24 March 2009
Doorstop Interview – ANU, Canberra
Subjects: WTO Forecast on exports decline, Chinese investment
JOURNALIST: Minister can you tell us a bit more about the overnight figures from the WTO on the shrinking state of global trade? What do you think is the message for the G20 meeting next week from that?
SIMON CREAN: I think the message is clear that the fall in the domestic activity is having a much bigger impact on trade flows. Trade flows are the important things to get going because world trade historically has grown much faster than world output. Trade itself is a stimulus. So the key message here is that we’ve got to do everything possible to stimulate economic activity and to advance trade flows. The ways in which we can do that is obviously to keep reinforcing the importance of the domestic stimulus packages, but to also conclude the Doha Round, because the Doha Round will give a new impetus to trade, it will enhance the stimulus packages that are being developed.
JOURNALIST: Are you confident that the G20 understands that trade is the integral part of this?
CREAN: Yes, I think the G20 put trade firmly on the agenda in Washington. What we haven’t been able to conclude to date is the round. But these figures will put in stark focus what is happening in terms of economic activity around the world. The multiplier is working in reverse. So if we want to generate economic activity and sustain economic growth we’ve got to use the domestic stimulus packages and enhance them, to liberalise trade markets, to open the markets up, to conclude the Doha round. I think the G20 is firmly apprised of that. The question now is the political will to conclude the round.
JOURNALIST: A little bit outside of your area, but are you sure of China’s role in the IMF. How do you see that? What would be your preference?
CREAN: Well I think that China is a huge creditor nation. Capital flows are a fundamental factor in trade. I think that just as the G20 itself was a realisation of the power shift globally, that factor has to be taken into account in terms of the financial architecture. We’ve taken it into account in terms of the WTO. It needs to be taken into account in terms of that which facilitates credit flow and liquidity availability.
JOURNALIST: You’ve mentioned previously that investment with China needs to be a two way street. Do you think that China’s recent rejection [inaudible] suggests that there is maybe a lack of willingness on their part..
CREAN: Sorry the deal by?
JOURNALIST: The deal by Coca-Cola to buy into a Chinese juice company recently does that signal there maybe a lack of willingness on China’s part?
CREAN: I am not too sure of the specifics of that particular proposal, but I do believe that just as trade is important to world economic activity, capital flows are important to the dynamics of trade and the dynamics of domestic economic activity. It is in our interests to be opening up the flow of capital, that means there has to be liberalisation on investment flows between countries.
Now I have said for sometime, as part of the FTA, we need a new approach - a new framework for investment between the two countries - there needs to be a reciprocity, a two-way street. I have not ever said that means equality of treatment because we do accept that China is at a different stage of economic development to ourselves. But I think the sooner we can get a framework that facilitates investment and growth on a two-way street the better.
JOURNALIST: In terms of the FIRB decision last night to extend by 90 days the Oz Minerals and MinMetals deal does that show that there is a degree of difficulty for the Government in this and a number of other similar deals?
CREAN: I think what it demonstrates is the need for time to consider the full impact of the proposal. That is a completely different process to what I have been talking about. I have been talking about a framework that is encouraging of investment between the two countries. Of course all proposals, whether they come from China or any other part of the world, have to be considered against national interest guidelines. I think it is just a demonstration that more time is needed to consider those facts.
JOURNALIST: So that is the sticking point the national interest guidelines?
CREAN: Well it’s not the sticking point it is the test by which decisions have to be made by the Treasurer. He has to be satisfied that the decision is in the national interest and he has clearly taken the view that he needs more time to make that assessment.
JOURNALIST: So there are some particular guidelines in terms of the national interest.
CREAN: The guidelines are transparent, the guidelines were put out some time ago. The guidelines he will use to consider proposals. It is his decision. Thank you.
[ENDS]
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