CNBC Interview
BECKY QUINN: Joining us right now to weigh in is oneof the big players in this game. Steve Ciobo is Australia's Minister of Trade,Tourism, and Investment. And Minister Ciobo, thank you for being here today.
STEVEN CIOBO: Good to be with you.
BECKY QUINN: Let'stalk about how things have changed over the last year and a half or so. It'snot just the United States, but a lot of different nations, that are looking atthings a little differently.
STEVEN CIOBO: Sure.
BECKY QUINN: Butcertainly the United States is kind of leading the way in terms of trying tochange trade policies that have been in place for years. What do you thinkabout all of this?
STEVEN CIOBO: Well, I mean we are, we're seeing what Iwould call some headwinds on the trade environment. Australia has been veryfocused on making sure we continue to open up trade opportunities, and perhapsthat's best exemplified by the fact that we pushed ahead with the Trans-PacificPartnership, the TPP-11. We've done that deal now, and that will hopefully comeinto effect at the start of next year. But in terms of US policy, PresidentTrump's been pretty clear now for quite some time about the recalibrationthat's taking place, and his strong desire to reign in the trade deficit. Youknow, we understand that, there's some policy differences in terms ofAustralia's approach to the US approach, but we've been good and pragmaticfriends for a long time. I've got a great relationship with USTR Lighthizer andwe'll continue to work through it.
BECKY QUINN: President Trump hinted, or at least - heactually said outright that he was considering TPP, trying to get back into it,when we were with him at Davos. There's been a lot of hopes around that butthat situation looks a little bleaker after some Tweets last week. What can youtell us about this? Have there been talks between the United States and theother TPP nations? What do you think might happen?
STEVEN CIOBO: I think at its core, the challenge, andthe President you know, said before the election, that one of the first thingshe would do would be to withdraw from the TPP.
BECKY QUINN: To befair, the other candidates said the same thing.
STEVEN CIOBO: Yep,Sure. And so when that happened, we were disappointed, but we weren'tsurprised, because it followed through on a pre-election commitment. Thechallenge is, though, that given the 11 of us have expended a lot of time,effort, and energy to make sure that we can do the deal and lock it in, we'renot now going to be able to renegotiate big chunks of the text. I mean themarket access where it's goods, services, investment, all of that is in place.It's a really comprehensive deal. There's a lot of other ancillary issues thatare sort of incorporated in the TPP-11 as well, so you know, there's a lot ofmomentum. We want to get it done. We want to make sure that we can have thiscome into effect as soon as possible. So ultimately, that won't be put on pauseto have the US come in.
BECKY QUINN: Does that mean that you and the other 10nations in TPP automatically get drawn a little closer into the Chinese orbit,that they become closer with you?
STEVEN CIOBO: Look,not at all. And I've made the point, we would love for the US to come back intothe TPP-11. That would be terrific, and I'll say it repeatedly, becauseespecially from Australia's perspective, but also more broadly, we think thatthere's a lot of benefit for the US, and indeed for all of the countries, ifthe US is at the table. But my observation is simply to say that there's not anappetite, and I know, from speaking with my colleagues in the TPP-11 countries,there's not an appetite to renegotiate vast tracts of text, because that willtake a long time to do.
BECKY QUINN: Meaning take it or leave it to the UnitedStates.
STEVEN CIOBO: Well, I mean, the deal is what the dealis as it is agreed now, and my point is simply, it would be a new deal if westarted renegotiating all aspects of it, and that would take a long time, andyou know, there's not an appetite to do it.
BECKY QUINN: So back to my question about China,because those who here in the United States have been in favour of TPP havesaid that we need to do this in order to ensure that those 11 nations don'twind up in China's orbit, that they don't become closer with China, that thisis kind of a bulwark against China in the region, and are entering into it. Isthat the case or not?
STEVEN CIOBO: No, it's not, and I think it's a falseconstruct. It's not that binary. It's not a case of, you either trade with theUSA or you trade with China. I mean that the fact is that in Australia's case,for example, China is our largest trading partner. We do about $175 billionworth of two-way trade with China. We run a trade surplus with China. But youknow, we've been strong allies.
BECKY QUINN: You run a surplus with China?
STEVEN CIOBO: Yeah, sure. And we run a trade deficitwith the United States. And the reason we run a trade deficit with the US isbecause we buy Caterpillar equipment, and we buy Boeing aircraft, and thatpowers exports for us, in terms of our resources industry and our tourismindustry. So I don't get too, personally, too caught up on the deficit surplusscale, because what matters is the composition of your trade, and what you'reable to achieve overall. But you know, look, there's strategic benefit if theUS wants to come back to the table around the TPP-11, but you know what, Ithink a lot of this is academic now. The President's made his position, Ithink, quite clear. All I can say is, the TPP-11, we'll want to press aheadwith it. We want the deal to come into effect, and we would welcome the US tocome back, but ultimately, that's a decision for the US.
ANDREW R SORKIN: Does that imply, you saidCaterpillar equipment and such, that you have a goods-based deficit with theUnited States on trade? In other words, just focused on goods versus services,than something the Trump Administration-
STEVEN CIOBO: Yes we do, but by the same token, if youlook at the Australian economy, and it's like this with most developedcountries, 75 per cent of our economy is services-based, but services exportsonly account for nearly 22 per cent of our exports. So I see services exportsas being the real growth industry for Australia, and where we're putting a lotof focus and emphasis, which of course gets back to things like tourism andeducation in particular. We can do a lot in that space, but that's at the coreof – you know, we have the most active trade agenda in Australia's historyright now, and at the core of that is what we should do on the services side,as well as our traditional strengths in resources, energy, those types ofthings.
BECKY QUINN: So what would you like to be telling theUnited States right now? If TPP looks like that ship has sailed, doesn't look likethat's going to be something that happens, where do we kind of have commonagreements, and where would you like to improve the relationship?
STEVEN CIOBO: Well, the relationship with the US isreally strong, so I'll make that plain. And we've had a free trade agreementbilateral FTA with the US for over a decade. That relationship is strong.Ultimately, from Australia's perspective, we want to avoid at all costs,there's an opportunity where you may have action and retaliation in relation totrade.
BECKY QUINN: Is Australia going to be permanentlyexempted from some of these tariffs that have been mentioned recently?
STEVEN CIOBO: Well that's the deal that's been reachedbetween the Prime Minister and the President, yes, so obviously we're watchingMay 1 as it rolls around, and what happens in terms of the exemptions. Werecognise that the US Administration has got to make, put in place policy toolsthat reflect, you know, what they're doing with all countries, not justAustralia in isolation. But having that agreement reached between the PrimeMinister and the President, we're working closely with the US Administration onactually what that looks like.
BECKY QUINN: If China is your biggest trading partner,are there repercussions? Are there waves that you feel, when these negotiationsbetween China and the United States get so tense?
STEVEN CIOBO: Well, it's not just confined to China. Imean, these are implications that are global in context. I look at, for example,some of the discussions between the USA and Europe. I look at the discussionsthat are taking place between the USA and China, or I look at the discussionsbetween the USA and Canada or Mexico as part of NAFTA. From my perspective, asI said, they're are some headwinds in the trade space at the moment. AsAustralia's Trade Minister, the best thing I can do to help mitigate againstdownside risk is to ensure that we continue to diversify. And that's preciselythe reason why we've really pushed - we're really forward-leaning on the mostactive trade agenda. I've got trade negotiations either underway or shortly tocommence with the European Union, with the UK, with Hong Kong, with Indonesia,with the Pacific Alliance Countries, with Mexico, Columbia, Chile, and Peru, soyou know, that speaks to a huge appetite to diversify as much as we can.
BECKY QUINN: Which are the trickiest of thosenegotiations?
STEVEN CIOBO: They're all tricky. These are alwaysfraught with challenges. The hardest thing, I think, is to get the kind ofquality deal that you want, which does produce a win-win outcome. One of thebiggest narratives on trade, especially in terms of Joe Public, is they'lloften view it as a win-lose. One side wins, one side loses. And it's justactually changing the narrative around that, to highlight that it's win-winoutcomes that we're after.
BECKY QUINN: Is it fair to say, when you say you'relooking to diversify with all of these different instances, is that because youdon't think you can count on the United States down the road?
STEVEN CIOBO: Well, it's not a reflection of the US,it's just about diversification mitigates risk. We need to ensure that wecontinue to open our export opportunities for Australian business, whether it'sgoods, whether it's traditional strengths, resources, energy, or what we'redoing now in services. The more that we can open up the export markets, and youknow we've seen this - we've just concluded the high quality FTAs with China,with Japan and Korea, and Singapore, for example, we've seen off the back ofthat a huge surge in export growth from Australia. And that's helping to driveour economic growth, and it's also driving, of course, a job surge in ourcountry as well.
BECKY QUINN: Minister Ciobo, I want to thank you foryour time today. Appreciate it.
STEVEN CIOBO: Good to be with you.