Bloomberg TV, Bloomberg Markets

  • Transcript, E&OE
Subjects: Free Trade Agreements with the United Kingdom and European Union; Global Protectionism; Chinese Investment.
06 September 2016

MARK BARTON: Steven Ciobo joins us now. You've just come out of a meeting with the International Trade Secretary, Liam Fox. What did you discuss?

STEVEN CIOBO: Look, we had a really good, warm and cordial conversation. There's obviously a lot of political alignment between Secretary Fox's view and my own view. Clearly you saw that as well on the weekend at the G20 between PM May and PM Turnbull. So we had a chance to talk about what it might look like – that is, the trading relationship, the investment relationship post-Brexit. Clearly there is some work to be done as the UK goes about finding the correct pathway for its exit from the EU and negotiations in that respect. But I wanted to reinforce Australia's desire to make sure we are able to take our relationship – in terms of that trade and investment relationship – to an even stronger platform in the future.

MARK BARTON: Why have you come out at being so vocal – Australia – in support of your sporting enemy? I know you're a big sports fan. I mean, is it first mover advantage?

STEVEN CIOBO: I think there are strong historical ties between Australia and the UK. We are in a position where we can build off that. We also have very high levels of investment between the two countries. The UK of course has a stock of about $500 billion worth of investment in Australia. Australia has around about $350 billion in the UK, so we can use that strong platform to continue building on the relationship we have. I mean where there's political alignment as well, it should be a pretty straightforward process.

VONNIE QUINN: Minister, how long do you envision striking this deal with Britain taking?

STEVEN CIOBO: Well Vonnie, it is difficult to say for sure. I mean in many respects that will also be determined by the type and nature of the discussions that the UK has with the European Union with respect to their exit. Those two things will impact on each other. But suffice to say that our starting points have a lot in common. We are both pro-free trade, we are both ambitious in terms of having a commercially meaningful and comprehensive trade deal in place. So that's a great predisposition, a great starting point, going into these discussions.

VONNIE QUINN: But it will at least take until after Article 50 is triggered and until some EU discussions are underway between the EU and Britain.

STEVEN CIOBO: That's correct. So the UK is not in the position to negotiate an FTA until after such time they have formally exited from the European Union. We are of course respectful of that but we will make sure we are in a position to have some important preliminary discussions about what we can do together. And I'm confident today's discussions with Secretary Fox, and I also met with Lord Price, are important precursors to the kinds of ongoing preliminary discussions that we'll have.

MARK BARTON: You've got this rhetoric – Australia, you and Mr Turnbull of free trade - "we need open free trade to lift global growth" - but there are some examples of Australia blocking trade. You've blocked investment by Chinese companies in the Kidman cattle ranch, the Ausgrid power network in NSW. Is that a conflicting signal? When on the one hand, you are promoting free trade but on the other hand, you're blocking investment by China?

STEVEN CIOBO: Well no, there is a very big difference there. We are certainly very pro-free trade and Australia has put in place a number of policies to make sure trade and investment is front and centre for the economy. We see it as fundamental to driving Australia's economic growth and fundamental to driving employment levels in Australia. We have put in place, of course, Free Trade Agreements in the past three years with North Asian powerhouse economies like South Korea, like Japan and like China. We've done a great deal recently on a comprehensive, strategic partnership with Singapore which will continue to propel that relationship further ahead. If you talk about the issues that you have raised about foreign investment, we have said no to some foreign investment where it is contrary to Australia's national interest but let's keep a sense of proportion about it. We have said no five times since 2001 and, on average, we receive about 1000 applications a year. So we've said no five times but there have been 15,000 occasions where we've said yes. So that gives you some context.

MARK BARTON: So you're off to Brussels soon. How quickly before you strike a free trade deal with the EU?

STEVEN CIOBO: Well I wish I knew the answer to that question. But certainly, there's a lot of aspiration on our part. I've had a number of conversations with Cecilia Malmström, the EU Trade Commissioner; very warm and cordial conversations with Cecelia. We've already got fairly mature discussions underway around a scoping study. We anticipate that scoping study should be able to be concluded by probably the end of the year and if that goes well, and we get alignment in terms of the scoping study, I would hope that we are in a position to have free-trade negotiations formally commence in the first half of next year.

VONNIE QUINN: Minister, following your discussions with Liam Fox today, what do you imagine the sticking points will be between the UK and Australia?

STEVEN CIOBO: Well we didn't get into a sector by sector analysis. We had a conversation about, politically, where we see a Free Trade Agreement could possibly be between Australia and the UK. Look I think the starting point for both Australia and the UK, and this was a point that was reinforced by Prime Ministers Turnbull and May on the weekend at G20, is that both countries are very outward looking in terms of trade. We want to engage with the world. We to make sure as much as possible we are free trade beacons around the world. That is really important at a time when we are seeing, unfortunately, an increase in protectionist sentiment. And I want to make sure that in Australia and the UK there is a strong focus – we are making sure that we are beacons for the benefits of free trade and the myriad of benefits that flow from Free Trade Agreements.

MARK BARTON: How difficult - and you've clinched a few in the past three years - South Korea, Japan, China since 2013. Just give our viewers the difficulty in striking a trade deal. Just to give investors and our viewers and a sense of what faces Britain in the next few years.

STEVEN CIOBO: These can take quite a deal of time. If you look at the relationship we had with China, I should say the discussions we had with China, that Free Trade Agreement was about eight years in the making. But that was under different governments and different governments accorded a different level of importance to doing the deal. The Government that I'm a member of, the Turnbull Coalition Government, made the Free Trade Agreement with China very important. We moved it to the very top of trying to secure that deal and that's why we were able to do China, South Korea and Japan relatively quickly, having done a lot of the spade work in the prior period.

Media enquiries