27 May 2008

Press Conference, Arequipa, Peru

Subjects: APEC Ministers for Trade Meeting

MINISTER CREAN: Well its delightful to be here in Arequipa to attend the APEC Ministers for Trade Meeting for the first time as Australia´s Trade Minister. World trade is important because over the last fifty years, world trade has grown at three times the rate of world output and each new round has given the trade momentum and that trade multiple a new boost.

Over the past five years, interestingly enough, despite the longevity of the economic boom, world trade has only grown at twice the rate of world output and so we genuinely believe that we need a new boost, particularly in the circumstances that we now confront with the uncertainty in the global financial markets and its uncertainty for world economic outlook – high food prices and high oil prices. And so to have the Round elude us is a wasted opportunity.

Now in the discussions today, we had very long discussion about the importance of concluding this Round. A number of the issues and difficulties were raised and I am pleased with the outcome of the text because the text is seized of the urgency of concluding the Round. And the words that are included there, whilst they don't put a specific time on, they talk about Ministers being ready to engage and to deliver expeditiously a modalities agreement.

There is a very strong view that engagement needs to be immediate and the delivery on the modalities needs to be within the next month or so.

JOURNALIST: Are you concerned that there is no timeline going into this draft?

MINISTER CREAN: This is a vexed debate because a number of people argue that by putting a timeline on, you make that the issue rather than the issue being the engagement and the outcome.

I am of the view that timelines help, but I am not going to get hung up on that point. What I am pleased about is that there was very strong support today for the fact that we need to engage, engage immediately, and find a process at Senior Officials level to narrow the difficulties and differences with a strong impra mateur from Ministers to work towards accommodating a Ministerial meeting to conclude the modalities, the modalities for agriculture and NAMA with the aim of using that momentum to work towards concluding the Round by the end of the year.

JOURNALIST: Now you mention agriculture, and that is very important. What are the other issues?

MINISTER CREAN: Obviously on the modalities question, the key issue is NAMA. There are still unresolved issues in agriculture, but the fact is important progress has been made on agriculture which is surprising given there is a lot of complexity in the agricultural text and the issues that surround it.

Nevertheless there has been a significant narrowing of the bracketed issues in agriculture as a result of active engagement. That same active engagement hasn't been present to anywhere near the same extent on NAMA, on goods. Now I think that there is an awareness of that fact, that that engagement has to occur.

We have to seek to narrow the differences; there is an architecture that provides the direction for that. And it is going to require a new engagement and a political will. Now of course there are remaining issues in services, in rules for example - but the first important hurdle so far as advancing the Round is to rationalise, to try and get the balance between ambition in agriculture and ambition in NAMA.

The fact is no matter how much progress we have made in agriculture, we will not conclude the Round unless we make progress in NAMA. You can't have one without the other. That message was reinforced, it is accepted and I think it has consolidated the determination to engage more effectively on the goods area, on NAMA, to try and narrow the differences.

JOURNALIST: Do you expect any specific statement or goals on agriculture coming out of this?

MINISTER CREAN: No, this is not the negotiating forum. But it is an important gathering of the political will. The trade represented in this meeting is half of world trade. APEC is the most significant of the regional fora. APEC was established post-Uruguay to be a mechanism to add, to enhance if you like, the Uruguay Round. So APEC has always had an active, keen and progressive interest in enhancing multilateralism.

We have the meeting next week at the OECD. There again is an opportunity for an important meeting of the political will. But in the end hard negotiations, exhaustive negotiations, non-stop negotiations need now to proceed in Geneva. This meeting has signalled the importance of that occurring with the purpose of expeditiously resolving the outstanding issues. The fact that we have talked about expedition as distinct from just at some appropriate time - in the nuances of these forums, I think that is important and reflected the urgency and the importance that was expressed in the meeting today.

JOURNALIST: [Inaudible]

MINISTER CREAN: I think that there is no question about the fact that the US wants to see a successful conclusion to the Doha Round and is prepared to participate constructively to achieve that outcome.

JOURNALIST: Is it harder in an election year within the US?

MINISTER CREAN: 151 countries sit around the table at Geneva, and so there is always an election. So I think it will be harder if we don't conclude it this year, because I think that there is a will on the part of the existing administration to conclude it. If it is not concluded, I don´t think that it will be a top priority for the incoming Administration whatever shape that might take.

JOURNALIST: So if it was a McCain Administration….

MINISTER CREAN: Whatever shape it might take. I just make the point, and this goes back to the point that I made at the outset, that this is of fundamental importance – not so much to having regard to it being an election year in the US, but of keeping open the window of opportunity and concluding the Round. That can only happen if we close in on modalities.

That is why the next few weeks are going to be critical - but the commitment to engage immediately and to work towards a conclusion expeditiously to conclude the modalities I think is an important statement. I am encouraged by it and we want to work to bring it about.

JOURNALIST: I wanted to ask you a slightly different question – the European Union is going to look into the foreign acquisition trust implications of BHP Billiton´s purchase of the Rio Tinto Group. I wonder what your expectations are for that and when do you expect a decision will be made?

MINISTER CREAN: I don't want to pre-empt the machinations of the machinery that will be exercised there. I think it will be important for those processes to be worked through and that will depend very much on what the proponents – what is actually on the table- and there is no proposal on the table because it hasn´t been accepted. So I can't really speculate on that.

JOURNALIST: This morning´s or I guess for us tomorrow's headline of the Sydney Morning Herald will be ´Slow Down Kevin¨ - the Prime Minister's pace is exhaustive and you mentioned exhaustive negotiations. As a former Leader of the Party, is he taking the pace out too quickly?

MINISTER CREAN: No, and in fact it has taken us twelve years to get back into office - we didn't get elected to slow down. There is a lot of unfinished business and we need to work flat out at it. I don't know any Minister that has slowed down but we have a lot of agendas that need to be fulfilled, domestically as well as globally.

Domestically we have inherited an inflationary pressure – but we also have significant supply constraints – through infrastructure and skills. If we are to maximize our potential, we have got to address those concerns and that is what the Budget was about. And so far as the global situations whether it is climate change or whether it is global trade talks – I mean the last time that we concluded a WTO Round was when Labor was last in office. This would be nice bookend. But there has been a terrible interregnum over the past twelve years, and in many senses this interregnum is the reasons why the new Government can't really afford to slow down.

JOURNALIST: You had a record trade deficit in February which got cut significantly in March – I think that Australia has had trade deficits since early 2002. Do you see that shrinking, do you see a surplus coming in the next year? I see you have reached a free trade deal with Chile…

MINISTER CREAN: We did – and the agreement with Chile is a model FTA as it is comprehensive, it covers all sectors and introduces important MFN principles. So this is an agreement that we hope sends a signal that where FTAs should head – and I think that there is a better chance of them heading in this direction if we conclude this Round. But as for the run of trade deficits, this is all the consequence of the previous government's failure to properly attend to trade policy. It believed that all they had to do was ride the resources boom. But that's not enough. We have to position our economy to sustain it beyond the resources boom and that has to be part and involve a significant improvement in our export performance.

We are only 21 million people and if the point that I made at the outset means anything, it means that our best opportunities of sustaining economic growth means engaging trade and that is why we have to be more active in the trade agenda.

That is why I have commissioned the Mortimer Review. That is why we have consolidated a number of disparate programs into the one portfolio for a more coordinated approach. That is why we have increased resources into some of our trade facilitation mechanisms. We are serious about turning the trade position around.

When Labor was last in office, net exports were a positive contributor to economic growth in 10 of our 13 years. Under the last government, net exports contributed positively to economic growth in only 2 of their 12 years despite the longest resource boom probably in history but certainly since the Korean War. Now we have got something right – they got a lot wrong. I am not saying that we return to what we did in the 1980s because the world has moved on, but we have got to re-engage and reinvigorate and that is why we can't sit around.

JOURNALIST: Any more FTAs with Latin America on your agenda?

MINISTER CREAN: We will continue to engage with FTAs and countries prepared to enter into them provided they are WTO-plus.

ENDS

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