CNBC Squawk Box

  • Transcript, E&OE
Subjects: BHP, Australia United States Business Week, trade agenda.
23 February 2016

MATTHEW TAYLOR: Let's bring in Steven Ciobo, Trade Minister of Australia, the newly appointed Trade Minister is joining us live from New York where he is on a promotional tour to try and get more investment into Australia. Steve, I just want to speak to you if we can to begin with about these numbers out from BHP, it really underscores the rebalancing that we are seeing in the Australian economy, a $5.67 billion loss. What would the Government response be to a loss of that magnitude for an Australian corporate?

STEVEN CIOBO: Well look obviously decisions in relation to the management of BHP lay with BHP management. I think from what I heard earlier Matt, you were saying that the market has responded positively and the share price has ticked up, that probably in some way reflects the fact there is more certainty now and less ambiguity about what might be happening in terms of decisions around the progressive dividend and what not, but as a Member of the Government and now as Minister for Trade and Investment, my focus is upon making sure that we position Australia in the strongest possible position to make sure that we continue to drive jobs and growth in Australia and continue to drive Australia as an attractive investment destination.

MATTHEW TAYLOR: Ok, well you are in the US for that very reason; promoting Australia as an investment destination. What are people saying to you in the global community about the Australian prospect? We know that the Prime Minister's trying to essentially reset the Australian economy from a mining boom to an ideas boom, so how is that being received?

STEVEN CIOBO: Look I think that there is a very large appetite for Australia, especially coming from the United States. We know that two-way investment, in terms of relationship between Australia and the US is really strong, worth about $1.3 trillion and of course the United States is the largest single source country for investment into Australia, so there is a large appetite for Australia. Americans are talking to me about the fact that they like that there is common language, they like that they have a low sovereign risk profile into Australia, they like that they've got a high degree of familiarity in terms of our legal system and accounting systems, so those are all big positives for Australia. Part of my role is to reinforce a couple of key messages: One is that Australia is much more than just resources and energy. It's about focusing upon the services side of the economy, you know services represents 70- 80 per cent of Australia's economy yet it is only around 20 per cent of our exports so there is a lot of scope for us to do more in the services sector and that has been a key part of what I have been focusing on over the past several days that I have been in the US.

MATTHEW TAYLOR: Ok where is the interest coming from in respect to potential investors? Are they looking at the services space? Is there still an appetite out there to invest in resources and energy or are potential investors running a mile considering the route that we have seen in commodity markets?

STEVEN CIOBO: They are certainly not running a mile. There's are a lot of interest and questions around agricultural technology and recognition that Australia is a good play, and I've got to say that there is a very strong message there as well about being able to use Australia as part of a strategy for an Asia play. A lot of Americans look at Australia and given our strong connection of course with China and with Asia more generally. For me it is part of sending a clear message as well that Australia, in comparative advantage terms, is in a really strong position, especially with respect to the major North Asian economies of Japan, Korea and China. Because of the Free Trade Agreements that we have put in place I have been able to impart that message very clearly- that Australia can be a strong platform from which to launch into Asia and that is something that has attracted a lot of interest as well while I have been here in the US.

BERNIE LO: Steve, its Bernie in Hong Kong just joining in the conversation, I hope that your trip is going well. I know that it is kind of like an induction, a baptism by fire for you so soon into the job but I would like to ask you specifically about the TPP because you are here in the US when America is consumed by these Republican/Democratic primaries and caucuses and at this point it is looking like Hillary is pulling ahead, it looks like nobody can stop Donald Trump on the Republican side. Neither likes TPP and it looks like it is going to be an even steeper uphill battle than it was when the thing was signed last week in New Zealand. What are you hearing over there and how do you rate the chances, do you think that maybe the odds are coming down unfortunately?

STEVEN CIOBO: Well look I have taken a number of meetings, I was in Washington DC over the weekend and have had the chance to meet with a number of different people from industry associations as well as Ambassador Froman who of course is the Trade Rep, the effective Trade Envoy for the Obama Administration. I also met with those that have good contacts in the Congress. The take home message that I was left with is that the work continues in relation to the TPP, that is the Trans-Pacific Partnership ratification. I don't know whether it might go before the Congress prior to the election or after the election but what is clear is that there is a clear appetite for the TPP to be ratified. The Administration certainly seems, from the messages that I heard, to be keen to have it introduced into the Congress, but we of course want to play our role in helping to present the argument that the TPP is not only in Australia's national interest but it is also in America's interest. If Australia can be a true friend to the US, as we have been for many decades then we will be able to also clearly indicate that this is going to be good for the United States, it is going to be good for Australia and indeed it really comes down to a type of decision as well about which trade rules are going to apply in the Asia Pacific Region – is it going to be the US trade rules or other trade rules? The fact that we have secured this agreement I think will now provide maximum opportunity for us to take that next step: ratification, which is going to be a benefit to everybody.

MATTHEW TAYLOR: Talk to us about your agenda as Trade Minister, of course it is an election year so I am not sure how much you can get out this year but I guess the Government is hoping to be returned later this year and we know that your predecessor Andrew Robb managed to get away the China, Japan, Korea Free Trade Agreements. Lots of talk about an India Free Trade Agreement and Andrew Robb mentioned that to us when we spoke to him at the signing of the TPP – is that going to be at the top of your agenda?

STEVEN CIOBO: There are a number of different pokers in the fire so to speak; we are looking at, of course, ongoing negotiations around a free trade agreement with India, that continues to be an area of focus. Likewise I am focusing on what we can do in terms of a free trade agreement or more comprehensive than that actually; an economic partnership with respect to Indonesia. We are looking at opportunities with respect to Gulf States and I am turning my mind towards whether we can do something with Taiwan and separately potentially something with Hong Kong. If you look at it in terms of multilateral and plurilateral approaches there is also the Regional Comprehensive Economic Partnership, where there is real opportunity so I am generally very excited about the opportunities for Australia. We have always had a very open approach to the benefits that flow from liberalised trade. I intend to continue to pursue liberalised trade very aggressively because it is great for an export nation like Australia. We want to drive investment, we want to drive exports and we know that by pursuing those two goals that we are going to drive domestic growth in Australia and we are going to drive domestic employment in Australia as well and those are big pluses that will only be harnessed effectively by making sure that we are able to engage in a commercially material way in relation to these free trade agreements and economic partnerships.

MATTHEW TAYLOR: We are out of time but appreciate you joining us. We will let you get out and enjoy the evening in New York. Steven Ciobo, Trade Minister of Australia joining us there from New York.

Media enquiries