Australia-China Business Council

Well, thank-you, Warwick and can I say what a pleasure it is to join you today for this important annual event on the calendar, and especially on the parliamentary calendar. And Michael and David, can I congratulate you for not letting Covid-19 get in the way, and for making sure that this event can continue. And I think, as Warwick pointed out, the number of participants who are already engaging in this forum shows that what you've done is absolutely worthwhile and shows that we can continue to deal with Covid-19 in innovative ways here in Australia and around the world. So well done and thank you.

And can I say, it's a pleasure to be able to talk about the relationship, and I'll do that first, Warwick, and then I'm happy to have a bit of a discussion about my recent trip. But before I start, I'd just like to obviously advise everyone that we've got a new team together when it comes to the Department of Foreign Affairs and Trade and Austrade. As you'd all be aware, Kathryn Campbell has taken over as the head of DFAT. She comes from a strong background as Social Services Secretary and also in senior leadership roles in the Army Reserve and also Xavier Simonet has taken over at Austrade, and he comes from a very strong business background, has been very, very good in terms of building brands, mergers, acquisitions and commercially has been very, very successful in the roles that he's played. So, we've got a new team at the head of Austrade and at DFAT and, as minister, I'm really looking forward to working with both Kathryn and Xavier as we continue to advance Australia's trade and commercial interests.

With regards to the relationship with China, as all of us know, it's been difficult for the last 18 months, two years. But what I want to reassure you of today is that as far as the Australian government is concerned we want to make sure that we have constructive engagement with the Chinese Government, but we want to make sure the business and commercial relationship continues to prosper. So, we are methodically working through these current difficulties. We continue to send a very consistent message to the Chinese Government that we do want constructive engagement, that the best thing we can do is sit down, talk about the areas of mutual interest where we can work together, and then, obviously, talk about the difficulties in the relationship and, in particular, on the trade front, work through the current issues that we have.

We think this is the best and most constructive way for us to do that — and that invitation for dialogue remains there. In all my public statements, whenever I'm asked about the Chinese relationship I always refer to the fact that at any time we're prepared and ready to sit down and have that dialogue. But there are many areas where we can work constructively together, whether it be the WTO or APEC, and there is no reason why we can't sit down and try and work through our current trade disputes.

As a matter of fact, there might be some issues where we agree to disagree, but I think there are many areas we would constructively work through them. So, I want to give you that very clear message that constructive engagement is still very much what we are looking for and hoping for when it comes to the Chinese relationship.

As you all know, what we've seen, especially over the last 20 years, from the Australia-China relationship is a partnership, an economic partnership, which has helped us maintain our standard of living and lifted millions out of poverty in China. And there is no reason why that partnership can't continue strongly into the future.

In terms of broader interests in the relationship, obviously, when it comes to the WTO there are areas where we can be working together in the lead-up to MC12. And my hope is through ministerial engagement with other ministers right across the globe, we'll be able to get a strong outcome in MC12 and put the WTO back in the paramount position that it needs to be, as we look to set new global trade rules and make sure that the current global trade rules are adhered to. So, it is incredibly important that we continue to push that agenda, and that's something that as minister I'm continuing to do.

In terms of our current disputes at the WTO with China on barley and wine, they continue to progress. But at the same time, we continue to send a very clear message that any time China would like to sit down and work through these disputes, we'd be happy to do so.

We've also, obviously, got the dispute now that China has taken against Australia which we will vigorously defend. We have a strong belief in our countervailing and anti-dumping measures and the way we go about putting those in place. So, we will continue to obviously defend our regime at the same time officials are also in dialogue, currently, with China on the facts of our countervailing and anti-dumping measures and, obviously, we'll see how that dispute progresses in the weeks and months to come.

In terms of my recent trip to Singapore, Vietnam, South Korea, Japan and the United States, there's a couple of things that I would like to say. First of all, in our immediate region, ASEAN and in North Asia, I think the stead in which Australia is held in at the moment has never been stronger. The welcome that I got in all those four countries and their willingness to want to engage and be a partner with Australia I think is quite remarkable at this time. In particular, there is enormous opportunities for Australia when it comes to energy.

All those countries in particular are looking at what energy they will need into the future as they decarbonise — and they see Australia as a trusted and reliable partner of energy. Obviously we've got a long history of providing energy to those countries, and they see us as their country of choice when it comes to providing the energy of the future. So, whether it be in liquid hydrogen, whether it be in ammonia, whether it be providing the rare earths and critical minerals that will go into electronic vehicles and all other types of manufacturing products that will be required to provide those renewable energy solutions into the future, they're very keen to work with us and continue the strong partnership that we have.

The second point that I would make is that they are also very keen to see increased engagement by the US into the Indo-Pacific. They see that the strategic conflict that is taking place at the moment, the strategic competition that is taking place at the moment that obviously we want to continue to see strong US engagement in the region as we seek to ensure that all players and all countries in the region adhere to the global rules that have been put in place. So that was a message that I took to Washington and one that I was able to give not only to Katherine Tai but also in my visits to the White House and up to the Capitol. So that part of the visit was also very constructive in being able to deliver a message to the US that the region is keen to see a step-up in US engagement into the region.

So, Warwick, I'll leave it there. Happy to engage across the board on any issues that people might want to raise. But, once again, can I thank you for putting this forum on, and can I thank you for the way that the Business Council engages with businesses both in Australia and in China. And can I reiterate that message that I said at the start — that the Australian Government is looking for constructive engagement with China. We're ready to sit down and work through the current disputes that we have and my hope is that the strong economic partnership that we've had and currently have will be able to continue into the future.

Warwick Smith: Thank you very much, Minister. We've got a few minutes, so perhaps if I can ask a couple of questions to just tease a little further out. I agree with you that the enduring economic complementary of Australia and China has basically been enduring, and I guess what we're seeking is ways in which we can continue to trade successfully. We do have, as you mentioned, WTO issues with barley and wine and other difficulties and fundamentally China has changed, not Australia. We're still fundamentally a trading nation and, as you say, wanting to be constructive politically to actually ensure that those trades can continue.

One of the things that is probably worth asking you about as we come out of the great pandemic, a little bit like the Great War, it's going to be something we look back on because it's profoundly changed things for people so many and so many businesses – difficulties and opportunities. But as we do look to go to the future, what are we going to do about part of your portfolio – tourism – and you were education, students, and the big preponderance of support that we have from customers out of China. Do you have a few views about that? Is there a role for Austrade more in that area, for example?

Dan Tehan: Well, I think it's a very good question, Warwick, and our hope is that the international student market once we can open our borders up will be able to resume — and that's what we're planning for. Obviously, the key thing at the moment is to make sure that we can get as many people vaccinated as possible and then as soon as that happens, obviously, our four point plan as we come out of the pandemic includes a strong resumption of international students. And that's going to be absolutely vital as a part of our economic recovery, and especially when it comes to our CBDs, because international students, in particular, make a large economic contribution to our CBDs in Sydney, Melbourne, Brisbane, Adelaide, Perth and in other areas as well as into regional communities.

So, this is something that we've already started to plan for. I've been doing some work with Alan Tudge, the Education Minister, to make sure that when we are in a position to resume international student flows, that not only will we have the requirements in place here in Australia but also what we need to be doing to market Australian education overseas. And that's going to be a key requirement because, obviously, the US, the UK, Canada, other markets are already there promoting their international higher education. And what we've got to be doing as we seek to resume to open up is do the same.

When it comes to tourism, I'm very strongly of the view that the demand for Australia's tourism offerings will be as strong as ever once we come out of this pandemic. I've now done two trips this year – one to Europe, one obviously to the ASEAN, North Asia, the United States – and everywhere I've gone there is no question that there is strong, strong demand still for visitation to Australia.

I think everyone understands, especially through the way that we've dealt with this pandemic, that our tourism offerings have actually increased and improved through the pandemic and there is a real keenness for people to want to come and travel to Australia. So, I've got no issues around demand when it comes to tourism. I think our biggest challenge is going to be making sure that we can get those vaccinations in people's arms and making sure that we can safely and securely open up. And we're also looking at ways that we will be able to do that. Obviously, we've got the travel bubble with New Zealand, and we'll look to expand that as we can, as we safely open up.

Warwick Smith: Thank-you. Can I ask a little further about Austrade. What can business do to help in China and helping to meet those aspirations that we all have? We know it's all about holding our current trade and diversifying our trade. That's a dual approach that state governments, you're taking and businesses are taking. You always hold the customers you have if you can. So Austrade becomes an important part. As you mentioned at the beginning. Kathryn Campbell has arrived and Xavier has arrived and so there's a chance to have a look more closely as you get into these portfolios about Austrade. Can you let us know, and give us an assurance, that the engagement in China, which has been good, will continue, supportive of a whole range of businesses – large and small – and great market intelligence, and any thoughts you had about Austrade. And maybe thoughts about greater engagement with business in some way with Austrade? Because we will have a rebuild for our nation. We have the lowest population growth in 104 years at the present time – two years of zero immigration and special skills. There are many pressures that will be upon us, and rebuilding our trade and extending our trade so Austrade will have an even bigger remit, and it won't be long before the Trade Minister is more important than the Treasurer. But I'll let you tell him that. For us, building growth for Australia is going to be absolutely pivotal on trade. So I invite you to perhaps have a ruminate on those broad issues.

Dan Tehan: Yes, no, look, a really good point. And you can be rest assured that Austrade's role in China will continue. It's probably more important now than it's ever been. And there are a couple of other things that I'm really keen to add there. First of all, I think it's more important than ever that business continues to play a role while we have these difficulties with the government-to-government relationship. You will have heard comments I made previously about the need for us to have a real Team Australia approach. So everything that business can do on the ground as well to continue to maintain those relationships at this current time I think is absolutely vital.

And I must say I was very pleased, I met with the Shanghai Chamber of Commerce, Australian-China Chamber of Commerce last week, or it might have been – yes, last week. And the signal that they were getting on the ground is that there is still very strong commercial links, that there is still strong demand for Australian products. So, I must say I was very reassured by that. And it shows that underneath what has been a difficult time at the government-to-government level, those people-to-people and commercial links are still quite strong. And I think that's something that we've all got to work to maintain at the moment and Austrade knows and understands this.

In Xavier you've got someone who comes from an incredibly strong successful commercial background. He understands the importance of what we define as a China Plus approach. We all know that it's important that we hang on to the existing trade that we've got with China. But at the same time, we've got to make sure that we're contemplating current risks. And so that's why we think of the China Plus approach where you can continue to diversify and make sure businesses understand risk, and business is very good at that. And if we take that approach, I think, that is how we make sure we set ourselves up for the future. And Austrade will play very much a key role in that and the focus of Austrade under Xavier will be commercial. He understands the importance of business bottom line. He understands that Austrade needs to be helping and supporting businesses maintain that bottom line. So, you can be rest assured that that role of Austrade will continue and the commercial focus of it will continue to be very, very strong.

Warwick Smith: Thank you for that assurance. That will give a lot of comfort to the over 300 that are on the call that largely this audience is focused on long-term historical trade with China looking for always new opportunities and that becomes extremely important.

One of the big commitments – and it's probably the last few moments to go – but the big commitments that you make and the Government makes and it's in a bipartisan approach, and that is that we need a rules-based and committed rules-based approach to trade. That's always been in our interests, and we've prosecuted that for a long period of time. You talked a little bit earlier about dumping issues and the WTO, and we were instrumental along with several other nations in seeing China introduced into the WTO. And I think they probably need to be reminded of the support that they had during that period. But one of the key issues is an appeals process and mechanism that is good and clear and open, and as I understand it, the Americans have now come back and addressed the appeals issue and are now going to support it. Very important for us to potentially have a voice there in some way. I wonder if you'd like to talk a little bit about that. We can commit to rules but many of us know that when you get to a court you need it to be open and you need it to be fair and possessed of good judges and good processes. Can you comment a little bit about that? It also needs to be done in a timely way.

Dan Tehan: Yeah, look, a really good question, and I'm glad you mentioned it because this is one of the positive things that we've seen in the relationship in the last few months. Obviously, we've got two current disputes at the WTO, and China has taken a dispute against us recently. And, at the moment, the dispute settlement body, the appellate body, is not functioning and so various members have come together, which includes Australia and China, to put together a different appeals process.

Now we've had discussions in Geneva with the Chinese representatives there as to how that appeals process – not the normal appellate body appeals process but this other modified appeals process that countries have put together, some countries have put together while we try and reform the appellate body – and we've had very good engagement at officials' level with China on what that different mechanism will look like for our disputes.

So, I must say, that sends a strong signal and a very reassuring signal of their belief in the trade rules system. So that has been a really positive – a real positive which has come out over the last few months. Obviously, we've still got a lot more work to do with the current disputes that we've got – barley, wine and some of the other disputes that we've got, to really send that strong message that adhering to the rules, whether they be WTO or rules that have been put in place through bilateral or regional free trade agreements, adhering to those rules is critically important ultimately for global prosperity and for people in all countries but, in particular, in Australia and in China. So we'll continue to send that message.

But, I must say, the way that we've been able to engage with Chinese officials through our officials in Geneva on what dispute settlement will look like, especially if there is appeals, has been a real positive over the last couple of months.

Warwick Smith: Well, that really is positive. It just shows you that dialogue, constructive dialogue, can take place, even around very technical and important issues where there's mutuality of need to get a good system in place. So I hope and wish you well with those continuing discussions.

Final question, a business-oriented question: many were surprised recently in the United Kingdom when the British-China equivalent of this body had Li Keqiang online, the Premier of China online, with their trade body to talk with British business about China and Britain and trade and recognising that, I think, it's the largest trade partner with Britain is China in many areas. So there's not dissimilar issues for us to think about.

But what it said to many of us is that maybe there's a role for business to do something similar, and in this age of pandemic where online now is going to be a feature now and into the future it becomes possible to bring today 300 people together, normally we wouldn't get that many coming to Canberra – no disrespect to Canberra – but what it does show you is that you can take messages and have dialogues appropriately. So that was a very appropriate and timely dialogue. They had an aircraft carrier in the South China Sea and all sorts of other issues, and they, like us, took a different view on technology to China. So this was quite important.

My question is, Minister, would the minister be supportive of business, if we were able to arrange some such meeting that would be positive, it would be constructive, it would be about having a dialogue. It's important for dialogues to somehow continue, but it would be good to know how you felt about that British experience and how it might actually work out to happen for Australia.

Dan Tehan: Warwick, I'm a firm believer in dialogue. And as I've said previously, I think at the moment we need business playing their role and really looking to step up at this time given the difficulties in the government-to-government relationship. So, initiatives by the business community to strengthen and enhance the relationship I think are incredibly important and if such forums could take place, I would see no issue with that. Obviously, we all know and understand the importance of dialogue. We also understand the importance that that dialogue has to take place with everyone understanding that obviously the actions that we've taken have very much been in our national interests and protecting our sovereignty, as China takes actions in their national interest and their sovereignty.

So as long as there's a clear understanding of the fact that what Australia's actions have been very much in our national interest, if business can step up and get dialogue going and enhance further dialogue, I would see that as a positive. Because all of us are seeking that constructive engagement. And we want to make sure that hopefully over time that we can get back to a relationship where we can have dialogue, where we can express views that might be different but also work together in those areas of mutual interest and mutual benefit to our two nations.