27 January 2009
Interview with Virginia Trioli and Joe O'Brien on ABC2 TV News Breakfast
Subjects: World Economic Forum, European dairy export subsidies, informal trade ministers' meeting in Davos
JOE O'BRIEN: Global leaders and company executives will be hoping for a glimmer of good news as they gather for the World Economic Forum at Davos in Switzerland this week.
VIRGINIA TRIOLI: Australia's Trade Minister, Simon Crean, will attend the annual event together with Deputy Prime Minister Julia Gillard and Mr Crean joins us now in the studio. Mr Crean, good morning.
SIMON CREAN: Good morning, Virginia, Joe.
VIRGINIA TRIOLI: Now, this Davos event is themed this year Shaping the Post-Crisis World. They're getting a bit ahead of themselves, aren't they? We're not in a post-crisis world yet, are we?
SIMON CREAN: . . . This is a serious circumstance. It's a global problem, it requires a global solution. This is the first meeting of world leaders not in a formal sense, as the G20 is or other structures, but an informal sense, but their interaction with the business community. I think you've seen, by a lot of the initiatives that we've been taking here, the partnership between government and the private sector becomes critical to the way forward so the ability to have that exchange, that interaction is important but also to take stock of where we think the state of play is to date and how we move forward. From my point of view, the trade dimension is terribly important because world trade rose faster than world output. No point countries simply committing billions even trillions of dollars to fiscal stimulus, domestic recovery, unless they're prepared to add the multiplier. So unless we're going to get serious about this and conclude Doha, get on with the trade liberalisation beyond Doha, then I think we underperform that which is already being committed in spades.
VIRGINIA TRIOLI: That's your biggest problem, isn't it? Because it would seem that the initial impulse by many countries in a time like this is actually to resort to self-protection.
SIMON CREAN: That's right.
VIRGINIA TRIOLI: And we've seen some examples of that already. So how do you open up trade flows at a time like this?
SIMON CREAN: Well, by concluding Doha. Take, for example, one of those protectionist measures that we're very concerned about, the Europeans imposing export subsidies on dairy. That would not be able to happen under Doha. Export subsidies are outlawed. It's just one of the significant benefits of concluding a Doha round.
VIRGINIA TRIOLI: But there's your explanation for why the Doha round collapses because there are countries who don't want to conclude it that way.
SIMON CREAN: No. No, we have agreement on that score. We have agreement to 80 per cent of Doha but we haven't got agreement to the final 20 per cent. Not export subsidies or things like that, we have agreement to those things. The trouble with Doha, it's not like simply going along and talking about this, you've got 153 countries, you need them all signed up. It isn't a majority vote, it's got to be a total vote.
JOE O'BRIEN: But doesn't the current economic situation make it more difficult to get countries to agree to things like that?
SIMON CREAN: It does but it's the reason why, if you look at it from the other perspective, Joe, it's even more essential we conclude it. There's no point pretending that we're going to gather as world leaders or gather with business leaders of the world, sit down and try and talk through the problem if we're not serious about going the next step. No point investing all of this money to try and lift domestic economies if you're going to - if you're going to diminish, in fact, be counter-productive by resorting to protectionist measures in the belief that that protects your jobs.
VIRGINIA TRIOLI: So at Davos, the meeting of trade ministers is, is it fair to say, somewhat informal, it's sort of almost off-campus, as it were? Are you going there with a feeling that these other trade ministers have a similar mindset to you?
SIMON CREAN: Yes, well, it's all informal but the trade ministers - bear in mind, it was this meeting 12 months ago that gave the real kickstart to Doha. It resulted in the July meeting which even though it didn't conclude achieved that 80 per cent. Now, up until that time we didn't have that much on the table. This all happened before the global economic crisis. What we're hoping is that we can pick that momentum up again, get a recommittal to concluding that 20 per cent.
VIRGINIA TRIOLI: I know that's your hope but I'm just wondering what's your understanding about the mindset of other countries, of other trade ministers at the moment. I mean, they're a little more fearful than that now, aren't they? That 12 months now seems like a very long time ago.
SIMON CREAN: Well, it's - it's only six months ago and we got close again in December. What was - what worked against us in December was the transition in the United States.
VIRGINIA TRIOLI: Yes.
SIMON CREAN: That's now happened. Now, again, we've got the Americans, the new administration coming in, how long is it going to take to get in the saddle, get focused on this? We've got the Indian elections coming up which complicate things. These are the sorts of political problems that we're constantly having to deal with. I think in theory people understand the importance of doing this. Everyone is committed to concluding it but all of - some of them have a different view as to how to conclude it and it's those sticking points that's continuing to frustrate us at the moment but we won't overcome those unless we persist with the political will. I believe that the technical issues that ran us aground in July are capable of being solved. At the technical level you can meet it but the parallel track that you need to achieve is the political will. That's what we're hoping to again re-engage, recommit and move forward on from this meeting.
JOE O'BRIEN: But Barack Obama was saying things before the election which indicated that he was leading towards protectionist policy in certain areas. Has he said anything since the election to indicate otherwise?
SIMON CREAN: No and, in fact, if you look at those statements, they were very much focused on certain bilateral agreements, certain free trade agreements, one with Korea, one with Colombia. At no stage did he in the lead-up to the campaign express criticism of or objection to concluding the Doha round. Now, it's true that they have a view that developing countries need to open up more of their markets if the developed countries are going to open theirs. That is the balance, that is the challenge for all of us. Of course, from Australia's point of view we'd like them all opened up because ours are open. But we're realistic enough to understand that as - whilst we won't get the perfect outcome we will get a much better platform and just that dairy industry - just to come back to that point, if we were to conclude Doha the export subsidies would not be able to be invoked by Europe in the current circumstances. Quite apart from the fact that you'd get pretty significant cuts in tariff levels both on agricultural and manufactured products, but more importantly this is the first round that has really moved forward on services exports and that, quite frankly, is a lot of where Australia's future will lie, in services and in investment flows. This is the new form of trade. Trade isn't any longer simply about producing the product and shipping it. It is about investment overseas, it's about trying to find access to global supply chains or to participate in-market to get better access to where the domestic growth.
VIRGINIA TRIOLI: Simon Crean, I feel like I'm in an echo chamber now. That was a cry that we all heard, what, 10 years ago? It was going to be in the services sector, in exporting education, health and the like. What's our great success been economically struck on in the last five or six years? And old-fashioned form of - of wealth and that is simply the mining boom. So it's like we're going in circles here. We have to relearn our own history in order to strike our new economic future.
SIMON CREAN: Yes, but significantly in both mining and agriculture, Virginia, where the new direction is now is not just the bulk commodity. It is the services and the investment dimension of both of those bedrocks of our economic future that we're engaging much better in. Our mining exports aren't simply the iron ore. They're the technology, the capacity, the investment, the know-how that goes with it. And this is terribly important with developing countries. This is part of the development agenda. We're in a position where not only can we export a better value-added product but we can assist the capacity building of developing countries so that they too can participate in the global opportunities.
VIRGINIA TRIOLI: Simon Crean, good to have you on the program, thank you.
SIMON CREAN: Thanks, Virginia. Thanks, Joe.
[ENDS]
Media Inquiries: Mr Crean’s Office 02 6277 7420, Clinton Porteous 0403 369 588 - Departmental Media Liaison 02 6261 1555.