Bloomberg, Daybreak

  • Transcript, E&OE
Subjects: Free Trade Agreement with Hong Kong; Belt and Road Forum; Trans-Pacific Partnership; US-Australia Relationship.
16 May 2017

BETTY LIU: Australia's TradeMinister says China's Belt and Road initiative will provide a win-win opportunityafter attending the summit in Beijing over the last couple of days. StevenCiobo is heading to Hanoi for the APEC Trade Ministers' meeting. He's currentlyin Hong Kong today and joins us now from there. Minister, great to have you. Ofcourse, win-win is the preferred terminology from Beijing. You've said that youwant to see the details of this $78 billion infrastructure push. What are youhoping or expecting that Australia might be able to get out of it?

STEVEN CIOBO: Well, Australia'sgot a great track record with the financing, the design, and the constructionof infrastructure. I think that there's real opportunity for us to be able towork in a complementary way with this initiative. Australia, of course, has agreat relationship with China, especially when it comes to trade. We've got alot of knowledge and experience that we can share, so I'm very confident thatgoing forward, Australia will be able to play its role as part of the broaderinitiative being executed across the various countries and throughout Asia andinto Europe.

BETTY LIU: You're in HongKong obviously at the moment. You're there to launch FTA negotiations with HongKong, but tariffs are already at zero. What are you hoping to achieve out ofthis deal?

STEVEN CIOBO: Well, there's alot more to trade than simply goods trade, of course, and whilst tariffs are atzero, there's a number of initiatives that we can undertake. What I'mparticularly focused on, especially in a highly developed economy likeAustralia, is making sure that we can maximise our export potential. Now,basically around 75 per cent of Australia's economy is service-based. We've gottremendous opportunity to boost our services exports. Only about 22 per cent ofAustralia's exports right now are services exports, and given that Hong Kong isour eighth largest export market, there's a real opportunity for Australia andHong Kong to be able to do some great work around services, a very modern andcomprehensive free trade agreement, one that also touches upon areas like thedigital economy. So that's what I'm focused on.

BETTY LIU: Mr TradeMinister, you're absolutely right, and you point out - you make a great pointhere about how service export seems to have lagged behind some of those harderexports like how we traditionally think of Australia, with commodities forinstance. So how exactly is Hong Kong going to help you in this respect? Whatexactly in the services side do you think that Australia can make a name foritself in the trading world?

STEVEN CIOBO: Well, look, Imean, Hong Kong, like Australia, of course, is very focused on services aswell. There's not a heavy or large manufacturing base in Hong Kong itself. Andso there's, of course, complementarities there for both Hong Kong andAustralia. In terms of areas, Australia has a great reputation. We've got avery creative people. Australians are, of course, very well-educated. We've gottremendous resources that we can draw upon in terms of that creativity, interms of the ability to develop design. Take, for example, the work that Ford'sdoing. They've withdrawn of course car manufacturing in Australia, but they'veretained a large proportion of their design team based in Australia. So it'spicking up on those sorts of skills that Australians have that I'm veryconfident we'll be able to use in the future to help boost a big push byexporters, whether it's architectural services, legal services, healthservices. There's so many different areas.

BETTY LIU: Mr TradeMinister, we've had you on several times, and every single time we have you on,we talk TPP. I know that you're very dedicated to getting TPP done. One of itsbiggest proponents – and so I'm not going to ask you 'do you think it's goingto get done or not?' because I know what your answer is going to be. I wouldsay, what do you hope to get achieved by the end of this year at the veryleast? That to you, is going to be a win-win by the end of this year?

STEVEN CIOBO: Well, look,Australia, together with Canada, New Zealand, and other countries have beenhaving really fruitful discussions about capturing the gains that are containedwithin the TPP. I don't know ultimately what's going to happen but what I amgoing to do is make sure we put in a concerted effort to try to get TPP overthe line as a TPP11 if need be. Important discussions will take place thiscoming weekend in Hanoi. It'll be an opportunity around APEC for us to cometogether as trade ministers to look at what we can do. We've had officials thatmet recently in Canada so we're going to keep having these conversationslooking at whether or not we can put in place a TPP11. Maybe not by the end ofthe year but certainly in the first half of next year. But there's a lot ofprocess that we've got to work through and of course with the US withdrawing,it's changed the metric for countries. I understand that countries will need torecalibrate their metrics around the TPP and that's just a process that's goingto get worked through and it just takes a little bit of time.

HAIDI LUN: Does it alsochange the focus or the priority back onto bilat deals. I know Australia's inconversations with India, Indonesia. Are you optimistic that those deals couldbe done this year?

STEVEN CIOBO: I've adopted apretty pragmatic approach when it comes to pursuing Australia's nationalinterest on trade and investment. And by that what I mean is that I will pursuebilateral deals, I'll pursue plurilateral deals, multilateral deals, regionalblocks. We will use the full arsenal of opportunities available to Australia tomaximise Australia's national interest. I always make the point in these tradedeals it's not about a win-loss scenario. Good trade deals provide win-winoutcomes. And so that's been my approach when it comes to engaging with othercountries. Now my number one priority is Indonesia. That's what I've been veryfocused on but we're continuing to pursue a number of new initiatives includingthe announcement today of the commencement of FTA negotiations with Hong Kong.So it really, I think, provides a good or lays down a good benchmark aboutwhere Australia's going in terms of our engagement with the world.

HAIDI LUN: Minister, youalong with the Prime Minister have been champions for free trade in what's beena pretty difficult few months in terms of global headwinds and not knowing whatwe can expect. Have the recent developments, the US, China, ten area tradedeal, does that encourage you that perhaps these concerns, this threat of aglobal trade war, have eased somewhat?

STEVEN CIOBO: I think there's alot of rampant speculation at the very outset of the new US Administration. Ithink that that's dampening down and that's a good outcome. We don't want thereto be high levels of volatility. We know that volatility will affect,ultimately, growth. My approach on these are fairly fundamental. That is thattrade drives economic growth and economic growth, in turn, drives jobopportunities. Now one of the most fundamental initiatives that any governmentcan undertake is to create the right business conditions to enable the labourforce and the people to be able to get jobs. That's what drives me in terms ofAustralia's engagement with the world. That's what I'm focused on. So we wantto drive trade because it's good for economic growth.

BETTY LIU: Trade MinisterCiobo, one last question before we go. Do you feel like the US and Australiarelations are back on track after President Trump and Malcolm Turnbull'smeeting here in the US?

STEVEN CIOBO: Well I don'tthink they were over off track, to be honest. Australia and the US have, fordecades now, had a really strong relationship and it's not just economicrelationship. Of course the economic and investment relationship is verystrong. The US is the biggest investor into Australia and we've got asubstantial stock of investments in the United States, as well. But it's alsothose people to people links, the fact that we share values, we share anapproach in so many different areas. So I'm really pleased that therelationship continues to be strong.

BETTY LIU: Alright. StevenCiobo. Thank you so much for joining us. Australian Minister for Trade, Tourismand Investment there in Hong Kong starting negotiations on a free tradeagreement with Hong Kong.

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