CNBC – Squawk Box interview

JOUMANNA BERCETCHE: Minister for Trade, Tourism and Investment of Australia.Thank you very much for joining us, sir.

STEVEN CIOBO: Great to be with you.

JOUMANNA BERCETCHE: Before we start talking about trade, I just wanna takeyour view on broadly what we're seeing in terms of politics and US leadership.Now, Australia isn't part of the NATO, but is a close partner of NATO. We see inthe US, recently, withdraw from the TPP, which of course is a deal that wassigned, and Australia is one of the members of TPP. When you think about all ofthese developments, in say the last 12 months, does it worry you that the US inno longer assuming a leadership position, when it comes to politics and alsowhen it comes to trades and being an economic superpower in the world?

STEVENCIOBO: Well, therecan be no doubt that we are seeing a change on emphasis under the TrumpAdministration. I mean historically, the United States have been the bedrock,the foundation so to speak, in terms of global leadership and I don't thinkthat they've vacated that role, but certainly there's been a change, a renewedemphasis. And President Trump is making it clear that his expectations are thatwhen countries sign up to, for example NATO, that they will follow through onthe commitments that they gave there. In this case, 2% of GDP's spending ondefence. But, ultimately, Australia's view, sitting in the heart of Asia, isthat we've got to make sure that we open up as many opportunities for oureconomy as possible. The TPP-11, which you mentioned, was a absolute core focusfor the Government. We've delivered now, market access to something like $17trillion worth of markets under that new TPP-11, so, you know, we will continueto move into a space that we think is important.

JOUMANNA BERCETCHE: President Trump ruffled some feathers last week in the UK,he gave an interview where he said that if the UK were to pursue this soft formof Brexit, and they are taking the rules playbook from the EU on goods, itwould make negotiating a trade deal with the US a lot more difficult. What isAustralia's stance on that, if the UK does adopt this soft Brexit typescenario-

STEVEN CIOBO: Sure.

JOUMANNA BERCETCHE:-Assuming many of the rules from the EU. Does it have anybearings of a potential trade deal with Australia?

STEVENCIOBO: Well, fromAustralia's perspective, we've got one FTA underway, in negotiations, and that'swith the European Union and then we've got the potential of a second FTA thatwe would like to do bilaterally with the UK. Now, as Australia's TradeMinister, I want as comprehensive and high quality a trade deal as I canachieve, with the UK. Ultimately, the form of Brexit, whether it's soft Brexitor hard Brexit, that will obviously impact on what we can achieve bilaterally.I'm gonna pursue our comprehensive, high quality FTA with the EU and obviously,if it's a soft Brexit, I would assume that the UK would be in part of that. Ithink it would limit opportunities, but we've got to wait and see, ultimately,what Brexit looks like. There's a lot of speculation at the moment, and, beingin politics, I don't get too excited about the speculation, I'm just lookingfor what the actual course of action is.

STEVESEDGWICK: We'reshort of one or two trade negotiations in the UK. I don't know if it's beenmentioned at all? But, we have virtually none because we handed over thatfunction of course, to the commission as well. Now, we're hiring left, rightand centre, the lawyers, the Mackenzie and you name it, are getting these hugefigures ready. Does Australia have the capacity to run two sets of parallel,does it have the desire to run two sets of parallel trade talks? Which is gonnabe torturous, let's face it. We all know that the Australian key to the door isgetting access on the agricultural front as well, as one of the key issuesanyway, I should say. Can you run two at the same time, do you want to run twoat the same time, is it just going to be too much?

STEVENCIOBO: No, we cancertainly run two at the same time, we can run more than two at the same time.Right now, I am pursuing the most ambitious trade agenda, in Australia'shistory. We've got FTA negotiations underway right now, with the EU, withIndia, with Hong Kong, with Indonesia, with the Regional Comprehensive EconomicPartnership, which is ASEAN Nations plus six more, and with the PacificAlliance, which is a Columbia, Mexico, Chile and Peru. We have full courtpress, so to speak, in terms of what we're pursuing on the trade front. We cancertainly look at doing a trade deal with the UK, we want to, and Liam Fox andI, probably only a year or two ago now, actually announced the joint workinggroup between the UK and Australia. In fact, I think we were the first one,that put together a joint working group to scope out what a bilateral FTA mightlook like.

STEVESEDGWICK: Because,you can't physically start the proper negotiations 'til April 2019.

STEVENCIOBO: Correct.Correct.

STEVESEDGWICK: But, thisis working group can do a lot of work around the peripheries. How quickly can atrade deal be done with Australia and the United Kingdom?

STEVENCIOBO: Look, it'ssort of like asking, how long is a piece of string? We've got to see. Ourobjective going into it though, is that we'll be able to commence negotiationsonce you move into the interim period, next year and then, you being the UK,moving into the interim period next year, and then we would hopefully concludenegotiations in that interim period. So, effectively-

STEVESEDGWICK: End ofthe transition period, you think that there could be a deal?

STEVENCIOBO: Correct.Well, that's more than I think, that's actually what we gonna be workingtoward. Ultimately, of course though, that is all predicated upon the UK havingfinalised Brexit from the EU. And I understand that naturally, naturally, thepriority for the UK is to make sure that their deal with the EU is the bestdeal possible for the UK. So I understand that would be the emphasis, but wewanna work ... I've got a great relationship with Liam Fox our Governments havea tremendous relationship, we have tremendous cultural ties, tremendouslinkages on investments-

STEVESEDGWICK: Hang onto that relationship, because it is nice to see a Brexiter still in theGovernment. Joumanna did you wanna come in?

JOUMANNABERCETCHE: Just acouple of comments there. One is, how big do you think the economic opportunityis going to be with the UK, because clearly you having these paralleldiscussions, but at the end of the day, I'm imagining the EU has probably goingto be a bigger trading partner, than the UK is going to be. So all things beingequal, you'd probably look to prioritise the EU FTA, over the UK Free TradeAgreement, at this point.

STEVENCIOBO: It's notabout priorities, both are important. Certainly, the EU discussions are moreadvanced, we have actually formally commenced negotiations with the EU, but theEU process can sometimes be a little bit more cumbersome because it is the EU.It's not a bilateral between Australia and the UK, so we've just got to seewhat that plays out like.

STEVESEDGWICK: So whatabout Mr. Trump, if we just can go back to that here as well, he says the WTOis broken, it's not fair, he used the word 'fair', quite a lot as well. Is theWTO broken? Do you think, what appears to be an approach from the US, wantsbilateral or multilateral deals, is a step backwards or an admission of thereality of the world?

STEVENCIOBO: Well, Idon't believe that the WTO is broken. That's not to say, that there isn'topportunity for reform, there is opportunity for reform, and Australia's workingconstructively with other nations to look at what that reform might look like.But, make no mistake, Australia strongly supports and backs the WTO, becausewe're not prepared to slip back into a world where might is right, we needbodies like the WTO to enforce global standards, so that all countries haverules-

STEVESEDGWICK: Mr. Trumpis dangerous though, I mean we heard from the IMF, half a trillion dollarspotentially can be wiped of the world economy. Are you very concerned about Mr.Trump and his approach?

STEVENCIOBO: I'm notgonna provide a commentary on President Trump, and you'll understand. I canonly speak to Australia's perspective, and Australia's perspective is tostrongly back the WTO. Yes, there's room for reform, but the WTO is critical interms of having the rules of the road for all nations, so that they know whathappens on the trade front.

JOUMANNABERCETCHE: I justwanna pick up, we had the RBA minutes come out yesterday and there was a linespecifically about trade, that they're warning that extra tariffs could harmglobal growth and that actually, the next layer of this escalation, is throughnon-tariff measures, such as administrative delays, so that's coming from theRBA. Are you expecting there to be somewhat of a hit to Australian growth onback of the extra tariffs that are going up in the world?

STEVENCIOBO: No, andAustralia's approach on these matters is to, as I said, open up as many newmarket opportunities as possible but that is what lay at the very core of myfocus, on having the most ambitious trade agenda. So, we're opening up newmarket opportunities for our exporters all the time. I also have a particularfocus on non-tariff measures, we've set up a new group within my department,that will look specially at ways to reduce those non-tariff barriers, becauseagain, we wanna make sure that it's not just, tariffs that are impeding tradeflow, so we wanna make sure that we reduce those, but also reduce thosenon-tariff barriers as well.

STEVESEDGWICK: Reallygreat to see you.

STEVENCIOBO: Good to seeyou.

STEVESEDGWICK: Quickquestion, do you think the shenanigans of British politics, or the shenanigansof Australian politics are more bitter and backstabbing? Bear in mind you are astudent of both.

STEVENCIOBO: My advice isthe same, doesn't matter where you're a politician, make sure you bring yourflak jacket.

STEVESEDGWICK: Becausemy lovely colleague, Karen Tso, she is like Australian politics, "That isdeadly." Whereas, I look at the British side and I think, not different.

STEVENCIOBO: Just bring aflak jacket, doesn't matter where you are.

STEVESEDGWICK: Steventhat's great. Nice to see you, that very much Steve for joining us.