Bloomberg Interview

  • Transcript, E&OE
Subjects: TPP-11, tariffs, investment, company tax cuts, Australian economy.
23 February 2018

VONNIE QUINN: So talk to us about the TPP first, which is sort of dead from the US point of view. But if the US were to decide it might like to get back in, would that be on the table? What would you want from the US?

STEVEN CIOBO: Well, it's more than on the table, Vonnie. We're actually keen for that to happen. The eleven of us sort of come together to form what is called the TPP-11, we represent $13.7 trillion worth of economic activity. We have left the door open for the US to come back, we weren't surprised but we were disappointed when President Trump took the decision to withdraw the US from the TPP, but if there's an opportunity for the US to consider coming back then we think that'd be a terrific outcome.

VONNIE QUINN: When you say an opportunity, what do you mean exactly? If the US were to ask, would that be enough?

STEVEN CIOBO: Well, ultimately what we have done with the TPP-11 is essentially replicate, well, we've kept what was in the TPP, the original agreement including the United States. But we've suspended a number of provisions and the provisions that we've suspended were the provisions that, in many respects, reflected the main offensive interested of the United States. So what we did is put pause, effectively, on that. We've kept all the market access arrangements in place because what that means is it creates incentive for the US to take the decision, we hope, to say 'Yes, we want to be part of this, you know, regional agreement. We want to be able to provide some trade stewardship and investment stewardship,' and if they chose to come back, we'd be able to implement the provisions that are currently suspended.

VONNIE QUINN: The US has already put tariffs on things like aluminium and steel and is looking to do a lot more. Would you want those rolled back in order for the US to re-join a multi-country partnership?

STEVEN CIOBO: Well, look, I've got some concerns about some of the decisions as they seem to be tracking at this point in time. We've got to resolve some of those and, indeed, that'll be the focus of some of the discussions I am going to have in Washington DC tomorrow, later today and on the weekend. Ultimately, though there is a de-coupling between those discussions and the TPP. I mean, look, fundamentally, this is a decision for President Trump in terms of what he'd like to do with respect to the TPP. The deal has changed from what it was. And, I believe, fundamentally, and the Prime Minister of Australia believes, as does Japan, and other countries, that there is a good opportunity for the Unites States to come back to the TPP table, it would be a good deal for America and a good deal for those countries that have signed the current TPP-11 agreement.

VONNIE QUINN: If the President and his team dismisses that, out of hand, what else do you want out of tomorrow's meeting? You've got the top three trade people in the country in that room, along with the top of your country.

STEVEN CIOBO: Well, I think there's a couple of things happening. The first, I think it's unlikely there would be an out of hand dismissal, I was really encouraged by the Prime Minister's, not the Prime Ministers, the President's speech in Davos when he made it clear that the US would consider, possibly, looking at the TPP again. So I think the door has been cracked open a little bit there and I want to engage in a constructive way with the Trump administration. If we can help to create incentive for the US to come back, that's terrific but in terms of other key priorities from Australia's bilateral relationship perspective, we, in particular, have interests around infrastructure. We've seen President Trump outline a bold vision for infrastructure across the United States, we have a federal system where we can share a lot of that.

VONNIE QUINN: Yeah, you're making the case to share some of that. How? What exactly do you mean? Do you want to invest in some of these public/private partnerships in the US, or just give advice?

STEVEN CIOBO: Well, all of the above. Australia's got over $2.2 trillion in national savings, we've got one of the largest national savings pools. And, when you consider we're a very modest population of 24 million, it speaks to what has been a policy focus for us for some time. So, yes, we've got finance that we can bring to the table, but we've also got the experience of public/private partnerships. We've had a mixed experience, some have been really successful, some haven't. But we've learned through that process, and we believe, especially given we're a federal system as well, that we've got a lot of experience around project design, construction, management, as well as financing that we can share with the US.

VONNIE QUINN: So, you're hopefully going to be, hopefully from your point of view, going to be giving some advice to the US, you're also taking advice, it seems, from Donald Trump. Malcolm Turnbull talking about taking down the corporate tax rate in Australia now, what else is the Australian Prime Minister going to adopt, of President Trump's tactics?

STEVEN CIOBO: Well, look, we will see, but certainly corporate tax is a key one for us. I mean, we've seen Australia, over time, slip up, unfortunately, relative to our competitors in terms of the OECD corporate tax equivalent, and we want to make sure that declines over time. As a Government we are very committed to doing that because we know capital is more liquid than it has ever been, it's more mobile than it's ever been, labour is more mobile than it's ever been. We need to be able to attract key people that are building wealth.

VONNIE QUINN: Speaking of the amount of dollars that Australia, and Australian pension funds, you know, life insurers, endowments, that have to invest, and a lot of that comes to the United States, what do you make of the Australian dollar and its level right now? What would you be more comfortable with the dollar at?

STEVEN CIOBO: Look, the long-run average sees it around 72 cents against the greenback, I mean, ultimately we will see what happens. Clearly, there is going to be a push in terms of repatriation of funds with the reduction of the US company tax rate, that'll be sitting against, I guess, a move now towards riskier markets and some emerging markets so. I don't know how that's going to play out, if I did I probably wouldn't be in politics. But certainly, the long-run average sits as the benchmark against which we can measure performance.

VONNIE QUINN: Sure but as a Trade Minister, are you more in favour of a weaker Aussie dollar or a stronger one?

STEVEN CIOBO: Look, I think the notion that a weaker dollar is a positive for a country is a false notion, I meanit really is, in my view, the definition of a false economy. We need to make sure that we build, gradually over time, I believe a stronger dollar, but that's got to be in the context of remaining competitive.

VONNIE QUINN: Talk to us a little about the economic health of Australia. You've got growth of what, 2.8% or so this year is the forecast? CPI inflation 2.2%, not too bad, unemployment 5.4%. Any concerns for the Australian economy, I know there are a few out there?

STEVEN CIOBO: Look, I think conditions continue to improve. Australia's incredibly well-placed, obviously. Fastest growing region in the world. We are in our 27th year of continued economic growth, it's a new world record in terms of developed economies. That's been a consequence of the commitment to economic reform over many years, so we've got in place the building blocks to remain competitive. We want to continue to attract foreign investment into the country, it helps us reach our full economic potential, and we are very focused on that. That's my role as Investment Minister as well, to attract that capital to Australia. But, I've got to say, overall, in terms of the picture, in terms of Australia's economy is a healthy one.

VONNIE QUINN: Alright, thanks to Australia's Minister for Tourism, Trade and Investment, Steve Ciobo.

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