FRAN KELLY: Steve Ciobo is currently on his way to Chile for a ceremony to mark the signing of another free trade agreement, the TPP. I spoke with him very early this morning before we had those comments from Sarah Huckabee-Sanders, about potential carve-outs.

STEVEN CIOBO:  Good to be with you.

FRAN KELLY: There are reports this morning that Donald Trump could sign this tariff deal into law as soon as tonight, our time, do you have any hope the President will change his mind?

STEVEN CIOBO:  Well, listen, we have been very focused on making sure we put our best efforts forward, with respect to having exemption for Australia. Now, whether that's achieved or not, we'll know in the course of time. Certainly not so that we've left any stone unturned, between the Prime Minister, myself, our Ambassador and Julie Bishop being in New York at the moment,  we've pursued this to the nth degree and put forward  a concurrent case about why Australia and mainly BlueScope, should be exempt.

FRAN KELLY: Let's talk about exemptions. You've had a conversation with your counterpart, the Commerce Secretary Wilbur Ross, any sign of good news for Australia, in terms of exemptions?

STEVEN CIOBO:  Well, nothing's changed since the weekend in terms of formal news. The Americans did indicate that they were working through it. Obviously, there's much work they need to get through and everyone has seen the reaction from various quarters around the globe in response to the President's announcement, so I suspect there's quite a workload that they've been working through.

FRAN KELLY: Wilbur Ross is described as one of the architects of these options. He's an economic nationalist. What did he say to you in terms of the justification of these measures?

STEVEN CIOBO:  Fran, long story short, the President has made clear that he firmly holds that within the United States, they need to be self-sufficient of domestically produced steel and aluminium with a target of approximately 8 per cent being the magic number, as I understand media reports have confirmed. So that's the aspiration of the US Administration. From Australia's perspective, we are a very small player in terms of the US market; on steel we're about 0.8 per cent of the market, on aluminium we are about 1.5 per cent of the market. And, in face, you would've seen Fran, that BlueScope share prices actually rallied off the back of the announcement because they have a steel operation on Ohio. So my concern is to make sure we get a good outcome for Australia but we need to be mindful of the bigger picture here, and my real concern is that we don't see an escalation of trade tensions, which ultimately wouldn't be good for anyone.

FRAN KELLY: And that's the concern of the world, as you say, already we've seen the resignation of Gary Cohn, the Economic Adviser to the President. He supports free trade and that has sparked real fears of a trade war. The US markets plunged on that news because of those fears. Do you share those concerns that one of the key proponents of free trade in the White House is gone and what that might mean for this dispute broadening?

STEVEN CIOBO:  Well, look, I'm not an expert on the machinations inside the White House Administration; I'll leave that to others to make comments on that. What I also know, Fran, is that Australia's position on the benefits of liberalised trade is absolutely clear. We are committed to opening up export markets for Australia, we are committed to liberalised trade, liberalised investment. Our nation has enjoyed 26 years of continuous economic growth and that's not a consequence only of free, liberalised trade, but that's played a very major role. So we know that trade is good for growing our economy, trade is good for creating jobs and that's why we remain absolutely, firmly committed to progressing.

FRAN KELLY: But we also know that nobody wins in a trade war and while BlueScope may be alright, the impact on Australia will be is if this broadens, the [inaudible] has already drawn up a hit list of measures, potentially $3.5 billion worth. Our Reserve Bank Governor yesterday warned of a very big shock to the world if counter measures are taken by others. How concerned are you that this will be the fallout, the next step, the response to these steel tariffs in the US?

STEVEN CIOBO:  Well, now is the time for due diligence, now is the time for cool heads to prevail. The reaction from around the world just reinforces what I, others have said, numerous times, over and over again, is that trade, liberalised trade's inherently good for our economy and inherently good for growing jobs.

FRAN KELLY: We all understand the benefits of free trade, it seems the only one who doesn't is the United States President. The issue then is what we can do in response, should we as Philip Lowe suggested yesterday, sit still and do nothing, in other words take no retaliation, or would Australia be looking at some kind of other reaction, other response, some kind of hit list of our own?

STEVEN CIOBO:  Well Fran, I'll tell you what we are actually doing in response – that is, continuing to pursue opening up more export markets for Australia. That's precisely why I'm in Santiago. As a Government, as you know, we are absolutely committed to chasing down an agreement for the Trans-Pacific Partnership, we've got it. I'm delighted that it's a very good outcome for Australia, it's going to add to growth, it's going to add to jobs. And I'd remind you Fran, of course, if Labor were in power, they would have walked away from this deal.

FRAN KELLY: But Minister with respect, I think a lot of people listening will think 'well, what use are these free trade agreements? You're going to sign the TPP, but we've already got a free trade agreement with the United States, it's our closest ally, and right now it looks like it's not worth the paper it's written on.

STEVEN CIOBO:  Well, that's not the case. What we need to do is look at the way in which we've seen tremendous growth in both goods trade, services trade, and investment between Australia and the United States as a direct consequence of that free trade agreement with the United States.  But Fran, let's also not get ahead of ourselves, let's wait and see what actually comes out, let's wait and see what the details are because what I've been working on, what the Prime Minister's been working on, and our Ambassador Joe Hockey's been working on. So, you know, in the fullness of time we will see how we've placed but in the interim we absolutely must make sure we diversify our interests, that we make sure we've got a good spread of customers around the world, and that's what the Coalition has delivered in spades.

FRAN KELLY: Am I detecting that you are a bit hopeful that there could be exemptions, not necessarily country exemptions but industry, different business exemptions?

STEVEN CIOBO: Well, what you can be assured of Fran, is that we are throwing everything we have at this to make sure that we continue to argue the merits of why, as I said, Australia should be exempt, or BlueScope should be exempt in relation to this.  But we've got to work through the process with the United States; the President made his announcement and now we need to see the details actually look in terms of how that announcement is enforced.

FRAN KELLY: The President also said yesterday, and I'm quoting here now, "We'll straighten it out. We'll do it in a very loving way. It will be a loving, loving way. They'll like us better and they'll respect us more." What do you think he means by that?

STEVEN CIOBO: Well, I suspect that the President is making it clear that his version that he said to us at Davos that also America first doesn't mean America alone, is a reinforcement of that message, which I take and interpret as meaning that the United States doesn't want to be isolationist on this, but wants to ensure that they can protect their national interest as they, and the President deem it to be, but also being aware of its impact on allies like Australia.

FRAN KELLY: But isn't a one-way tariff imposed isolationist?

STEVEN CIOBO:  Well, I mean, we also close tariffs from time to time, Fran, when we see the dumping of products into our market. I think, again, the point I make, we need to see what the details look like. I'm not going to get too sensationalist about an announcement, what I need to focus on is what the actual details are.

FRAN KELLY: And just finally, did we have a deal with Donald Trump? And do you believe that deal's been reneged upon?

STEVEN CIOBO: Well, certainly, the Prime Minister spoke to the President at the G20, and understood there to be an exemption for Australia or Australian product, at that meeting. It was reported very widely at the time, and again, that's a point that we've made over to the United States.

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

STEVEN CIOBO: Good to speak to you Fran, thanks.

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