ABC, The World

  • Transcript, E&OE
Subjects: Australia Week in China (AWIC), Arrium, free trade agreement with China (ChAFTA).
12 April 2016

AUSKAR SURBAKTI: The Trade Minister Steven Ciobo joined me a short time ago, from Beijing, and I began by asking him what the delegation will be bringing back to Australia.

STEVEN CIOBO: Obviously I can't predict what the outcome will be, but what we do know is that in 2014, when we last ran Australia Week in China, we saw over a billion dollars of increased export sales which were attributed back to Australia Week. We saw more than $3 billion of investment off the back of Australia Week in China. I think it's quite reasonable to assume that having built this, that is Australia Week, the 1,000 plus delegates that are participating will no doubt find opportunities to do increased trade deals and to drive investment.

AUSKAR SURBAKTI: But anything that will be forged as a result of this trade mission won't offset some of the negative aspects of the China-Australia trade relationship, and I'm talking about the flooding of cheap Chinese steel in Australian markets. That's been identified as one of the factors for the collapse of the Australian steel maker Arrium. Are you discussing these matters with your Chinese counterpart?

STEVEN CIOBO: I've raised in conversation with Chinese officials, questions about what's happening in terms of the oversupply of Chinese steel. Obviously there is, as I've said, a number of factors which come into play. But I think Australians also need to be mindful of the fact that it's Australian iron ore. It's the many jobs in the iron ore industry, which are benefiting from the production of steel in China. We want, of course, our end to have a long term future. There are a number of challenges and that's part of the reason why the Government, as I've said, has brought forward orders for the Adelaide to Tarcoola rail link. I cannot stress enough the absolute vital importance of making sure that Australia's steel industry remains competitive. One of the worst things we could do to make our steel industry less competitive would be to levy a great big carbon tax back on the steel industry and that's precisely what Bill Shorten and the Labor Party want to do.

AUSKAR SURBAKTI: Okay, let's look at the China-Australia Free Trade Agreement, which came into effect late last year. We're seeing China impose levies and taxes of its own since this has come into play. I'm talking about a levy on e-commerce products that the Chinese government has imposed, which are already affecting companies like Blackmores and the baby formula company Bellamy's. Wasn't this free trade agreement supposed to create a levelled playing field? How is it meant to do its job if China is allowed to do things like that, impose new levies on top of the tariffs that they've taken away?

STEVEN CIOBO: In a Chinese context what we've seen take place is that there's a tax that's been imposed of 11.9 per cent, and that is obviously going to have an impact, but that's completely separate to a tariff. What's more with that 11.9 per cent tax is imposed across all imports, not just Australian imports. The second thing is in relation to an announcement that was made last Friday, about there being on e-commerce platforms some additional changes that have been made. This is a fairly technical matter. It deals with goods that are imported through free trade zones in 12 different locations around China. It's too soon frankly, without additional information, to rush to judgement about what the impact of it will be. Suffice it to say though, that I think it's fair to say a number of importers into China knew that this change was most likely going to be coming. It's something that we can work around. Look frankly, because Australia does have preferential market access under the China-Australia Free Trade Agreement, we'll be in a better position relative to our competitors to still be a market leader in the China market.

AUSKAR SURBAKTI: Yes, but these non-tariff barriers are effectively counteracting the spirit of the China-Australia Free Trade Agreement. We've got the grains industry market access forum criticising these tightening of quarantine rules that China imposed on Australia's grain imports, just as another example of these non-tariff barriers. Also, in 2013 China suspended all imports of Australian chilled beef into China, another example of a non-tariff barrier there. What's the point of having a free trade agreement if these non-tariff barriers can effectively be applied over it?

STEVEN CIOBO: Australia, under the China-Australia Free Trade Agreement, still has a material market advantage - preferential market access over other competitor countries. Let's not lose sight of that fact. Now, domestic policy changes that are made by the Chinese government, with respect to the decision about where they impose taxes, are of course rightly the decision that falls upon the Chinese government.

AUSKAR SURBAKTI: Minister, you accept that China is within its rights to impose these non-tariff barriers on things like e-commerce goods that come in from overseas, in terms of grain imports, chilled beef. Why is it then not a fair proposition for Australia to protect Australian steel in the manner that China is doing with its local industry?

STEVEN CIOBO: Australia does protect our goods. We have some of the most stringent phytosanitary rules in the world. We know that we've got a very valuable resource in terms of having clean and green agriculture for example. Now for many countries, Australia's biosecurity rules are non-tariff barriers and guess what? We stand by them, but we don't use them in a way that is in breach of WTO conventions, that is the World Trade Organisation. Any market has the same issues that they've got to deal with. To go to your questions though, about why don't we mandate the domestic use of steel? Well, the reason why we don't is one, because it's in breach of our trade agreements. But two, because it's not in our national interest to do that. If we were to mandate the use of Australian steel, well guess what? Other countries would turn around and say, "You know what Australia? We're not going to import your goods, we're going to mandate our own supplies, have to supply governments in their own countries." The world has tried that. It's tried being insular, it's tried putting up tariff walls, it's tried putting up protection barriers, and all it leads to is a loss of national income and that's not a good story for Australia.

AUSKAR SURBAKTI: Minister Steve Ciobo in Beijing, we'll have to leave it there, but thank you for your time tonight.

STEVEN CIOBO: Pleasure, thank you.

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