Sky News, PM Agenda

  • Transcript, E&OE
Subjects: Changes to e-commerce trade, Anti-Dumping Commission, Arrium, Australia Week in China (AWIC).
14 April 2016

DAVID SPEERS: Minister, thanks very much for joining us here in Shanghai.


DAVID SPEERS: I want to start with the concerns that have been raised about a recent decision by China on restricting goods imports via e-trade, so buying things online. Can you explain what China is actually doing?

STEVEN CIOBO: Sure, to start with, it's not a restriction. What's actually taking place is that China has imposed, through their free trade zones, some extra conditions about those goods that are able to use those free trade zones. Currently what will happen is that there'll be an 11.9 per cent sales tax imposed on goods that are coming through those zones. China is changing the list of goods that's actually able to come through those zones. Because what was historically the case was that you could basically shift products through those free trade zones. They didn't have to go through all the normal customs process, certificates of origin, all those kinds of things. Now they've made a limited list of goods that can still come through those free trade zones and effectively bypass some of those traditional methods. Whereas the vast bulk of good, of course, still need to be imported into China the same as it is from anywhere else in the world. So, for Australia, we're actually still materially better off, we still have a market advantage over competitor nations, because the vast bulk of Australian goods are imported into China through the traditional ways, which require a certificate of origination and those types of things. This is actually not going to have a big impact except for those small range of goods that traditionally were flowing in without having to jump through those hoops -

DAVID SPEERS: What are those small range of goods?

STEVEN CIOBO: Well, it's things like, for example, complex vitamins. It's things like, for example, milk powder. These are two of the primary ones.

DAVID SPEERS: These are pretty important ones.


DAVID SPEERS: They're small range but important companies like Blackmores, Ballemy's, the Devondale brand. Are they affected by this?

STEVEN CIOBO: Well, potentially they are. This is the whole point David, you've still got to see how this plays out. I've had some conversations with senior Chinese government officials about precisely what the implications of this policy announcement are.

DAVID SPEERS: What have they told you is the reason why they've done it?

STEVEN CIOBO: Well, bear in mind that this is only taken place since last Friday so it hasn't been a great deal of time. The reason they've done it is actually to bring more consistency across the market into China. But we also want to maintain a sense of proportion. You know, we are a very big exporter to China. It's our single biggest trading relationship worth around $160 billion per annum. We export something like $38 billion worth of iron ore to China, but we've also got other great industries that are built around services as well. For example-

DAVID SPEERS: Sure, but on these ones; is this consistent, what China has done, with our free trade agreement?

STEVEN CIOBO: Look, it absolutely is…

DAVID SPEERS: So there's nothing you can do to stop this?

STEVEN CIOBO: Well no, of course we will take it up and I have been taking it up...

DAVID SPEERS: What have you said to them?

STEVEN CIOBO: You can see the response from those that are actually exporting these goods. They've said well look, "this hasn't actually blindsided us", they sort of knew it was coming -

DAVID SPEERS: Not all of them. Some of them are still looking for answers on exactly what's happening.

STEVEN CIOBO: Well I think it's important to distinguish between those that are looking for answers about what will be the process going forward, and I'm working alongside them because I want the relationship to work. But as I said, if you look at those that are in the space, like Blackmores for example, they've been a very clear voice of reason about this and said, "well, it hasn't exactly caught us by surprise". We want to get certainty and clarity around it, but we also shouldn't lose sight of the fact that this is a very small proportion of what Australia's exporting to China.

DAVID SPEERS: Can I ask you about steel? Is China dumping steel?

STEVEN CIOBO: Well we've got an Anti-Dumping Commission that makes decisions independently around this sort of matter. But what is clear is that there is an oversupply of steel around the world. Now whether China is dumping or not, there will be 10 economists and probably 12 different opinions about ultimately what's taking place.

DAVID SPEERS: What's yours?

STEVEN CIOBO: Well I don't think mine is relevant. What I think matters is what the Anti-Dumping Commission finds. They'll be reporting to Government making a determination about the state of the steel market. Let's be clear about this David, we have 43,000 jobs that are reliant on iron ore exports from Australia. We are by far the biggest iron ore exporter to China. Guess what, that iron ore plus coke and coal is used for the manufacture of steel here in China.

DAVID SPEERS: So the more steel China makes, great for iron ore producers, just not so great for steel producers.

STEVEN CIOBO: It's great for iron ore producers, it's great for coke and coal exports, and of course, Arrium steel is under pressure but you know what, Arrium steel can serve a very viable future in Australia. They are a great niche supplier of high quality steel when you consider a global marketplace. They can have a strong future.

DAVID SPEERS: So, Australia won't be putting pressure on the Chinese this week on the steel production issue.

STEVEN CIOBO: Well I've raised the issue about steel oversupply; we know that there is a global oversupply of steel and that's a concern. But I do think it's important in Australia that we maintain a sense of balance about this -

DAVID SPEERS: What is the message to the Chinese though, is it to produce less steel?

STEVEN CIOBO: Well it's not a message, it's to ask them about their prospects with respect to the oversupply of steel and how they see the market playing. It's in no one's interests for there to remain a global oversupply of steel. There will of course need to be some rationalisation in the industry and we'll see how that plays out. But let me be clear, Australia has a very strong interest in terms of exports of coke and coal and iron ore, but also in terms of production of steel which has a good future in Australia too.

DAVID SPEERS: This is a two-way trade relationship, what is your message about how open for business in Australia is, given the concerns that were expressed about the long term lease of the Port of Darwin, the changes your Government's put in place around investments in agricultural land. How open for business are we?

STEVEN CIOBO: We are very open for business David, and that message couldn't be made any more clear given the fact that we've got 1,000-plus delegates that here for Australia Week in China. The reason that so many people are coming is because Australia gets the opportunity that is China.

DAVID SPEERS: Would you welcome a Chinese owner of the Kidman & Co agricultural holdings?

STEVEN CIOBO: Look we've got an investment framework that's in place. Now that investment framework looks over any investment that's coming into Australia that meets obviously the threshold criteria. Under the Coalition, bear in mind, that we've lowered the reportable threshold. We've lowered it from 252 million down to 15 million. So we've put more scrutiny in terms of what's actually taking place with respect to investment in Australia, but ultimately we need to understand that investment into Australia helps to drive jobs and helps to drive economic growth in our country. But it's not a one-way street David, it's a two-way street. I mean, as part of Australia Week in China, I've just been at Goodman Operations. They've opened up a new facility here in China, 110,000 square metres of logistics as part of their $7.5 billion investment into China, some 41 premises. So, it's important to keep a sense of proportion. There's a lot of Australian investment coming into China too.

DAVID SPEERS: Trade Minister Steve Ciobo, thanks for joining us.

STEVEN CIOBO: My pleasure, thank you.

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