2 March 2009
Interview – Jim Middleton, News Hour, Australia Network
Subjects: Australia-New Zealand ASEAN FTA; Chinese Investment in Australia
JIM MIDDLETON: World trade has taken a battering as the global financial crisis goes from bad to worse. Even in China heavily laden ore carriers are sitting idly offshore as demand from the new economic giant plummets. But there are some glimpses of sunlight.
At the weekend, the Association of Southeast Asian Nations signed a free trade agreement with Australia and New Zealand; a deal which has the potential to boost trade well above the $100 billion a year already achieved. Simon Crean is Australia's Trade minister.
Minister, thanks very much for your time.
SIMON CREAN: My pleasure, Jim.
MIDDLETON: AANZFTA, the Free Trade Agreement Australia and New Zealand have just signed with ASEAN, how soon do you expect to see the benefits flow?
CREAN: Well, the - it comes into force from the 1 January 2010. But I think that we already understand that there are significant opportunities that businesses within the region should be working towards.
We are going to see significant openings of markets in all of the ten economies that we trade with but likewise from those countries into Australia and New Zealand. It's an agreement, I think, Jim, that understands and it's a very mature assessment by all of the countries that participated that whilst exports matter to us, trade matters more. It's the interdependency of trade and growing the base of that trade activity that will cement an increased interdependency.
It's also an agreement that understands the different stages of development of countries within the group that we're negotiating with and finally it's an agreement that links aid for trade not just the issues of trade liberalisation.
MIDDLETON: On the question of capacity building, aid for trade, how much monetary assistance do you see Australia and New Zealand providing to grease the skids, the trade skids?
CREAN: We in Australia have committed another $20 million in aid to be worked through as part of the capacity building exercise within the country. Interestingly, last week when I was in Thailand for the signing of this agreement I had a very good briefing from AusAID as to the infrastructure already being undertaken within Thailand and within the Mekong region for physical infrastructure, what the new money does is to provide the capacity to support soft infrastructure in the reading - in the region, skills formation for example.
So, what I am very pleased about is that this is more than just a traditional trade agreement. It's a connecting in a practical way of the aid and the capacity building function and it's an agreement that doesn't just cover goods access, it covers services and critically it covers investment close.
MIDDLETON: On that point, in terms of what you point out as a pretty mature set of economic relations between the ten countries involved, in what areas do you see opportunities where are we underdone?
CREAN: Well, I think we've got capacity to grow in all the areas. Understand that this is a market of 600 million people, Jim.
And Australia is still forecast to grow positively, so too are the countries within the ASEAN group as a collection.
Despite the fact that the global financial crisis is impacting upon all of us, there is still growth opportunity within the region and what this agreement reflects is the ability to not just look at improved market access for goods but let's look at the services, let's look at investment close, increasingly the new trade these days isn't just about producing something and shipping it or trying to ship it to another country.
It's also about where the investment locates, the positioning to take advantage of global supply chains or access to bigger domestic markets. So it's this, if you like, this more mature dimension in terms of what trade is, not just the maturity in terms of the agreement and the political will that is reflected in the - in what we sign.
MIDDLETON: You mentioned the global financial situation a moment ago. Now, free trade agreements are one thing multilateral negotiations and agreements are quite another. You'd have to be pessimistic about the prospects in current circumstances of reigniting the Doha round?
CREAN: No, I am optimistic about concluding the Doha round and in fact, if anything the AANZFTA, the ASEAN Australian New Zealand Free Trade Agreement, gives comfort to that optimism.
Why am I optimistic? I am optimistic for two important reasons, Jim. World leaders are saying that they need economic stimulus to get us out of this crisis, well, trade is a stimulus. Trade has grown three times faster than world output in the last 50 years and each time there's been a new world trade round that multiplier has widened. So if we want to give added value to the domestic fiscal stimulus packages then we've got to conclude another round.
The second reason it's important, is all of the world leaders are saying, we've got to stop the growth of protectionism. Concluding Doha is an insurance against protectionism because it introduces new disciplines to stop the reversion to protectionism.
MIDDLETON: China's government-owned enterprise Chinalco is trying to get its hands on about $30 billion worth of Rio's assets as Australia's Trade Minister, how worried are you about this having the potential to cut the price of Australian minerals if competition is reduced.
CREAN: The question of Chinalco is a matter for the treasurer based upon advice to him from the foreign investment review board and there's a national interest test that the Government will apply and that's something that's got to run its course, but quite apart from that I think that the investment that China is showing an interest in, in Australia, is also reciprocated by a growing desire by Australian interest to invest in China.
When we talk about reciprocity we don't mean equality of access but we do mean that there has to be some form of reciprocity. Best way to deal with that, is through a free trade agreement.
MIDDLETON: Minister, thanks very much for joining us on News Hour.
CREAN: My pleasure, Jim.
[ENDS]
Media Inquiries: Departmental Media Liaison 02 6261 1555