Interview with Kieran Gilbert, Sky News Sunday Agenda

Kieran Gilbert: Let’s go live now to the Minister for Trade, Tourism and Investment, Dan Tehan. Thanks, Minister, for your time. We might be getting a bit more English ale on our shores at cheaper prices if the free trade deal is going to happen. Are there sticking points? Is it likely to be inked, at least in principle, when the Prime Minister gets to London?

Dan Tehan: Still more work to be undertaken, Kieran. There’s a lot of work that has been done. We’ve made enormous progress from where we were six weeks ago when I went to the UK, but we will continue discussions over the next 24, 48 hours in the hope of reaching an agreement. But we’ve said all along that we want this to be an agreement of substance. We want to make sure that it’s in Australia’s national interest, and if we need to be patient, we will be patient and wait to make sure that we have an agreement of substance in Australia’s national interest.

Gilbert: Can you give us any insight into what the sticking points are at this stage? Is it about agriculture? Is it all about securing some decent access for our agriculture? You’ve said in the last week: British consumers want it, their farmers not so much.

Tehan: So, there’s still a number of issues we need to work through, and we want to make sure, to start with, that this agreement in principle document has everything that’s in it, which means that the 700 or 800 pages of legal text which will make up the final agreement is covered, so that we know that our agreement in principle document is comprehensive—which means it will then set a clear path to reaching a conclusion on that final legal text. We also have to make sure that we’ve got an outcome in agriculture, in services, in investment, which is one of substance and meets our national interest test. So, we continue to work through this. I was up last night, throughout the night, as negotiations continued. They’ll continue overnight tonight for us, and hopefully we’ll be in a position to ink a deal. But I said when I became Trade Minister that I would take a proactive approach, a principled approach and a patient approach, and we’ll do that, that’s the approach we will take. We’ll make sure that we continue to engage fully over the next 24, 48 hours, but we want to make sure that we adhere to our principles, so that means we get a comprehensive agreement right across the board, and if we need to be patient and wait, then we will be patient.

Gilbert: So you are willing to, again, walk away, at least at this stage, if it’s not to the standard that you require? And, again, is this an opportunity not just in agriculture but across the board, for our exporters to diversify out of the reliance on China particularly?

Tehan: Well, Kieran, if we need more time, we’ll take more time. We have to get this right. We have to remember that, in part, we’re also negotiating the UK’s entry into CPTPP, one of the things that potentially is on the table if we get this right, then that means the UK will not have to negotiate again with us during their accession to the CPTPP. So, there’s a lot at stake for us to make sure that we get this agreement right. So, we want to make sure that the substance is there, that it’s comprehensive, that it’s ambitious, and if we need to take more time we’ll take more time. My hope is that over the next 48 hours we’ll be able to resolve the outstanding issues, but the clock’s ticking and time is running out.

Gilbert: Is it a chance, as I alluded to in that question as well, for exporters, for Australia, to reduce the reliance on trade with China, given the difficulties we’ve had with that country?

Tehan: Well, every opportunity is a chance to further diversify our exports, and the more diversified your exports are the better placed you are for the ups and downs of, especially, global commodity trade. So, that’s why we’re pursuing this agreement with the United Kingdom, it’s why we’re also pursuing one with the European Union at the moment, and the 11th round of negotiations on that agreement will conclude this week. So, we continue to look at every opportunity we can to diversify our exports, and this UK free trade agreement would be very good in that regard, but we’ve got to make sure that it’s a comprehensive and ambitious agreement. Australia negotiates comprehensive and ambitious agreements. We’ve done it so it now covers over seventy percent of our trade, and we want to make sure that we get this agreement right, and in particular get it right because if it then allows the UK to accede to the CPTPP and not to have a further negotiation with us, all the more reason why we’ve got to get this agreement right.

Gilbert: And there’s a great deal at stake for the UK as well. They don’t want to walk away. This is their first post-Brexit FTA, so they want to get a deal inked.

Tehan: In my view it’s in both countries’ interest to ink a deal. It’s also in both countries’ interest to make sure it’s as comprehensive as it possibly can be, that it’s as ambitious as it possibly can be. I want this agreement to be the best agreement that we’ve negotiated outside the Comprehensive Economic Relationship we have with New Zealand. That’s my aim, and my hope is that the UK are looking at this, to make this the best agreement they’ve ever done outside of the one that they’ve got with the European Union. And if we can achieve that then I think we’ve got a deal that both countries can sign up to, and then it’ll be a deal also that both countries will set them up for the future, it will set up their economies for the future and it will also set up our future trading relationship, whether it be in the Indo-Pacific region or in Europe.

Gilbert: Has the environment/climate change question been a difficulty? We know we talk about comprehensive and ambitious, well, their ambition and Boris Johnson’s is largely on climate change this year, hosting the major global summit in November. How much has that been a challenge for you to navigate?

Tehan: No, look, the discussions on the environment have been quite straightforward and not one of the sticking points. We’re basically agreed on the approach we will take on the environment—that is that multilateral negotiations are where things like emissions reductions are negotiated. But both countries are prepared to commit to work cooperatively on environmental issues, including on emissions reduction, on technology which helps emissions reduction. All those things, that cooperative approach, we’ve been able to get agreement on and, so, that hasn’t been one of the major sticking points.

Gilbert: Is the issue of carbon tariffs, border tariffs or adjustments, is that a looming threat? Do you see it as a realistic concern, not just from the UK but particularly, I’m thinking, from the European Union?

Tehan: So, when it comes to these bilateral free trade agreements, it’s not an issue. But multilaterally it is. And Australia’s great concern with carbon border adjustment mechanism is that they can be used as a protectionist measure. We’ve already put forward an alternative, and that is that what we would like to see is a reduction in all tariffs when it comes to environmental goods and the freeing up of movement of environmental services. So that means all countries can get access to the technology that they need to reduce emissions, and the know-how and expertise to be able to use that technology. We think that’s a much more pro-trade approach. That’s the approach that all countries should be taking rather than putting in place barriers, protectionist barriers, which would actually prevent us getting the emissions reduction the globe needs.

Gilbert: It’s a realistic threat though, isn’t it? Particularly from the EU.

Tehan: Look, the EU potentially are going to put it on the table. But, obviously, the first thing they’ve got to do is make sure that that is WTO consistent, and we’ll wait and see what the EU are going to propose, but it’s going to be very difficult. For instance, if you look at the scheme that they have in the EU, they- obviously, there’s large swathes of their industry which are exempt from their scheme, their emissions reduction scheme. So, how they take account of that is- we have to wait and see. So, there are many, many unknowns when it comes to what the EU are proposing. But as we’ve made clear, we just think it’s the wrong way to go about it. Why wouldn’t you come out with a free trade approach which says: let’s get rid of all tariffs on environmental goods, and let’s make sure that when it comes to environmental services, we can ensure that the technology that’s needed, that that know-how is there for all countries as they reduce their emissions.

Gilbert: Minister, when the Prime Minister talks about the need to get the rules of the road back in place, essentially, is what he said in his speech before leaving for the G7, with the WTO, one of the challenges, as you would know better than anyone, is to get that restored, that organisation. It’s not just the democracies in the G7 you need to worry about; you need countries across the board, all members including China, on board.

Tehan: That’s right. It’s a consensus-based organisation. But what we really want to see at the moment is true leadership from G7 countries about reforming the WTO, making sure that it can continue to set the rules that we need that will govern trade into the future, like ecommerce or digital trade, but also making sure that all countries adhere to the rules and we have a properly functioning dispute settlement mechanism. And that’s one of the things that we really need G7 countries to be focused on, because if they can show leadership, we think, that we can get the outcome we need at the WTO ministerial meeting at the end of this year, which will really pave the way for a reformed World Trade Organization which starts functioning how the globe needs it to function at this time.

Gilbert: You heard from Andrew earlier in the program and his- the question he put to the Singapore Prime Minister. Some interesting views from the Singapore leader. Is there anything that we can learn from that country when it comes to dealing with China?

Tehan: Well, I think what the Singaporean Prime Minister was saying was that we do need to constructively engage with China, and that’s what the Australian Government has been trying to do. When it comes to my counterpart, in January I wrote a very comprehensive letter to him, setting out all the ways in that we can constructively engage. And obviously, I’m still waiting for a response to that letter. But if you look at our trading relationship with China, our exports have helped lift millions out of poverty in China, and likewise, their imports into Australia have helped us sustain our standard of living here. So constructive relations are in both countries’ mutual interest. That’s something that we want to see. We understand there will be things that we will have to agree to disagree on, but there are lots of mutual interests of where we can engage and engage constructively.

Gilbert: Finally, has Joe Biden provided some ballast to Australia’s forward leaning approach to China in the fact that the President is very supportive of alliances and including not just ours but the quadrilateral dialogue and so on? Has it provided ballast to the Government’s approach on China?

Tehan: Well, there’s a couple of things. First of all, we saw overnight a very historic meeting between President Biden, Prime Minister Johnson, and Prime Minister Morrison where they were able to talk about the challenges in the Indo-Pacific and how the three countries can work together—and that is something which I think all Australians should take reassurance from. The second thing is that the US, under President Biden, have come out very clearly and said that they’ve got our back and they won’t leave us on the field by ourselves—and I think that also is incredibly reassuring. It’s a very complex geostrategic environment now in the Indo-Pacific. We want to work with likeminded partners to make sure that we get that rules-based order so that we can pursue the peace and prosperity that we want to see throughout the Indo-Pacific. So I think President Biden has shown very clearly that he wants to work very closely with us, as the US has always, and wants to make sure that our interests are looked after as well as the US’s interests, and all countries interests, in the Indo-Pacific.

Gilbert: Trade Minister Dan Tehan, appreciate your time. Thanks.

Tehan: Thanks, Kieran.