Sally Sara, Host: The Federal Government says US trade officials have confirmed the 10 per cent tariff for Australian imports, but the Minister for Trade Don Farrell says Australia will this weekend be pushing hard for zero tariffs. Earlier this week, US President Donald Trump had initially threatened the baseline global tariff of 15 per cent in the wake of the US Supreme Court striking down his so‑called Liberation Day tariffs.
Don Farrell will be in talks with his US counterpart this weekend. The Minister joined me a short time ago from Los Angeles. Don Farrell, welcome back to Radio National Breakfast.
Minister for Trade and Tourism, Don Farrell: Thank you, Sally.
Sally Sara: Can you explain what the current state of play is for Australian exports to the US; what proportion of goods will be facing tariffs of 10 per cent?
Minister Farrell: All right. What's happened since the Supreme Court made a decision to remove the tariffs that President Trump had originally imposed, is that there was an announcement by the President that he would replace the 10 per cent tariffs with a 15 per cent tariff. But when we looked at the Executive Order that he had signed after the Supreme Court decision, the figure was in fact 10 per cent, not 15 per cent, and over the weekend we confirmed with my counterpart, Jamieson Greer, that in fact the figure was 10 per cent and not 15 per cent.
The effect of that is that all of the tariffs that were previously on Australian goods at 10 per cent remain the same. So that's things like lamb, and a range of manufactured goods. That still leaves about 30 per cent of our products that get into the United States, including things like beef, like gold, like copper, all on a zero tariff. So there's different tariffs for different products, but the net effect of what's happened over the last week is that there's been no change to any tariff applied to Australian goods.
I'm chatting with my counterpart, Jamieson Greer, tomorrow, and we're meeting again in a couple of weeks' time. We're going to be pressing the Americans for the removal of all of those tariffs. We don't think they're justified, we don't apply tariffs to goods that come in from America. Our Free Trade Agreement provides that those goods that come from Australia to the United States should go tariff free and we want the Americans to honour that agreement.
Sally Sara: Is there some frustration from Australia regarding the imposition of the 10 per cent?
Minister Farrell: We don't think it was justified in the first place, Sally, and of course the decision behind the highest court in the United States to remove those tariffs really does vindicate our position.
You might recall when the tariffs were first imposed, we argued that the only effect of these tariffs would be to push up prices in the United States. That's exactly what's happened. So the reason that the President removed the tariffs on beef was that it was in fact impacting on cost of living in the United States.
We say that's also true for the rest of the products that we sell to the United States, and my argument to my counterpart tomorrow will be that we want these tariffs removed. Firstly, because it's in Australia's interests to have them removed, because it simply pushes up the price of our product in the United States, but it also pushes up the cost of living for ordinary Americans.
Sally Sara: Mr Trump has announced that he wants to raise tariffs to 15 per cent for some countries or even higher. Do you have any assurances from the US that Australia is exempt from that?
Minister Farrell: That will certainly be one of the issues I'll be raising with my counterpart tomorrow. As I said, our argument won't be, "don't increase us to 15 per cent", our argument will be, "remove all of the tariffs in accordance with our Free Trade Agreement".
Sally Sara: What action will Australia take if the United States, in your view, fails to honour the Free Trade Agreement and fails to remove even the 10 per cent tariffs?
Minister Farrell: We will continue to discuss the issues with the United States. We believe our argument is the correct argument. The American Supreme Court agrees with us that these tariffs are not appropriate. Just as we did with China, Sally, we'll keep the discussions going. Obviously, America is a very important ally for Australia, but they have to honour the terms of our agreement. Just as we did with China, and it took us a few years, but we got $20 billion worth of tariffs removed from Australian products. We've got the right argument here Sally, and in due course that argument will be successful.
Sally Sara: Is there any clarity on whether there may be tariffs refunded?
Minister Farrell: Sally, the way the tariffs work in the United States system is that the importer pays the tariff, Australian companies by and large don't pay tariffs when they export products into the United States. So it will be up to the importers who have brought those products into the United States to get their tariffs back.
President Trump has made it pretty clear that he will oppose any refund of those tariffs, and the way the American system works, it will probably be some years in the courts before that issue is ultimately determined.
Sally Sara: Are there any instruments under the Free Trade Agreement with the United States that could be enacted in this situation to put a penalty or place more pressure on the US to revert to zero?
Minister Farrell: It's my job Sally, to convince the Americans that they're going down the wrong track. I think as time goes by it will be increasingly clear to the American Government that the action they've taken has taken them down the wrong track, and that's what I intend to do.
Sally Sara: You're listening to Radio National Breakfast. My guest is the Minister For Trade and Tourism, Don Farrell.
Turning to another export market for Australia, the EU, you've travelled to Brussels for altercation with EU officials on a Free Trade Agreement. Are we any closer there, Minister?
Minister Farrell: Look, we're making very good progress in our discussions with the Europeans. I spoke with my counterpart, Maroš Šefčovič last weekend, and when I get back to Australia next week, we'll have further discussions.
Both Europe and Australia believe in free and fair trade. We believe this is an opportunity to take advantage of the instability in the rest of the world to reach an agreement, and it's my job, if we can, to reach agreement with the Europeans, and to get a Free Trade Agreement with them. A population of 450 million people, a GDP of $30 trillion - they would be an important market for Australian products, and we need to get our products into the European market.
Sally Sara: What are the remaining sticking issues, and how quickly are you hoping to see an agreement signed?
Minister Farrell: We're both committed to trying to reach an agreement in the next few weeks. There are a number of outstanding issues that have sort of been well reported over the last couple of years, particularly in the agricultural area, but it's my job to reach an agreement.
I believe it's in the national interests of Australia to get an agreement, particularly given the instability in the rest of the world. We have managed to increase our trade last year to $1.3 trillion, so a record level of trade despite that instability, but I think we can do more.
Part of my job as Trade Minister is to try and push companies out the door and take a chance to get their wonderful products into the international market. Why is that? Well, if you're an outward‑facing Australian company, your profits are likely to be higher, but more importantly, the wages of your staff are likely to be higher.
So I see my job as getting these Free Trade Agreements, but then making sure Australian companies take advantage of them.
Sally Sara: Just finally, the Canadian Prime Minister will be visiting Australia next month in the wake of his now famous rupture speech. What do you think about, from your portfolio, what should Australia be doing next as a middle power on the trade and strategic front?
Minister Farrell: Look, we should be putting the argument that free and fair trade is good not just for the prosperity of Australian businesses and Australian workers, but for all businesses and all workers throughout the world. It's by reducing the barriers to trade that you improve your prosperity. That's what Australia has always done, Australia has been very good at it, we're actually getting better at it despite the instability around the world. We have to push that argument.
I think we'll get a receptive ear from Prime Minister Carney. We're like‑minded in the sense that we both believe in free and fair trade, and I think we've got to prosecute that argument. We've got the World Trade Organisation meeting coming up in a couple of weeks' time, we'll certainly be going there to push the message that free and fair trade is the way that countries improve their prosperity.
Sally Sara: Minister, thank you for joining me.
Minister Farrell: Thanks Sally, nice talking with you.
Sally Sara: That's Federal Trade Minister, Don Farrell there. You're listening to Breakfast.