ABC Radio National

  • Transcript, E&OE
Subjects: Trans-Pacific Partnership (TPP); World Economic Forum; President Donald Trump; Labor’s Betrayal of the Free Trade Legacy; Agricultural Trade.
23 January 2017

FRAN KELLY: Well, the Trade Minister, Steve Ciobo, is turning his attention to a plan B for free trade. He joins us from New York this morning. Minister, thanks very much for joining us.

STEVEN CIOBO: Good morning, Fran.

FRAN KELLY: "We must protect our borders from the ravages of other countries stealing our companies, destroying our jobs. Protection will lead to great prosperity and strength". That's what Donald Trump said. What did you think when you heard that sentiment and him even using that word "protection"?

STEVEN CIOBO: Well, Fran, I'm not going to build a structure on one or two sentences. Clearly, Australia's interests are well-served by us continuing to open up markets for our exporters. We've seen growth in this country being in many respects underpinned by the preferential market access we've had to major markets like Japan, like South Korea, like China. We've seen huge increases in the export of services as well as agricultural products to these key markets. And as Trade Minister, that's, of course, where I maintain my focus, opening new opportunities for Australian exporters because that ultimately is very good for our country.

FRAN KELLY: Well, that's all very well, but how worried are you about a sort of tit for tat, because there's the new American President talking on the weekend about other nations "making our products, stealing our companies and destroying our jobs". What does that even mean in this globalised world - a world where if you look at say the iPad, it's an American invention made in China, can these things be wound back? And how can we talk about American products, or Australian products or German products in a globalised world?

STEVEN CIOBO: Well I guess two points to that Fran. The first is obviously I'm sure you'd understand I'm not going to provide a running commentary on President Trump's statements, the second point though which goes directly to your question about global value chains and global supply chains is that yes Australia's future is very much embedded with these global supply chains. You frequently see where, for example, in the construction of any particular item, and take, for example, Boeing aircraft or the Joint Strike Fighter; we have some of the very advanced manufacturing of items for those aircraft that's made in Australia. Those parts are part of the global supply chain that ultimately results in the finished product that's built-

FRAN KELLY: But are you worried that these are the jobs that Donald Trump wants back in America?

STEVEN CIOBO: Well, what I'm making sure that we do is continue to open up markets for these Australian exporters, so whether it's agriculture, whether it's resources, whether it's advanced manufacturing, or whether its services. Our nation's interests are best served by continuing to open markets. Now there will be some countries who don't want to be part of that global value chain, but that's not Australia's future. That's not where we need to be. And what we've seen, and part of the reason why we've had 26 years of continuous economic growth is because we've been willing to embrace these opportunities for new markets and for Australian exporters.

FRAN KELLY: Sure, but the US is not just any country. Sure, you say that some countries won't want to be part of that global chain, but the US is a gorilla in this and it will make a difference. We had Donald Trump, one of his first pronouncements as President was to pull America out of the TPP. Why do you still have some hope that Donald Trump might change his mind or do you accept the TPP is now dead without America?

STEVEN CIOBO: Well, with respect to the TPP, I've just come off the back of the World Economic Forum. We had a world ... I should say we had a trade minister's meeting in the WTO, the World Trade Organisation as well. At that meeting, I had the opportunity to discuss the future of the TPP with countries like Canada, Mexico, New Zealand, Japan, Singapore, and Malaysia, and others. And Fran, what we all recognised was that there's tremendous gains that were achieved under the agreement. Now, it may come to pass, and certainly, it appears to be the case, that the United States won't ratify the Trans-Pacific Partnership. But the gains that we've been able to achieve absolutely warrant hanging on. And the conversations –

FRAN KELLY: But can you hang on without the US? My understanding was, the US sort of made up about 40 per cent of the trade covered under it and the agreement covered under the TPP agreement.

STEVEN CIOBO: Well, look, access to the US market, no doubt, was an incentive for a number of countries, but there's also a tremendous amount of benefit that has been able to be achieved under the agreement, which countries don't want to let go. This is exactly what we have been discussing over the past week, and what I will continue to pursue. Because you know, Fran, one of the benefits of trade, and this is a point that's been made by, for example, our Prime Minister as well as the UK's Prime Minister, people that view trade deals as win and lose deals, that's wrong. That's not how it works. It's not a zero-sum game. The fact is that the best trade deals are deals that produce win-win outcomes. And that's what we all recognise has been able to be achieved under the TPP. Now if it comes to pass that we need to make small changes in order to capture the benefits of the TPP and not have the United States as part of it, well then so be it. That's what we'll have to look at doing.

FRAN KELLY: Yeah, but I'd suggest that the TPP without the US is not a small change, it's a major redrawing of the agreement and there may be a tremendous amount of the agreement as it was written, but that will be significantly decreased without the US. Are you better off now as Australia's Trade Minister talking about Plan B, switching to less of a focus on trying to make the TPP happen without the US or looking at that other multilateral agreement on the table, which is called RCEP, I think, the Regional Comprehensive Economic Partnership led by China?

STEVEN CIOBO: Well let me be very clear on this, I can walk and chew gum at the same time. And on that point Fran, I'm not putting all of our eggs in one basket. Australia and for me as Trade, Tourism and Investment Minister, I am pursuing our national interests, I'm pursuing preferential deals with the TPP, let's call it 12 minus one, with the Regional Comprehensive Economic Partnership. At a bilateral level I'm having discussions with Indonesia and we hope to be able to conclude this year an export agreement with Indonesia. I'm having conversations with the UK with a view to putting in place a trade agreement with the UK once they formally exit the European Union…

FRAN KELLY: Of course.

STEVEN CIOBO: …I'm having conversations with the European Union as well, so these are all active considerations, let's call them pokers in the fire, that are very much in play as we speak.

FRAN KELLY: Of course, there's a lot of trade going on in the world and a lot of deals to be struck, but are you essentially wasting your time still focusing on the TPP minus one, I think as you said? Labor says it's a waste of time, that that deal's dead, you should move on to other things. Is it, and on that point, why haven't you done any economic modelling on how the TPP without America within it would affect our economy or the benefit of that?

STEVEN CIOBO: Well to go to your first point about is it a waste of time, look absolutely it's not. Fran, I mean, this is a real point of difference between Labor's approach and our approach. I notice that Bill Shorten and Jason Clare, the Shadow Trade Minister, came out saying oh, we should focus on Indonesia, well I mean terrific. I'm glad that they're reading press releases from last March. I mean, the Coalition has been doing that, I've recommenced negotiations with Indonesia last March and we're actually starting to reach the business end of the season and hope to conclude this year. So I'm glad Labor's playing catch-up on that.

FRAN KELLY: Sure, but if you're still saying we need to ratify the TPP because we need to absolutely underline that we see the importance of this, you should be able to tell the Australian people, shouldn't you, of what the value of that agreement is without America? Why haven't you done that modelling?

STEVEN CIOBO: Well there's been a number of parties that have done modelling on the TPP. To give an example –

FRAN KELLY: Without America?

STEVEN CIOBO: Well of course not, because this is only a statement that the President made on his inauguration on Friday –

FRAN KELLY: Well it's not like we didn't see it coming.

STEVEN CIOBO: I mean I think frankly – well Fran, I think it's frankly a little unreasonable to expect institutions like the World Bank and others around the world to have raced out and modelled something on a hypothetical. I mean, let's deal with, there's a thousand hypotheticals you could come up with and obviously not every single one of them is modelled, so let's deal with what we actually have in front of us. Now to go to your point about is this still worth pursuing, of course it's still worth pursuing. The fact that, for example, that we have the opportunity to capture gains on Australian beef exports to Japan, the fact that we've got the opportunity to capture big gains and streamlining of trade between 11 countries, the fact that we could benefit from financial services exports to 11 countries, these are all really important gains and to just walk away from them is to walk away from a more prosperous future and I'm not prepared to do that. And frankly, I think it's a great shame that Labor and Bill Shorten are willing to do that. We saw them basically flinch on the Australia-China Free Trade Agreement until one minute to midnight and I just think that that's poor leadership from Australia's alternative Prime Minister.

FRAN KELLY: You're listening to RN Breakfast. Our guest is the Trade Minister, the Federal Trade Minister Steve Ciobo he's in New York for trade talks. A couple of questions just to finish on the trade, Barnaby Joyce told us on AM earlier agricultural trade is key to our economy, obviously. He said it pays for our schools and our hospitals and our way of life, do you see the sentiments being expressed by the new President as a threat to our standard of living?

STEVEN CIOBO: No, because we've been able under the Coalition to lock in preferential market access to Korea, to Japan and China, just to name some and as I said Fran, I'm hoping to build on that with, for example, Indonesia and over time, India as well. These will continue to be important markets. It's not just for agriculture, agriculture is a crucial export for us but it's also what we can do with services. Fran, services is about 75 per cent of the Australian economy yet accounts for only roughly 22 per cent of our exports. We can really boost our services exports as well and that's going to be great news for our future prosperity too.

FRAN KELLY: Steve Ciobo, thank you very much for joining us.

STEVEN CIOBO: A pleasure, thanks.

FRAN KELLY: Steve Ciobo is the Minister for Trade, Tourism and Investment. He's joining us in New York. He's in the United States for trade talks and for the G'Day USA events which are about to kick off.

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