Bloomberg Daybreak
HAIDI LUN: Australia posted a record trade surplus in December, we had that reboundin commodity prices, of course, being a major part of that. But headwinds areon the horizon when it comes to trade in the form of the US withdrawal from theTPP, and President Trump's threats of a border tax in imports. Joining us nowto talk about all of this from Canberra is Steven Ciobo, who is Australia'sMinister for Trade, Tourism and Investment. Minister, great to have you. We hadthis bipartisan resolution from US Congress over the last couple of days reallyreaffirming the relationship between Australia and the US and the commitment tothese ties. But we have a President who has demonstrated in the early days, awillingness to act unilaterally. So how much of a concern is there that thissort of volatility and negativity is now sort of tied up in the traderelationship between the US and Australia?
STEVEN CIOBO: Well the trade relationshipbetween Australia and the US is very strong. We run a trade deficit to theUnited States. But look, part of the reason we run a trade deficit is we, ofcourse, bring in, for example, Caterpillar equipment which powers our resourcesexports. We bring in Boeing Aircraft which, of course, powers our tourismindustry. I've consistently made the point that what we're focused on is notwhether we have a deficit or a surplus but how we're utilising the imports andthe exports that we have to make sure we keep growth in the Australian economy.
HAIDI LUN: Minister, I want to talk about the TPP because President Trump has kepttrue to his word. He said that he would withdraw the US from the TPP on hisfirst day in office, and he has signed the order to do that. You have said inthe past that a TPP without the US is still feasible, but my concern is, is itrelevant and do you then try to bring China into that?
STEVEN CIOBO: Well it absolutely is relevant.What it comes down to is this, there were a lot of hard fought gains that wereachieved through intense negotiations over many years, in relation to the TPP.I don't want, and I know a number of other countries don't want to let thosegains slip through our fingers. That's why I put a focus on whether or not wecould have for example, a TPP 12 minus one. In other words, the TPP less theUnited States, given the US doesn't want to be part of it. We'll be having ameeting in Chile in March of this year to canvas all of the options. I'll justreinforce though, that the benefits of the TPP are numerous. They are not onlynumerous, but there's also enhanced benefits for small and medium sizedbusinesses. You get, of course, lower barriers to trade, you get lowercompliance across that TPP network. And I think it's really important that wetry to capture those gains.
HAIDI LUN: What about the legality of it though? Because as it's written now, itstipulates that you need 85 per cent of member GDP for it to actually be legal.So will it there be some redrafting of the wording?
STEVEN CIOBO: Well look, by definition, therewould need to be some minor tweaking. I mean, it really comes down to where,ultimately, we end up. If we can get in-principle agreement that we want totake this TPP agreement forward without the United States, well that's arelatively straightforward process. We could make minor changes to the text toallow for the exclusion of the United States and still get the TPP into place.Alternatively, if there was going to be a more substantial redrafting aroundsome of the agreed points, well that's obviously a whole separate issue thatwe'd need to deal with. At this stage, I'm pursuing a minimalist approach,which would be to say let's keep the gains that we achieved under the TPP, andlet's apply it to as many member states as possible that are willing to sign upon those terms, less the United States.
BETTY LIU: Minister, as we know, and as youknow very well, trade deals can take years, years, years to put together. So ifI were to read between the lines a little bit on what you're saying on TPP, doyou hold some hope that even if, for this Administration TPP is not going to bea pursuit that they're going to take, that perhaps if negotiations take longenough that it might outlast our current Administration?
STEVEN CIOBO: I think you've probably gone onebridge too far there. Let me speak in very plain terms. What we're looking foris whether or not we can entice, encourage, support a multitude of the originalTPP countries to keep what we've already achieved through negotiation. Now,I've had discussions with Canada, with Mexico, with Japan, with Malaysia, withSingapore, with New Zealand, for example, most recently in Davos at the WorldEconomic Forum. It's hoped that we might be able to achieve agreement wherebywe could have, and I'm not going to rattle off any particular countriesindicating their support or otherwise, but if we were able to do something withCanada, Mexico, Peru, Chile, New Zealand, Singapore and Japan for example, wellthat would be a great outcome. We've just got to see where it goes.
BETTY LIU: Minister, earlier today we heardfrom the newly confirmed Secretary of State, Rex Tillerson, saying that the USis going to work with many foreign governments, including Australia, Japan andSouth Korea. Certainly, people read into that saying he's trying to repairmaybe with Australia the relations that were damaged by that phone call betweenDonald Trump and Malcolm Turnbull. Do you believe this is an Administration youcan work with?
STEVEN CIOBO: Look, absolutely. Our Ambassador inthe United States, Joe Hockey, has done an outstanding job at maintainingstrong, open lines of communication with the new Trump Administration. OurForeign Minister, Julie Bishop has had a number of conversations now with VicePresident Pence. Of course, our Prime Minister has spoken to the President. Andwe have officials that are communicating all the time as well. I'm veryconfident that the long term nature of the friendship between Australia and theUnited States will continue.
BETTY LIU: But was it damaged by that phonecall?
STEVEN CIOBO: Not at all.
BETTY LIU: Not at all? Despite the reactionhere and his strong comments? Not at all?
STEVEN CIOBO: Well look, we are focused onmaking sure that we pursue good outcomes for Australia. We had a deal with theUS Administration. The Prime Minister made it clear that we expected that dealto be honoured. I think it's a sign of a healthy, mature relationship that,frankly, the Prime Minister and the President can have a robust, let's call ita robust conversation, and that doesn't have an impact on the long-termfriendship, the fact that we're allies, the fact that we have long standingdefence ties, trade ties, economic ties. We're very focused on making sure thatwe honour, for the long term, the very strong bonds that exist between theUnited States and Australia.
HAIDI LUN: Minister, there's been a lot of talk about potentially China occupyingthis vacuum that would be left by a retreating, more isolationist UnitedStates, and part of that is to do with trade. I know that Julie Bishop did meetwith her Chinese counterpart, the Foreign Minister Wang Yi, last night, and heactually expressed some reluctance about the TPP, about these higher standards.Saying that, you know, essentially for China to be involved it would have to beat a level of comfort. It is better to lower the standards, and is thatsomething that you would be considering in order to have access to the Chinesemarket?
STEVEN CIOBO: Look, in many respects these arequestions that are probably best answered after March. The reason I say that isbecause in March we'll have the opportunity in Chile to meet and discuss, asthe TPP countries, what we see as the pathway forward. But let's be clear. TheTPP agreement, which was, you know, hard fought negotiated over many years,contains a large number of very good outcomes. These are outcomes that weshould not let slip through our fingers. Outcomes that ultimately providebenefits to all countries. Now if we can achieve agreement among a large numberof the original TPP countries to keep that agreement in place - to ratify thatagreement, and even if that means without the United States, well that's a goodoutcome. We should reach for that agreement to come into effect with as manycountries as possible less the United States given obviously the US does notwant to be part of it, because that's still a very good outcome for all ofthose countries that have signed up to it.
HAIDI LUN: You know, Foreign Minister Wang Yi also last night, when he spokeexpressed a very strong stance against protectionism. Is that also Australia'sstance, given that there has been domestic discontent over foreign investment,over, you know, the foreign purchases of Australian assets? Is that somethingthat Australia should be taking a stronger position on, particularly as nowChina would become even more important with diminishing trade ties with thelikes of perhaps the UK and the US as this sort of populism wave becomesstronger?
STEVEN CIOBO: Well Australia is unapologeticallypro-free and liberalised trade. We recognise that trade deals have helped topropel our country's economy. They've helped to provide jobs to Australians.It's one of the reasons why we're in our 26th consecutive year of economicgrowth. I mean Australia has not had a recession for what is coming into nowour 26th year. Part of the reason, and I'm not saying it's the sole reason, butpart of the reason is because of our commitment to liberalising trade deals.We've just put in place liberalised trade deals with Japan, with South Korea,and with China. China is, of course, our major trading partner. We have anexcellent trading relationship with China and I warmly welcome the President'scomments at the World Economic Forum that they were going to open up theirdoors to even further liberalised trade. I warmly welcome opportunities toengage further with China. I make the point consistently that for any businesswhether they're European, American, or others who are looking at an Asia play,that Australia is a logical platform for launching into, for example, the Chinamarket because of our preferential market deals. I'm also continuing to pursuefurther deals. We have in train right now, negotiations with Indonesia with aview to try and open up and liberalise the trade relationship between Australiaand Indonesia and a number of other countries as well. So we are very forwardleaning on trade.
HAIDI LUN: Alright. Thank you so much, Australian Trade, Tourism and InvestmentMinister, Steve Ciobo there for us in Canberra.