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PHIL KAFCALOUDES: Now, we have Simon Crean, the Trade Minister, with us in our Canberra studio. Thank you for your time.

SIMON CREAN: My pleasure, Phil.

PHIL KAFCALOUDES: Nice to have you on. Well, has the Chinese - have the Chinese made any kind of intervention so far in those negotiations?

SIMON CREAN: No, they haven't. There's been continued agitation, I guess, because of the position that the steel mills from time to time found themselves in but my very strong message, and it's been conveyed by other ministers, is that the market has to determine the principles. The Government is not going to get involved nor should it. China wanted to be recognised as a market economy and what we say is that "if that's the case, we have recognised you as a market economy, act like one. Act in accordance with market principles."

PHIL KAFCALOUDES: Well, the steel companies are worried about the rising cost of ore. Don't they have a right to bring this up at a government level, especially with inflation being a national issue in China?

SIMON CREAN: No, I don't think - all I'm saying is you can't have the Government intervene to set prices for what is an internationally traded commodity. Once you do that you're debasing the whole basis on which you argue for a market economy. Now, it's true that there are price pressures and they will continue to grow in China for commodities in particular. Why? Because of the continued strong growth of China. That growth is now translating into a lot of urbanisation, construction, et cetera. That is going to continue to fuel not just the iron ore sector but the coal sector.The point that needs to be made here is prices in a market will always go up where demand is outstripping supply. China is not the only demander. There is also strong growth happening in the rest of Asia. The key therefore is to not address it by governments intervening in the price negotiations but by trying to expand the supply of the resources.

Now, Australia is welcoming of foreign investment. I've continued to make the point on many occasions that we are welcoming of investment including from China on the basis that it is expanding our productive capacity to meet those demands. But if you look around the region, Phil, it's fascinating to look at it. The Philippines is one of the most undeveloped resources in the region. There are resources aplenty within the region. What's not happening is sufficient investment to unlock those resources. Australia is a key player in this regard because Australia's strength is not only the fact that it has the commodities and it has more of them but it is the most efficient producer and extractor of those commodities. So what we're seeking to do in our trade negotiations all round the region is not to get the access for the resource, because that doesn't have a tariff on it, but address the behind-the-border issues that enable us to make investments and unlock those resources in other parts of the region as well.

PHIL KAFCALOUDES: Now, one quote from you was recently you said that China should be transparent about its future needs and creative about meeting them. How creative? How so? What sort of ideas?

SIMON CREAN: I think the point I was making about creative about the future needs is to understand that the whole investment equation needs to be approached on the basis of expanding productive capacity but if we're going to go into the investment equation, Phil, it's important to understand that investment is a two-way street. Australia also has investment interests in China and other parts of the region. That's why I'm arguing very strongly in terms of the trade negotiations with China that we need to frame the investment issue in a modern context. We need to have it as an integral part of our free trade agreement with China.

PHIL KAFCALOUDES: Well, you're also doing trade agreements or free trade negotiations at least with a whole lot of other countries at the same time. You've got - you're looking at Korea, of course, but then you're looking at the eight Pacific nations - US, Australia, Singapore, Brunei, Vietnam among them - and those trade negotiations started yesterday. Anything come out of that so far? Any surprises for you?

SIMON CREAN: No surprises but encouragingly a very good start to the negotiations, Phil. I mean, this is an exciting new trade agreement because all of the parties that are signed up to it so far are committed to it being a quality trade agreement: comprehensive, covering all the fields, in particular that investment field that I talked of before. What we want to do is to lay the foundations for a trade agreement spanning the Pacific and a preparedness to invite new partners in, should they choose, welcome them in, on the basis that they come in on those same, sound, comprehensive principles. The discussions went very well yesterday. I'm very pleased with that. We're delighted to be hosting them and, given the visit of President Obama next week and their strong support for the Trans-Pacific partnership, I think this is an important issue to focus on, particularly bearing in mind that the US will be hosting APEC next year. So it's important for us to try and make some progress, to report progress, because the Trans-Pacific partnership is really an important bridge to the broader objective, which is a free trade area for the Asia-Pacific, the whole of the ASEAN - the whole of the APEC group.

PHIL KAFCALOUDES: And that brings in other issues too. There is pay disparity between some of the countries involved and trade unions say that labour rights might be a sticking issue. Now, you are a former head of the ACTU. Does that in any part of your brain worry you at all?

SIMON CREAN: Well, it doesn't worry me because I think we're capable of accommodating it. Labour rights are a different issue than parity of labour rates. I don't think anyone is arguing that what we do is impose the same labour rates across the country - across the Pacific. The recognition of different labour rates is one of the competitive advantages associated with development but when it comes to labour rights, a different question. We obviously continue to argue and will always argue that labour rights have to be respected. These trade agreements are not about reducing labour rights, they're about reinforcing the importance of organisations such as the ILO and the fundamental principles associated with negotiations and collective bargaining. But that doesn't worry me one bit. What I'm concerned about is creating the environment in which we're liberalising the markets, markets for products, markets for services, markets for investment, because trade is a multiplier. Liberalising trade is going to strengthen economic activity.

Trade liberalisation is an economic stimulus without the hit on the budget and, as we're trying to come out of the global recession, as we're trying to come out of this global financial crisis, looking for sustainable growth paths going forward, anything that can be done to facilitate trade liberalisation is going to be an important fillip to that. And whilst we are talking about all of these structures within the region, don't lose sight of the fact that we're still determined to get a successful outcome in the Doha Round of World Trade Organisation talks.

PHIL KAFCALOUDES: And as you just mentioned, we do have Barack Obama. The announcement's been made that he is actually coming to Australia. There were concerns it would be cancelled but it's only been put off a couple of days so, as you said, you are - you're confident that the trade discussions with the US will go on very well with the highest level of the American government?

SIMON CREAN: Well, they've signalled that trade is an important part of the dialogue that we're going to be having when President Obama visits the country. Clearly the Doha Round is in that mix but so too is this Trans-Pacific partnership. The fact that he comes the week after we've had the very first negotiations of the eight partners in the Trans-Pacific partnership, and the fact that they seem to be proceeding very well, I think is an important portent to where we might be able to take the relationship together. They are a strong alliance partner, our strongest strategic alliance partner, but they are also a very significant trade partner for us but it's not just the trade between the two countries that matters, it's what we can do together in terms of the region and in terms of global recovery through the mechanism of trade. Bear in mind that President Obama has made some very important speeches recently in terms of the commitment to grow exports, to double exports over the next five years. That can't be done unless you liberalise trade barriers and so the agenda in terms of how we might achieve that together is the important part of building the relationship, going forward.

PHIL KAFCALOUDES: And one last question, Simon Crean, before we go, and this is just on Kevin Rudd's popularity. It seems to have taken a little bit of a hit recently. The poll that was out in The Australian today down to 48 per cent approval rating and we've got Tony Abbot's at 47 per cent. Concerned?

SIMON CREAN: Anyone - anyone who's still at that rating after two torrid years of government, particularly going through the worst economic recession the globe has suffered, and pulling the nation through, as the only developed country in the world that has avoided the recession, anyone that's still polling that well in those circumstances is doing very well indeed.

PHIL KAFCALOUDES: Simon Crean, Australia's Trade Minister, thanks for your time, appreciate you coming in to our Canberra studio.

SIMON CREAN: My pleasure, Phil.

ENDS

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