CNBC, Squawk Box
KAREN TSO: Joining us now around thestudio set is Steven Ciobo, who is Australia's Minister for Trade, Tourism andInvestment. Minister, great to see you around the studio this morning.
STEVEN CIOBO: Good to be with you.
KAREN TSO: Let me ask you aboutrelations at this point between Westminster and Canberra. Is there any inklingthat there could be some form of a trade deal that comes quickly in the systemonce Article 50 is triggered?
STEVEN CIOBO: Well it's more than an inkling. We've announced a Joint Working Group to doexactly that. The Joint Working Group's focus is to scope out what we might betrying to achieve under an FTA. We've had some very constructive and warm andcordial preliminary discussions about an FTA once the UK's formally out of theEU.
KAREN TSO: There is a level of comfortbetween the two trading partners, but what is the benefit of an FTA, what doesAustralia gain, what does the UK gain?
STEVEN CIOBO: I think there's bigbenefit. The fact is that both Australia and the UK have very mature, highlydiversified economies. In a range of areas we're already quite competitive andby that I mean that we have high levels of integration, high levels ofsophistication, especially in relation to services but also big, importantsource and destination countries for investment. Australian investment into theUK, and UK investment into Australia are both really strong flows. There is alot of potential there and I'm very confident that together with Liam Fox, thatwe'll continue to have some very constructive discussions and ultimately thefewer barriers that we have to trade and investment, the better that bothcountries do.
GEOFF CUTMORE: Do you recognise thebarrier of the Clause 50 triggering to negotiating a prompt agreement with theUK? I mean this process will ultimately take two years. We suspect it could beeven longer, you know how negotiations with the EU go. Does that mean Australiareally can't do any trade deal with the UK on a bilateral basis until thatprocess is finished?
STEVEN CIOBO: Look, and that's the advicethat I've received from the UK. They've made it clear that it would have to beonce the UK has formally exited the European Union. We understand that, I mean,there's a process to be worked through and understandably the bulk of the UK'sfocus will be on its actual exit negotiations with the EU. I mean, that makesperfect sense, it's logical. So we are engaging now. As I said, preliminarydiscussions, some scoping out of our level of ambition, but once that processhas been finalised, that's when we'll engage in earnest in negotiations.
GEOFF CUTMORE: If you were a gambling man,would you put money on a deal with the UK before you actually get a deal withthe EU, given it took Canada seven years?
STEVEN CIOBO: I'm not a gambling man.Look, these two things run in parallel. Our discussions with the EU are moreadvanced than they are with the UK at this point in time because with the EU,we're reaching the final stages of a scoping study, which will really map outthe pathway ahead. With the UK we're in preliminary discussions, so it's aslightly different process, but we can walk and chew gum at the same time, soit's fine.
GEOFF CUTMORE: As I understand it, youupset the Italian farmers by putting tariffs on tinned Italian tomatoes cominginto Australia. Given it took just a small group of farmers in Wallonia toscupper almost the Canadian deal that had been negotiated for seven years,you're not making friends in Europe and do you think that that might hold upthe potential for any new deal?
STEVEN CIOBO: No, look, I mean there's alot of merit and a lot of strong argument about why the EU and Australia shouldbe able to do a deal. The fact is that in terms of Italian canned tomatoes, ourindependent anti-dumping commission looked at it, they made some decisions, itwas subject to review. We obtained some additional information and they reacheda different conclusion and the Italians are happy with the situation that we'vearrived at now, because it has, and it gets overly technical, but it has to dowith Europe's green box subsidy programme and so now we've found a pathway,having reviewed the information that they're happy with. But look, ultimatelyfree and liberalised trade is good for both countries and especially for Europebecause Australia sits in the fastest growing region of the world. Europe has alot of growth challenges ahead of it and so doing this deal is a good outcomefor both.
KAREN TSO: What do you talk about,this whole push towards globalisation is not where economies have been going, Imean, Donald Trump swept to power on this whole protectionist message, do youhave concerns that the tide is changing and that FTAs are really a story of thepast, not the future?
STEVEN CIOBO: Look, I'm concerned thatthere are some people that put forward that point of view but that's not apoint of view that Australia agrees with. We are unapologetically pro-free andliberalised trade.
KAREN TSO: Because the country needstrade but other countries don't necessarily need as much trade as whatAustralia does -
STEVEN CIOBO: Well I'd argue that everycountry, I'd argue every country needs trade. I mean, the fact is that if youlimit yourself in terms of your trade and investment options, all you're doingis limiting the growth of your economy and all you're doing is limiting jobopportunities for your economy as well. Australia is very engaged in trade andinvestment. We see big opportunities, we've locked in place three big freetrade agreements with China, with Korea and with Japan and we'll continue.
KAREN TSO: What can you say to theBrits who might be watching this interview and saying, well what are theramifications for negotiating with Europe once there is an exit, and Canada wasclosely watched, Australia's been closely watched for negotiations with theEuropeans, but it's a different system here, where you've almost had a countryoperating under the umbrella of Brussels and their different standards arequite similar to Europe verses what Canada and Australia have. Are there anycrossovers you think between negotiations you've been having with Europe andwhat lies ahead for Britain down the track?
STEVEN CIOBO: Look, that's a greatquestion. I mean, it's difficult, it is difficult to say that from Australia'sperspective, because we are some distance away, but we find the Europeans verygood bona fide interlockers, we find them very good to deal with. They havestrong interests that they stand to defend in terms of their defensiveinterests. We've got strong interests that we want to capture. I mean, we'vemade it very clear that we expect to increase our agricultural exports intoEurope. Perversely as we sit today, Australia actually imports moreagricultural products from Europe with our population of 23, 24 million thanEurope does with its massive population from a country like Australia. I mean,people can instinctively understand that that doesn't make sense. There aregains being made and likewise, Europe will have opportunities in Australia too,particularly and it goes to my earlier point, particularly to use Australia asa landing point for an Asian growth structure.
GEOFF CUTMORE: Just to wrap up with you,obviously the elephant in the room really is Donald Trump and trade and whathappens next. After the shirt fronting that I think Mr Turnbull gave him, what[are the] prospects do you think for positive relations between Australia andAmerica on the trade front going forward?
STEVEN CIOBO: Very high. I mean,Australia and the US of course have been allies, good friends, for decades anddecades. It's arguably our strongest and most important relationship and I'msure that will continue irrespective of which government's in power inAustralia and which administration is in power in the United States. We want toengage constructively with them. We'll wait to see who the US TradeRepresentative is, that confirmation process has to happen for Lighthizer, sowe're watching that to see ultimately how their trade policy will be crafted.But I'm very confident that Australia and the US will continue to have verygood trade and investment relationships.
GEOFF CUTMORE: Yeah, I guess friends canspeak to each other with cross words, can't they?
STEVEN CIOBO: Well no cross words, butrobustly and maturely.
GEOFF CUTMORE: Nice to have you in Steven,thanks very much for joining us.
STEVEN CIOBO: Pleasure.
GEOFF CUTMORE: Minister for Trade, Tourismand Investment Australia, Steven Ciobo.