Interview on 5AA Breakfast with David Penberthy and Will Goodings

  • Transcript, E&OE
Topics: Australia-China trade relationship, US elections.
06 November 2020

David Penberthy: There's more than a degree of consternation in some of South Australia's biggest export industries about repercussions about how we’re threatened and are being followed through on by the Chinese government due to the fact Australia saw fit to lead an international campaign to investigate the origins of coronavirus. You would have thought pretty inoffensive thing to have asked, to have done, given not only has it killed millions of people around the world, but it has killed economies right around the world as well. That said, there were threats in the early stages that this would mean bad things for Australian export markets. And the reality has been that we're seeing that now play out.

The latest, that the China Alcoholic Drinks Association asked the Chinese Ministry of Commerce to impose retrospective tariffs on Australian wines. Wine makers have also heard from Chinese importers that an informal message has been sent from authorities asking them to stop importing several Australian goods, including wine, from November 6. It's not just wine, though — the multi-billion-dollar copper mining sector is also concerned there were reports it could be a target, along with sugar, timber, barley, coal, lobsters. The lobster industry in the South East is watching this closely, they have concerns that they could be next. Senator Simon Birmingham joins us. Minister, good morning to you.

Simon Birmingham: Hello guys. It's good to be with you.

David Penberthy: What's your assessment of this as the Federal Minister for Trade? How serious do you think China is about attacking these sectors of our economy?

Simon Birmingham: Well, the ongoing reports that we're getting from industry and a range of different news sources are deeply troubling, and there's no denying or getting away from that fact. There's a lot of inconsistency in what we see and hear as well — Chinese official government statements denying any coordinated effort being taken against Australia, they deny any discriminatory actions that are being taken. But that doesn't seem to be what industry is seeing and hearing at present. And ultimately the proof will be in the pudding. If there are no such discriminatory actions in place, then we should be able to resolve the issues that some of our seafood producers have found in terms of the clearance through customs, which should not see a disruption to our wine exports to China. So we hope that the Chinese government is true to its word and that these issues can be resolved, but there's no denying the fact that the range and extent of concerns that industry are hearing is deeply troubling.

David Penberthy: Some of the accusations against Australian industry and the role the Federal Government plays in supporting them has been absolutely outrageous. I mean, one of them was the suggestion there’s been dumping in the wine industry, which is the exact opposite way in which that industry works. If some of these spurious claims end up resulting in tariffs or some other form of trade protection, what's the mechanism by which that can be addressed? Does the WTO have a role to play here?

Simon Birmingham: So ultimately, if China goes down the path with the wine industry as they have with our barley industry of applying dumping duties or anti-dumping duties, and claiming falsely that there are extensive subsidies in those sectors, then yes, we can proceed through to the World Trade Organization with a dispute there. We’ve undertaken WTO disputes with some of our closest friends and partners that are like Canada and India, and so there would be nothing exceptional about us doing that with China — and we do reserve all our rights in that regard. Some of the other issues that we're facing are a little trickier in terms of the fact that there's an opaqueness to some of the issues that are being raised. The industry claims that buyers are I think we're being told not to purchase Australian goods, and, you know, that sort of coercive action by another country in interfering in the private arrangement between businesses would be another level of concern and that's why we pleasingly note that China denies such actions have taken place. And we will be monitoring what happens in terms of those trade flows very closely to hopefully see that they live up to their word.

David Penberthy: Senator, do you think that, philosophically, we need to have a broader think as a nation about whether we are too overly dependent on a country whose system of government and manner of behaviour doesn't exactly gel with ours? And start looking for different trade partners?

Simon Birmingham: We as a government have sought to open as many doors as we possibly can for Australian businesses, and that's why we've done trade deals not just with China over the last seven years, but also Japan, Korea, Indonesia, through the trans-Pacific partnership with Vietnam, Canada, Mexico — why we’re pursuing agreements with the EU and the UK and have a comprehensive economic strategy for our engagement with India. So, it’s all about giving Australian businesses, the maximum number of choices.

Now, who business chooses to trade with, these are commercial transactions, as they should be, and businesses choose where they find sellers and or buyers and who they sell to. And I guess though, what we would see this year with the range of issues that we’re talking about, is the risk profile has changed dramatically for many Australian businesses. That the constant stream, it seems, of concerning, troubling administrative or other decisions being taken in China, heightens the risk for Australian businesses in terms of trading there and putting too many eggs in one basket, potentially, for some big businesses or sectors. And a business decision is always a balance between risk and reward. For some the reward of what is the largest market in our region will no doubt remain great enough; but, for others, the risk of these sorts of disruptions, I’m sure, we’ll see them look at any of the other opportunities, be it Indonesia or India or get- or further afield, that our Government sought to open up for them.

David Penberthy: Where is India? That feels like it’s a realistic opportunity at the moment. We’ve engaged on a military level with them, increased capacity with the QUAD, the Quadrilateral Security Dialogue with Japan and the United States in recent months. Can we fast track that agreement? Because, as far as I can see, it’s currently still in negotiation?

Simon Birmingham: Relations with India are indeed very strong — India is being hard hit by COVID, as many other parts of the world are, and so they have enormous challenges in their systems right now. It's correct that we don't have a formal free trade agreement with India, and we probably won't see one of those for a little while. I hope that we can find an avenue for a breakthrough there, but India is challenging in terms of FTA negotiations, but they are absolutely open to deepening other areas of economic cooperation.

And so, during the course of this year Prime Minister Morrison and Prime Minister Modi signed what's known as the Comprehensive Strategic Partnership Agreement between our two countries, that includes commitments to deepen cooperation in areas such as critical minerals, resources – they’re types of things that support lithium batteries and other critical minerals that go into phones and technologies and so on. So, we're really exploring opportunities to deepen the economic cooperation with India and working to a range of strategies that, even if we can't get to the point of an FTA, hopefully we can manage to secure growth in that market by many other means. And we've seen that paying dividends in the last few years with quite strong growth in trade with India across a whole range of categories.

David Penberthy: The leader of our most important ally has alleged that there is voter fraud, and that the US elections have been somehow tampered with. As a Minister of the Australian Government, do you have concerns about the manner in which elections have been conducted in the US?

Simon Birmingham: Look, I have confidence in America's systems, and their democracy, to withstand any of the challenges that come about during an election environment. I have no doubt that elections will be conducted and counted fairly, and that the democratic will of the American people will ultimately be what we see upheld. And whether that involves legal challenges or not, we will end up with the President, I'm sure, who reflects what the majority opinion in the US is as a result of votes cast freely and fairly. And that's what we should all see.

Earlier this morning I saw some footage of the greatest president, perhaps, that America never had — the late John McCain — a wonderful, wonderful man, and I saw footage of his concessional speech when he conceded to Barack Obama. And I think we can all that hope that that, at the end of this very fraught election period, whoever the loser is, is able to muster the type of strength of character and goodwill to be able to repeat some of those very admirable sentiments that John McCain did when he lost and acknowledged Obama's success.

David Penberthy: Is there anything in the likely losers past behaviour that makes you optimistic that that might occur?

Simon Birmingham: Well, I won't go so far as to predict the final outcome, I just won’t do that.

David Penberthy: Well, just to round out the discussion, Senator, because I mean, the election is having interesting implications for the conversation that we we've had you on about this morning. One of the first things that President Trump did when he won back in 2016 was pull out of the Trans-Pacific Partnership, and it was seen as a withdrawal from our part of the world in an economic sense. Is there the prospect of renegotiating American participation to that Agreement should there be a change of Government in the US?

Simon Birmingham: Look, I would always hold out some hope there, but probably not a great hope that it would be an early priority. We will encourage whoever wins the US election to continue to deepen investment and trade ties with us and our region. The US is, in fact, Australia's number one investment partner. So, in terms of the flow of investment both from another country into Australia and from Australia into another country, the US is a standout there. And so, it's a crucial economic partner as well as an ally in other, in other ways. The Trans-Pacific Partnership, we do see expansion opportunities for countries like Thailand, the United Kingdom are interested in joining the TPP. We’d warmly welcome the US back to the table, but I wouldn't necessarily expect that to be in early order for whatever administration we get post-January.

David Penberthy: Good stuff. Senator Simon Birmingham, the Federal Minister for Trade and also Finance. Thanks for joining us this morning on 5AA.

Simon Birmingham: Thanks so much guys.

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