Interview - Squawk Box Panel, CNBC
Will Koulouris: I am incredibly pleased, to discuss all of these issues, to introduce the Trade Minister, Tourism and Investment Minister of Australia, Dan Tehan. He’s joining us live from Canberra. Minister, thank you so much for being here. Just firstly, I wanted to talk about the FTA. I know you had those discussions with your counterpart yesterday, and I suppose at the risk of sounding like a really annoying kid in the back seat of a car on a road trip, are we there yet?
Dan Tehan: Look, discussions continue. I’ll be talking to Liz again tonight. We’ve got a lot of work to do in the next week, then our Prime Minister will, obviously, leave for the United Kingdom for the G7 meeting and bilateral talks with Prime Minister Johnson. So still more work to be done. We’re working tirelessly. Officials are doing a mountain of work as we dot i’s, cross t’s and work through the final details. So not there yet, but we’re continuing to work tirelessly on it.
Koulouris: So, in terms of some of the things that are, I suppose, holding up the discussions in that respect, is it the ISDS, the labour mobility issues, or is it really just, I suppose, centred on the issues when it does come to the farmers and the zero tariffs, zero quotas?
Tehan: Look, so obviously, we want to make this the most ambitious free trade agreement that we’ve done since New Zealand. So, there’s a lot of discussion going on, whether it be services, investment, mobility. We want people to be able to move from between the UK and Australia as freely as they possibly can, and, obviously, on goods, market access, including agriculture. Our aim is to make this the most liberalising agreement that Australia has done with any country outside of New Zealand and so there’s a lot of work going on still to make that a reality.
Koulouris: I wanted to touch on agriculture as well. We had the dispute panel body in terms of the WTO when it comes to barley and Australia and China. Obviously, you were pleased that New Zealand had signed on as a third party to that dispute at the same time, but also you’ve mentioned that Australia and China may be having another WTO dispute on the cards over the next few weeks when it comes to wine. So what I really wanted to get from you is, do you see there to be any kind of way that Australia and China – and I know that you’re trying to get them on the phone – but is there going to be any kind of resolution, in your mind, at any time, over the next couple of years?
Tehan: Well, look, that’s our hope, and that’s why I’ve written to my Chinese counterpart. We were appointed around the same time, just before Christmas—offering to sit down and work through these current disputes that we’ve got with barley, with wine, lobster, timber, and other issues. Look, so far, I haven’t had a response to that correspondence but my hope is that we can sit down and work through these issues. Dialogue is the best way to resolve issues. You mightn’t be able to agree on everything, but at least you can work through issues and come to an understanding of where both countries are coming to. So, we will continue to seek that dialogue but, in the meantime, we’ll take a very principled approach. And if we think that our industries have been injured or harmed by action that’s been taken by any country, including China, then we will ultimately seek the WTO, as the independent umpire, to try and have those issues resolved, if we think we’ve got a case which is a strong case—and, at the moment, when it comes to wine we’re considering whether we do have a strong case. We’ve worked very closely with the Australian wine industry to understand the injury that has been caused by the action that China has taken and we’ll be making an announcement on whether we will go to the WTO with regards to wine in the coming weeks.
Christine Tan: Minister Tehan, this is Christine here in Singapore. As you try to pursue a dialogue with China, is there any work going on behind the scenes within the Australian government to try to find new markets for many of your exports?
Tehan: Of course, we’re always looking at ways to find new markets. So, we’re in negotiations, as we mentioned earlier, with the United Kingdom on a free trade agreement. We’re also in negotiations with the European Union on a free trade agreement and our negotiators at this very moment are in the 11th round of those negotiations, and we made very, very strong progress in the 10th round. So, we continue to explore those opportunities with the European Union. That would open up a new market for Australia, when you combine the United Kingdom and the European Union, of over 500 million people. So, we’re very much focused on that at the moment, but we’re always looking, as well, at other opportunities that we can pursue, whether it be through our existing trading partners or by opening up new avenues to be able to export.
Sri Jegarajah: Minister, good morning. What’s the risk that Australia and China commercial relationships could disappear down a retaliatory rabbit hole? Could major exports like iron ore and LNG potentially even be in the firing line?
Tehan: Well, we want a very constructive relationship with China. Trade benefits both countries. It’s helped lift millions out of poverty in China and it’s helped us continue to grow and improve our standard of living here in Australia. It’s a win-win. It’s mutually beneficial for both countries, and our hope is that there’s a clear understanding of that between both countries. And so what we want to see is a way that we can have a very constructive relationship, we can make sure that the benefits that have accrued from our trading relationship can continue—because they’ve accrued for both nations—so we want to make sure that we’re doing everything we can to have that constructive relationship, to be able to, ultimately, sit down and work through these current issues that we have with China, because we think that will not only benefit China, and its economy, and its people but also will benefit our economy and our people.
Jegarajah: Minister, what’s your take on the global macro picture and where we are in terms of the current cycle? And Australian terms of trade clearly benefited from this melt-up in commodity prices. But would you describe it as a super cycle?
Tehan: Look, I wouldn’t describe it as a super cycle, but as we all understand we’re coming out of a pandemic. We’ve seen a sharp pick-up in commodity demand through this period. But we also have to understand that that will moderate at some time, and anyone who’s dealt in commodities knows and understands that it is cyclical, and the most important thing is to be able to prepare, through investment, for those times when the cycle is on a downward movement. But, at the moment, all our forecasts show that commodity demand will remain strong. Our economic performance as a result of that, coming out of the pandemic, has been incredibly strong, and the forecasts we have for the next 12 months, as laid out in our budget, which we brought down only three weeks ago now, is that our economy will continue to grow and grow quite strongly as we come out of this pandemic.
Koulouris: Minister, just quickly, the APEC meeting is on the weekend, are you going to be supportive of this New Zealand push in terms of the vaccine tariffs, and also their seeking of the moratorium on the no new subsidies for fossil fuels?
Tehan: So, we’re looking forward to working very cooperatively with New Zealand on their APEC agenda. There are a couple of items which we strongly back and that is around making sure that we are able to reduce or eliminate tariffs on vaccines and health products around the Asia Pacific. We think that’s a very positive initiative. They also have a very positive initiative with regards to reducing or eliminating tariffs on environmental goods and liberalising environmental services—we also welcome that, we think that’s a much more positive way to help all countries deal with emissions.
Jegarajah: Minister, we have to wrap it up there I’m afraid. We’re just out of time, sir.
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