Sky Business

  • Transcript, E&OE
Subjects: Tourism Australia campaign, US stock exchange, economy, trade.
06 February 2018

HELEN DALEY: For more on this theTrade Minister Steve Ciobo joins me live from the nation's capital, Minister,thanks very much for joining me. You've been around the world in many weeks.

STEVEN CIOBO: Well, that's life of aTrade Minister, Helen-

HELEN DALEY: Yeah. No, exactly.

STEVEN CIOBO: - so that's all part ofwhat's involved.

HELEN DALEY: Well it's good to haveyou and talk trade, and back on the program. But just before we do talk, I wantto ask you about this market selloff. Now the Dow Jones industrial had itsworst one-day points drop, not percentage drop, overnight, partly on fears ofinflation and US interest rates rising. The Australian market is very much overa 3% drop today, RBA did not move our interest rates, as expected. But, are youconcerned for this equities market sell-off? It wipes a huge amount of valuefrom Australian companies, and, it wipes a huge amount of value from individualAustralians' wealth, and their retirement savings.

STEVEN CIOBO: Well, I mean, at the riskof stating the obvious, equities go up, equities go down. But, what matter iswhat is happening, in terms of the forecasts. What's the market anticipate in 6months, 12 months, 18 months down the track. Now, we all know, it is a clichéfor a reason, that people say, when the US sneezes, the rest of the worldcatches a cold. Well quite clearly, in terms of the economic cycle, the UnitedStates has got really strong economic growth, very low levels of unemployment,and expectations are that the Fed is going to increase interest rates, as anattempt to tighten monetary policy. Now, if that happens, understandable. Themarkets have priced in a downturn in equities, and that's being reflected afterwhat has been an incredibly strong bull-run for quote a period of time. So,what we're seeing is some retraction-

HELEN DALEY: Do you have some sympathyfor Australians? And their retirement savings?

STEVEN CIOBO: Well,of course. I mean, every Australian that's invested in superannuation has gothuge exposure to equities, and, I think you've got to look at in the context,Helen, of what's going on. And, what's going is, we've seen a really strongbull-run on equities, and now we're seeing some retraction of some of thatbull-run. I think anyone who's in equities, the soundest advice that anyonecould ever give any of them, is to take a long-term view, to not try to play iton the basis of what's happening on any one particular day, but to take along-term, considered view. That's what you need to do around retirementsavings. You take a long-run, considered view about what's happening, and, inthat respect, we've got the economic conditions right to continue to strengthenthe Australian economy. Economic growth, strong employment growth, all thatbodes well for our future.

HELEN DALEY: The RBA leaving rate's onhold. Does that say that they are still quite worried about the Australianeconomy? That it's not strong enough to normalise rates.

STEVEN CIOBO: No, I wouldn't phrase itthat was. What I would say, based on my observations, is that the RBA issatisfied that inflation isn't about to break out. And, I think that in thecontext of them being satisfied that we're not seeing any real pressure thatrequires venting, in terms of inflation, that they're happy for rates to staywhere they are for the time being.

HELEN DALEY: Let's talk trade. The TPPmark two, it's got the fancy name of Comprehensive and Progressive Agreementfor Trans-Pacific Partnership. How confident are you that this will be ratifiedwithout the United States?

STEVEN CIOBO: Look, very confident.This is a good agreement. It's an agreement between the eleven remainingcountries, excluding the United States. As I've said on numerous occasions, wewere disappointed, but not surprised, when the US withdrew from the TPP. Butlook, what we have now is a very good agreement, a great agreement forAustralia. We're now opening access to $13.7 trillion worth of global economicactivity, among the eleven countries that are there. And, in fact, on a cold,calculated basis, if you look at Australia's position, vis-a-vis NorthAmerica's, our position has strengthened. I mean, we now have, for example,into Japan, much more competitively-priced beef, versus US beef, because theUnited States now sits outside of the TPP-11. That's just to cite one example,Helen, where this is really gonna work in our favour.

HELEN DALEY: Yeah, so, are you sayingthat we are in a better position without the United States being part of this?

STEVEN CIOBO: Well, I'm just giving ...I'm not saying the United States shouldn't be in the deal. We would welcomethem back, we think it would be terrific for all countries-

HELEN DALEY: You're saying it's betterfor us without them?

STEVEN CIOBO: What I'm saying is, onbeef, into Japan, our beef is more competitively-priced than US beef is,because we are seeing a faster tariff phase-down than, for example, the UnitedStates is.

HELEN DALEY: Right. With otherproducts, aside from beef, and services, what actual products, and services,will do better with these new nations that we're dealing with?

STEVEN CIOBO: Sure. Well, the firstthing to realize, under the TPP-11 is that we've got a new free-trade agreementas such, with Mexico and Canada. Now, that's gonna be terrific news forAustralian exporters. The more we are able to put in place free tradeagreements,

that directly translatesto reduced barriers to trade, to lower tariffs, and to great investmentfacilitation. When we do that, all parts of the Australian economy benefit soI'm not going to sit here and cherry-pick favourites. What I am gonna say is,we're reducing tariffs, we're reducing barriers to trade, we're facilitatinginvestment, and the consequence of that will be that the Australian economy,overall, gets a boost.

HELEN DALEY: Minister Ciobo, Japan wasinsistent on pushing this forward. You were also a key proponent. You've been amajor negotiator as part of it. Why is being so open, in terms of trade in thePacific, Asian region, so crucial for Australia?

STEVEN CIOBO: Look, Helen, it is critical.I mean, the fact is that, if you look at Australia's history, and the factthat, and I'll be fair, under successive governments, we've seen, historically,an embrace of an open economy. Australia's been a beneficiary of that. We areseeing a country now that we've continued to see growth in our nationalprosperity, our GDP per capita continues to grow. This has really helped todrive Australia's economic success. It's part of the reason, it's not the solereason. It's part of the reason why we have set a new world record for adeveloped economy, now into our 27th year of continuous economic growth. So,that's what we are focused on, continuing to open markets for Australianexporters, to power economic growth, and to drive job creation here in Australia.

HELEN DALEY: Alright. Just on thisparticular deal, are you concerned at all how China, which is our key tradingpartner, how it might view the TPP?

STEVEN CIOBO: No, not at all. I mean,of course I've had many discussions with China, about the TPP, and, as youknow, we're currently in negotiations with 15 other countries as part of theRegional Comprehensive Economic Partnership, what's called RCEP. That, like theTPP, is, potentially, a big regional trade agreement. China's in there, India'sin there, the ASEAN countries are in there, Korea's in there, New Zealand's inthere, so, if we can get that deal over the line as well, that will be anotherboost to our trade framework.

HELEN DALEY: Now, you also criticized,in recent weeks, the US, and particularly the Trump Administration, followingtheir slapping tariffs on washing machines and solar panels. What is your worryabout these protectionist signals, and do you think Donald Trump is going to gofurther down this track?

STEVEN CIOBO: Well, I'll just pointout, by saying, I haven't criticized the US. What I have done is outlinedAustralia's approach-

HELEN DALEY: You criticized-

STEVEN CIOBO: Australia's approach isdifferent-

HELEN DALEY: -protectionist signals,didn't you? In a speech in San Francisco.

STEVEN CIOBO: Oh, sure. I've certainlybeen critical of protectionism, but that's a slightly different thing-

HELEN DALEY: You don't think puttingtariffs on washing machines, solar panels, is protectionist?

STEVEN CIOBO: Well, we're getting intosemantics.

HELEN DALEY: Alright,well, my interpretation -

STEVEN CIOBO: What I would say ...Well, no, because, I mean, the fact is that you can have examples of wheregoods are being dumped, for example, and, even the WTO recognizes thatcountervailing duties, in most situations, make good economic sense. But, look,I don't want, we're really getting into the weeds now-


STEVEN CIOBO: My point is this, though.Protectionism in Australia's history is proven to be spectacularlyunsuccessful. All around the world, you can look at countries, take for exampleArgentina. They've experimented with protectionism. Protectionism doesn't work.The Australian Labor Party, and certainly the trade union, are calling forpro-protectionist policies. They don't work, and that's why I've been very firmin rejecting that, because all that will lead to are lower levels of prosperityin the future.

HELEN DALEY: And yet, you know that anumber of minor parties, and certainly, part of Mr. Trump's appeal to a certaintype of voter, was that other countries are thieves, that they're stealing ourjobs, and there's a certain adherence to that kind of thinking in this country,too.

STEVEN CIOBO: Look, but that's not new.We have seen examples in Australia's history, I mean at Federation, Helen, wehad a protectionist party. I mean, it's actually been a part of the Australianpolitical landscape for many, many decades. My role as Trade Minister,Investment Minister, is not only to, obviously, open up markets for Australianexporters, it's also to do what I can around advocacy about the benefits offree trade, and liberalized trade investment. The fact is that, Australia, as Isaid, now at our 27th year of continuous economic growth, has benefited hugelyfrom opening up markets, and opening up exports.

HELEN DALEY: Alright. I want to askyou, very briefly, we're gonna run out of time, Minister, the new tourismcampaign, featuring a kind of a remake, of sorts, of Crocodile Dundee. I thinkwe've got some vision of it, if people haven't already clicked on it, which youshowed at the Super Bowl yesterday. Now, what has been the actual, quantifiableresponse to that in the first 24 hours, in terms of actual bookings, or properinquiries to come to Australia?

STEVEN CIOBO: Well, it's probably,frankly, a little soon to look at actual bookings in the last 24 hours. What Ican tell you is, the amount of social media engagement, and the value of theequivalent, if you were to pay for it in advertising. I mean, the advertisingequivalent is now well over $40 million. And, if you look at the number ofsocial media hits, it's more than 600 million social media hits. So, on anymeasure, it's been a tremendous success. To go to your very direct questionabout actual bookings, that's just gonna take a bit more time. That's notsomething that happens in 24 hours. People don't decide to go on internationalholiday with 24 hours' notice, but we'll see over the months ahead what thattranslates to, in terms of increased numbers.

HELEN DALEY: Alright. Steven Ciobo,the Trade Minister, appreciate you joining us this afternoon. Thank you.

STEVEN CIOBO: Good to speak with you.

Media enquiries