FRAN KELLY: Steve Ciobo is Australia's Trade Minister. He joined us in our Parliament House studios. Minister, welcome to breakfast.

STEVEN CIOBO: Good morning, good to be with you.

FRAN KELLY: The Australian economy, highly trade-dependent, obviously. Exports make up about 40% of GDP. How big a risk is there of Australia getting squeezed in a trade war between the US and China at the moment?

STEVEN CIOBO: Well, there's no doubt that if there was a trade war that would be very bad for Australia, but indeed would be very bad for the entire world. The Productivity Commission recently concluded a study looking at what the potential impact of a trade war would be. We know that it would send the world into recession. We know it would cost, of course, many jobs, and we would see, as a consequence, economic growth going backward now. That's not an outcome that we want. That's not an outcome that the United States wants. It's not an outcome that China wants. As a government, we've been very committed to opening up more export opportunities, so that's not a pathway we want to go down.

FRAN KELLY: How bad for Australia? Let's talk about this. China is responsible for 80% of North Korea's exports and imports. If Donald Trump does impose tariffs or quotas on imports of Chinese steel and aluminium, for example, experts fear that the Chinese economy would take a hit and would have little choice but to import less of our iron ore, coal and gas, for example. How worried are you about that?

STEVEN CIOBO: One of the misconceptions, Fran, about Australia is the belief that Australia's exposure to China puts us very overweight with respect to that one market. Now, I think it's important to maintain a sense of balance about all this. For example, Mexico's exposure to the United States is far more significant than ours is to China. Canada's exposure to the United States is far more significant than ours is to China. So-

FRAN KELLY: I’m sure their governments might be worried as well.

STEVEN CIOBO: Well, the reason I mention that is because often there's a lot of focus on Australia's exposure to China without actually putting it in the context of what is the situation more broadly with respect to other markets. Now, we made sure we do what I'm focused on doing every day, is opening up more export opportunities. Because that's part of having a diversified mix of potential markets that exporters can choose to export to, which of course, just means we don't put all our eggs in one basket.

FRAN KELLY: Sure, but a tit for tat trade war between the world's two biggest economies would slow economic activity across Asia and beyond as you were just saying. Some call into question the whole, some say would call into question the whole global rules-based system around trade. Now trade is, you know, often not … it's not unusual for it to be used as a weapon in political spats. But is it right to use it in these circumstances when the world is at risk of a nuclear war?

STEVEN CIOBO: We have imposed a number of sanctions against North Korea. The United Nations Security Council put in place a range of sanctions against North Korea as well. I mean this is part of what we’re attempting to do to make sure that we can put maximum economic pressure on the North Korean regime to stop being as errant as they’re being. I mean, what they are doing is highly provocative, completely unacceptable, and the world needs to send a strong message.

Now, that is completely appropriate. I'm not going to build though, a house of cards, based on the assumptions of what could happen or what might happen. Of course, we look at scenarios. Of course, I've had conversations about what might be potential outcomes. But this just reinforces the point I made to you earlier, which is that we must continue to diversify countries that Australia, and Australian exporters, can do business with, because that minimizes, and mitigates the risk.

FRAN KELLY: Yeah, and I'm sure as Trade Minister you have to look as those risks because it's not completely hypothetical in the sense that the US President has said again in the last 48 hours, that America will curb trade with those who do trade with North Korea, and he singled out China. But also talked about others, and he will be speaking to the allies about this.

Now, Donald Trump promised you in the Presidential Election to slap a 45% tariff on all Chinese imports. Some are concerned that a trade tussle with China is exactly what Donald Trump wants. That he wants to use North Korea as an excuse to slap these trade tariffs on China, and that would be good for his base. Are you worried about that? That he could be using North Korea as a cover, for taking action against China?

STEVEN CIOBO: No, I'm not. I don't think that anyone approaches these matters flippantly I think that it requires a cool head, a calculated approach about the way in which we can hopefully bring North Korea to heel in terms of their nuclear approach, to try to get them to comply with the United Nations Security Council sanctions.

To make sure that we can minimise the risk of there being potential outbreak of conflict on the Korean Peninsula, which nobody wants. It's not in anybody's interest for that to happen. So, no, I don't think there is a risk that under US domestic policy intent, that they're trying to use this to achieve some kind of domestic outcome, I don't think that's the approach they’re adopting at all.

FRAN KELLY: China is not happy about it. It says overnight, quote, "It's unacceptable and neither objective nor fair." At the same time, we are demanding China does more to help curb North Korea's nuclear activities. America has threatened China with these sanctions. Is that counterproductive in your view?

STEVEN CIOBO: Well, we know that China's putting a lot of pressure on North Korea. The Prime Minister has made clear and I've taken the opportunity to reinforce wherever I can as well, that there is a role for China to play. They are playing a very important role with respect to putting pressure on North Korea. We saw reports yesterday that at a government to government level, China continued to ratchet up pressure on North Korea as well. They make it very clear, it is no one's interest for there to be an outbreak of trade hostilities. All that will do, will result in lower economic growth, lots of people losing jobs, and nobody wants that.

FRAN KELLY: Nikki Haley, the UN Ambassador to the Security Council has called for the strongest possible trade sanctions. Can trade be used successfully as a weapon? Is that appropriate?

STEVEN CIOBO: Well, I would, I guess, take issue with your terminology there. I mean, what trade can be used for is exactly what we're doing now with North Korea, which is to use it as a trade sanction. We want to ensure that we put maximum economic pressure on North Korea to comply with the wishes of the world. Of course, trade is one way that we can achieve that outcome. It sits among a basket of different approaches that we can adopt, but it is an important tool to be used. I mean, we see the world repeatedly use trade sanctions against errant countries and I think it is a part of the, for lack of a better term, the arsenal that we have available to us.

FRAN KELLY: Minister, on other issues, obviously, North Korea and trade wars are major issues for the government to be consumed with, but back home, the government is grappling or the Parliament is grappling with the citizenship mess. Bill Shorten has released his paperwork showing he's not a dual national. Is it time for others, including Liberal MP's like Ann Sudmalis to do likewise or should this stop here now?

STEVEN CIOBO: Well, you know, Fran, an extraordinary thing about Bill Shorten's approach is that he basically just toyed around for weeks and weeks. I mean, he could have released this document, which presumably he's had for a quite some time, could have released that weeks ago, but this is part of the silly approach, frankly, that we continue to see from the Australian Labor Party who clearly are more interested in playing political games on the floor of the Parliament, than they are in actually dealing with the issues that matter to every day Australians -

FRAN KELLY: With respect, the Finance Minister Mathias Cormann said a week or so ago, that there is no doubt over Bill Shorten's citizenship and then we got this renewed call suddenly for him to produce the paperwork again.

STEVEN CIOBO: Well, I mean has he ever produced the paperwork to begin with? This is my whole point.

FRAN KELLY: Are we at that point now where every person that might have this issue in the Parliament should produce their paperwork, is that what you're saying?

STEVEN CIOBO: Well, no I think what we'll know is, and we'll have much greater clarity, post the High Court decision in respect of this matter when that comes in October. So that ultimately is going to be the opportunity to put to bed a lot of these questions, because we will know the way in which the High Court's going to interpret Section 44, we'll know those that might stand in breach of it, those that are not, we'll know the approach that they will have with respect to the various tests about, have you taken steps and so on and so forth.

Now, the advice of the government, which we've made clear on numerous occasions, is that Barnaby Joyce, we believe, is on very strong territory. I just make the point again, Bill Shorten has had this document for weeks. The fact that he sat on it and refused to release it and then did it in some kind of stunt yesterday in the Parliament, I believe, just demonstrates this is a guy who's more fixated on playing silly games in the Parliament than he is on actually doing the right thing and having dealt with this matter quite some time ago.

FRAN KELLY: Steve Ciobo, thank you very much for joining us.

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