shipping, all the information that I’m hearing is it could take some time to play out, so it could be another 12 to 18 months. I think it’s something that all economies will need to deal with over time. We need to see more investing into global shipping. We obviously need to see more investment in our ports, both for landside of ports and the seaside of ports, to make sure that we can deal with some of that congestion.

So, this will be one of the issues I’ll be discussing with the US Commerce Secretary today because it’s impacting on all countries, and especially in the Indo-Pacific. And we were talking earlier about inflation pressures well it’s one of the things which could add to inflation pressures. So, I think all of us need to put our heads together and work out what we can do to address these current congestion issues and it’s probably going to be, at its key, more investment.

Speaker: Minister, thank you so much for your time today. Glad to have you in my city.

Dan Tehan: A pleasure.

Speaker: Australian Minister for Trade, Tourism and Investment Dan Tehan.

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