Interview on Bloomberg, Bloomberg Live, with Paul Allen
Paul Allen: The US-China trade talks, are they getting scary now? Because we've got a meeting this month. There's no schedule, no date, no nothing. What's the best case here?
Simon Birmingham: Well, it is a concern that there seems to be an impasse that has worsened of course, in terms of escalation of tariffs and measures applied against one another. And yet we don't see the clear off ramp in terms of how are the parties going to get to a point of having successful discussions to resolve it. Now our position has been clear all along, and that is that we do understand some of the points of concern in relation to forced technology transfer, protection of intellectual property, and that Australia shares those concerns, as do many other countries of the word. But we don't believe that the unilateral application of tariff hikes is the way to go about trying to resolve these issues and that we're concerned about the impact on the global economy, and on economies like ours as a result of these ongoing measures that are clearly now having a direct and real impact on trade volumes, and from that, on economic growth.
Paul Allen: And China, particularly, so critical to the fate of Australia's economy being the largest trading partner by some distance. But are there any risks here as China slows, and I mean particularly in terms of these key commodities such as iron ore and coal. Has the weakness in the Aussie dollar been enough to offset that?
Simon Birmingham: Well, there are always risks that we seek to manage. Now the fact that there was a global trade war underway was known back at the time that we structured our budget in May of this year. And critically at that time, in April, May, we made sure that we put in place reforms to deliver tax cuts in Australia that will provide more revenue back into household expenditure. And we hope that those sort of measures can of course sustain academic activity here, record infrastructure investment in this country as well.
In terms of our trade volumes, we continue to look as to how we can expand access opportunities for Australian farmers and businesses elsewhere around the world, to make sure that whether it's in new trade deals that we've struck with Indonesia or trade deals that we are still negotiating with the European Union. In all those cases, it's about creating more opportunities, more diversity for Australian businesses to choose where to send their goods and products and to give them that chance to diversify their risks.
Kathleen Hays: Minister Birmingham, hello, it's Kathleen Hays in New York. It wasn't so long ago that trade negotiations, things like free trade agreements, were kind of in the background and every once in a while there'll be news on a big deal. But nowadays, the style has certainly changed, at least in the US. Does this new environment make it harder for you to sit down with India, when you sit down with the EU and try to reach an agreement? Or is it just background noise?
Simon Birmingham: Look, I think we continue to get on very successfully with the job of negotiating new trade opportunities. Now, Australia has been a leader in recent years, especially since our Government came to office in 2013, in demonstrating the ability to get on and get deals done. And what we did was as the only major economy in the world, to strike deals with all three major North Asian economies, with China, Japan and Korea, really positioned the Australian economy to be in the strongest possible position to export into all of those markets. In persevering with the Trans Pacific Partnership when the United States walked away from it; we demonstrated together with other partners a commitment to continuing to open up borders, open up trade, and to use what has been the conventional and proven demonstrated way of sustaining economic growth in recent decades, that we will continue to apply that by seizing these opportunities for more open trading environments and relations between countries. And we'll persevere with that. Yes, there's a lot more of an intense focus on it nowadays. But that focus also means that in negotiations such as the regional comprehensive partnership agreement, the 16-nation bloc agreement with the 10 ASEAN countries at its core.
Now, I think there is not only the content that people are focused on as how to get the best deal in terms of the structure and content of that but also a recognition that symbolically it can be very important at this point of time of global headwinds in relation to free trade and open markets. But if we can seal an agreement like that, it's a demonstration that particularly our region, the Asian region, is committed to continuing that proven pathway of open markets and open trade.
Kathleen Hays: May I switch gears just a little bit and ask you a question from one of our Bloomberg Television viewers: has the government seen more Chinese and/or Hong Kong residents applying for residency or citizenship in the past year? Is there a change in difficult [indistinct] …
Simon Birmingham: [Interrupts] Look, I'm not- I've certainly not heard of any data that suggests there's any particular or marked change in the numbers there. Australia has a very well-structured migration program and so in terms of people seeking visas and entry into Australia, we have made it very clear over a number of years that we focus on skills. We also have investment visa pathways as well, and people need to meet those standards. And it's a very orderly process and also has the requirements very clearly set out for people who are scored against a points basis as to whether or not they have the skills that we need as a country or against certain investment criteria as to whether they're bringing those dollars into the country in an appropriate way.
Paul Allen: Will, in the midst of the US-China trade battle, you're negotiating free trade agreements with other countries – India and the EU as well. Is it getting hard to conclude those when the climate can
change in the, you know, the breath that takes to type a Tweet?
Simon Birmingham: It's always hard to conclude trade deals. But no, I don't think the global environment is making it harder. If anything, I think it is providing will and political momentum that the other countries of the world are actually determined to demonstrate that we stand committed to open markets, to open trade and to growing those opportunities. And so, certainly from Australia's perspective, these types of tensions that we are seeing gives us reason to double down our efforts; to make sure that we create those new opportunities for our farmers and businesses and that we work extra hard to seize every incremental gain we possibly can in agreements and opportunities with other countries.
And we're seeing that many other like-mindeds around the world are wanting for both the structure and content of trade deals to do that, but also for the symbolism of demonstrating that we are getting on with that tried and proven and tested method of delivering economic growth.
Paul Allen: Do you have a timeline yet for when those two deals might be signed? India and the EU?
Simon Birmingham: Look, India is part of the RCEP negotiations and it's publicly known that under those RCEP negotiations we are working towards the end of this year. And I hope that can be realised. I will be travelling to Bangkok again at the end of this week for another round of the RCEP negotiations and I hope that we can see further progress to work towards that substantial conclusion at year's end.
The European Union, I would hope that we might be able to settle something by the end of next year. We've still got a little way to go there. We took the big step in Australia recently of releasing their list of geographical indications – that's part of the EU's demands. From Australia's perspective, what we want to see is much better market access across our services sector, as well as in goods, particularly the traditional agricultural goods that are very important to Australia.
Paul Allen: Just finally, in this – and I want to bring us back to where we started, really – in this uncertain environment we are, it seems – the Prime Minister particularly – softening us up for a rather soft read on GDP tomorrow. Is there a chance that we're going to get a negative reading there?
Simon Birmingham: Oh look, we'll see. I'll leave that for the market commentators to estimate what that may be. And we'll know the figure, of course, once it's released. But the June quarter this year was dominated by the election that was held in, of course, the middle of that period. So I think there are a number of factors that were driving uncertainty in the Australian economy at present. We did have a reality of a stark choice and significant expectations that there was going to be a change of government in Australia, and with that, significant escalation of taxes across a number of different areas, particularly hitting investments in the Australian economy.
So the fact that that was avoided and averted I think has seen confidence lift since then. That lift in confidence we hope will translate into economic growth, giving stability and certainty to investors. But all of those issues were not there at the time for much of those June quarter numbers.