Interview with Patricia Karvelas, ABC RN Breakfast

Patricia Karvelas, host: High-profile meetings between Australia's Foreign and Defence Ministers and their Chinese counterparts have raised hopes of a big reset. There has even been speculation Beijing was prepared to relax or even lift its ban on Australian coal imports. But an editorial in the Global Times newspaper on Monday, lashing Defence Minister Richard Marles as difficult to distinguish from his predecessor Peter Dutton, is casting doubts over the prospects of that reset.

Don Farrell is the Minister for Trade, Tourism and Investment and our guest this morning. Minister, welcome to RN Breakfast.

Minister for Trade, Don Farrell: Nice to be on with you today, Patricia.

Patricia Karvelas: Now, the reset with China seemed to be off to a good start, but the Foreign Ministry's comments this week suggest otherwise. Are we back to square one already?

Minister for Trade: Look, I don't think so. Minister Wong had a very good meeting with her counterpart a couple of weeks ago and I issued, I guess you'd call it, an olive branch to my equivalent in the trade space when we were over in Geneva earlier in the year. It wasn't possible to meet at that stage, but that olive branch is still there. I'm still hopeful that at some stage particularly at some stage this year it might be an opportunity to meet and discuss some of the important issues that we would like to sort out with China.

Patricia Karvelas: Have you been given any indication that that could happen this year?

Minister for Trade: Look, I guess one positive sign is that I did get a congratulatory letter from Minister Wang, who's my equivalent in the Chinese system, and I think that's positive. I plan to write back to him shortly and again offer to meet at a time convenient to him.

Patricia Karvelas: Now earlier, the Chinese Government said Australia's relationship with China can set sail again. What would that look like?

Minister for Trade: That remains to be seen. Obviously, we have got some important issues with China and there are some blockages in our trade relationship. Unfortunately, we've had to take some action with the World Trade Organisation, particularly in relation to barley and wine. We'd be hopeful that, rather than proceed with a trade dispute through the WTO, that we could get those restrictions on Australian sales lifted.

But having said that, China continues to be our largest trading partner. The value of our sales to China continues to grow. I was at the Brisbane Markets yesterday and saw some navel oranges from the Riverland in South Australia that were all set to be transported to China.

So, on the one hand, there's a whole range of Australian products that are being sold into China, and then we have a problem with a few significant parts of our industry getting our products to be sold. So look, there's no easy solution to this. We need to be positive. I think we need to try to be constructive. We want a good relationship with China into the future. As I said, they're our largest trading partner. But there's a few hurdles along the way and I want to do my bit to make sure that we try and resolve those issues and get back to a normalised relationship.

Patricia Karvelas: You mentioned the World Trade Organisation. A lot of Australian producers don't want you to pursue China through the WTO over the tariffs. What's your message to them?

Minister for Trade: Look, we work under a rules-based system. We signed up to the WTO. We're a great trading nation. Australia has always valued its trading nation status. I don't think we've got any alternative given the decisions that China has made. But look, if they're prepared to sort this thing out some other way, then of course we will be happy to have discussions. But at the moment under a rules-based system which Australia has signed up to and which China has signed up to, there's only one way to resolve these issues in the event that you can't sort it out some other way, and that's through the mechanisms that the World Trade Organisation have set up. We support those mechanisms, and we intend to use them.

Patricia Karvelas: If you're just tuning in this is Radio National Breakfast and my guest is Don Farrell, who's the Minister for Trade. Do you see a realistic prospect of getting Chinese bans on Australian coal lifted?

Minister for Trade: Look I think it's speculation at this stage Patricia, to be honest, and I think that's a ‘wait and see' issue. Obviously, from a trade point of view, we'd love to see those restrictions lifted, but I think it's a little bit too early to predict just how that issue is going to play out.

Patricia Karvelas: What impact will the creation of a single organisation, China Mineral Resources Group, to manage coal and iron ore imports have on the negotiating powers of Australian producers like BHP and Fortescue?

Minister for Trade: I noticed the comments of both BHP and Fortescue today. They didn't seem concerned about that development. Iron ore prices go up and down on a pretty regular basis. There are a whole lot of factors that affect the price of iron ore. Of course, we have a terrific product to sell. Our iron ore is some of the best quality iron ore in the world and we've always been very successful in selling that product to a range of countries, including China and I'd be pretty certain that we'll continue to do that.

Patricia Karvelas: Are you worried that a slowdown in the global economy will dent Chinese demand for Australian iron ore which has already fallen to under $US100 a tonne?

Minister for Trade: Look, as I say, the price of iron ore, as with most other products, goes up and down depending on‑demand. We are in a more uncertain climate. There's no doubt about that and you're correct - we have seen the Chinese economy slow in recent times. We've also got the difficulties between Russia and Ukraine that are disturbing a whole lot of aspects of international trade. I'm hopeful that we can see our way through all of these issues and get back to what we know to be normal relations not only between us and China, but also us and the rest of the world, and that, that doesn't lead to any further deterioration in the economic circumstances.

Patricia Karvelas: When are talks with the European Union on a free trade agreement expected to resume and how close are we to a final agreement?

Minister for Trade: Well, the next meeting is on 17 October this year, and I just met with our negotiator to have a bit of a brief on that and an update. I have met with a few of the Europeans and I'm meeting some more later this year. I'm getting a very positive response from them about our chances of success. I think there are a whole lot of mutual benefits in a European free trade agreement. I think it's important to remember that Europe's economy is worth USD $17 trillion. They've got a population of 450 million people, so it's obviously going to be a very important deal if we can get it. It's hard to predict exactly when we might finalise an agreement but –

Patricia Karvelas: Would you like to sign it off by the end of the year?

Minister for Trade: I think that's probably a bit too optimistic, to be honest, Patricia, but perhaps by midway through next year it would be terrific to have an agreement and to have the Prime Minister heading over there to sign a new free trade agreement. He's made good progress with the meeting with Emmanuel Macron in France a couple of weeks ago. I think it was a very good sign that whatever blockages there might have been in the negotiation process have been removed by that meeting. Our views on climate change are much more in line with those of Europe and that's going to make it a bit easier. So I'm optimistic. I think we will get a free trade agreement.

There's a group of 15 or 16 European parliamentarians coming out who I will be hosting in Canberra in a few weeks' time. I had a meeting with them in Geneva and they were very positive about the new government. So I think all the signs are heading in the right direction. Also, in the next few weeks, we will be starting to process the agreement which we do have, which is the free trade agreement with the United Kingdom. The UK Trade Minister is coming out to Australia for more discussions about how we might progress the full implementation of that agreement.

Patricia Karvelas: Minister, many thanks for your time this morning.

Minister for Trade: Thanks Patricia.