National Press Club interview

SABRA LANE: We will take questions in a moment. Firstly, the Prime Minister is due to visit China later this year. Given you were recently in China and weren't successful in meeting a Chinese Minister, how pessimistic or optimistic are you that Mr Turnbull's trip will actually happen this year?

STEVEN CIOBO: Well, the Prime Minister has indicated a willingness to go to China. It's obviously got to be married against a number of other competing demands in terms of time, but I think if you reflect on my visit to China, Sabra, it was very successful and it builds upon the great connection that we have between Australia and China. As you know, China is our largest trading partner, $175 billion worth of two-way trade and my visit there was to, of course, sign on to the forthcoming China International Import Expo, which will see me lead a delegation of a number of Australian businesses to what is one of the biggest initiatives that President Xi has undertaken, as part of China's ongoing commitment to opening up to the world and to opening up to investment. So, that was a very major component of my visit to China. I also had the opportunity, of course, to meet with the Mayor of Shanghai, which- in their system is a little different to a local mayor in Australia, of course. He's the second most senior person in the region and it reinforces that this is a relationship that, based on the trade results, as well as the people to people connections, it does, I truly believe, continue to go from strength to strength.

SABRA LANE: We have a long list of questions to get through today. Tom McIlroy.

QUESTION: Minister, thanks for your speech. Tom McIlroy from the Financial Review. You talked about the superior access that Australian businesses have to countries like China. Given the go-slow that is in place at the moment, how confident are you that the difficulties faced by wine and beef exporters won't be experienced by other industries in the coming period?

STEVEN CIOBO: Tom, I think it is important that we put some context around your phrasing of 'go-slow'. If you look at the results of Australian exports to China, if you look at the investment from Australia into China over the past three years, the growth has been phenomenal. If you look at wine, for example, what started out pre-ChAFTA as being around a $211 million export industry, which has now grown to be more than $1 billion worth of exports, you see that this is the product of the Government's commitment to opening up those opportunities through the China-Australia Free Trade Agreement. Again on wine, before ChAFTA, the tariffs sat at 14 per cent. Today, it's around the mid twos and on 1 January next year, it will go to zero. That reinforces that this is a market that has had tremendous growth. So, what you refer to, absolutely, is an irritant that is there, but when you put it in the context of where trade is going, when you look at the growth that we've had of beef exports, of wine exports, I think it is important that we don't mischaracterise what is happening.

SABRA LANE: Primrose Riordon.

QUESTION: Thank you, Minister. Primrose Riordon from The Australian. I'm just going to stick with China if that is okay for the moment.

STEVEN CIOBO: Sure.

QUESTION: DFAT's Graham Fletcher told Estimates last week that with China, problems in one area will have implications in other areas. I guess, do you agree, and is China using trade disruptions to change Australia's domestic policies?

STEVEN CIOBO: Well, my engagement with China on this issue in relation to, for example, wine, has yielded fruit. I visited China a couple of weeks ago. I raised the issue then and I would actually also make the point that I have actually only been approached by one wine business seeking my help and assistance with respect to difficulties that they've encountered. Since that approach, we have achieved quite a lot of success in helping to get that product moving again. So, I don't think that that result aligns with the premise of your question. In other words, what I am saying is the proof of the pudding is in the tasting.

SABRA LANE: So the wine industry is having an emergency meeting today to discuss this. You say that that's imagined?

STEVEN CIOBO: No, what I'm saying is that I've had one business approach me directly, seeking our support, and we've had quite a degree of success in getting product moving again since then.

SABRA LANE: Lisa Martin.

QUESTION: Lisa Martin from Australian Associated Press. Thank you for your address today, Minister. I want to leave China and go to another emerging economic powerhouse - India. Earlier this year, the Indian Government slapped Australian chickpeas with a 60 per cent tariff. Have you done enough to go into bat for Australian chickpea farmers? Do you have any plans to visit India in the near future, and what does this say for the prospects of an India-Australia free trade deal in the short-term?

STEVEN CIOBO: Well, we certainly have been very proactive doing what we can with respect to India's decisions in imposing those tariffs on pulses more broadly. Both Minister Littleproud and myself have met with our Indian counterparts. I was in Paris last week and met with Suresh Prabhu again, my counterpart from India, and raised this issue in the context of not only the impact it is having on our farmers, but also I believe, the reputational impact it has on India as a customer. There is no doubt that these types of sudden changes in tariff policy do affect the decisions that, for example, Australian farmers make about where, which crops that they plant, but, secondly, where they decide to find customers for the products that they export. The challenge that we have got with India at the moment is that India's general pre-disposition to trade sees them have some very strong defensive interests around agriculture. I have made the point on a number of occasions that agriculture is, of course, one of Australia's key offensive interests and there is of course significant challenge, in terms of how we marry our offensive interests with their defensive interests. But I am not resting on my laurels. That is precisely the reason why I commissioned Peter Varghese to develop this India Economic Strategy. I want to make sure we can continue to push forward on that relationship. I want to make sure we can find common points where we can work together to produce a win-win outcome for India and for Australia. And in the interim, we will have challenges, as we do with every trading partner, around isolated examples of products or services where there is a tariff imposed or there is challenges in relation to Customs clearance or whatever it may be, but you work through those in a calm, methodical, rational way for the best interests of the Australian export industry.

SABRA LANE: Fergus Hunter.

QUESTION: Fergus Hunter from Fairfax Media. I want to go back to China. On the South China Sea, China has been escalating its militarisation in the disputed waters in defiance of international pressure, in defiance of an international ruling under the UN Convention on the Law of the Sea. Australia's position has been pretty consistent, pretty clear against that militarisation, concerned about China's actions earlier this week, I think it was your colleague, Defence Minister Marise Payne said, "When Australia disagrees with the actions of another action, including partners and allies, we say so." When you were asked two weeks ago on the South China Sea, you said, China's actions in the South China Sea "were a decision for China", and you rejected megaphone diplomacy. I am just interested, why decline to state Australia's position on this? Are you in disagreement with that position or are you trying to play good cop in a relationship, as you try to deal with all of these other trade issues?

STEVEN CIOBO: Well, I didn't decline to state the Government's position. In fact, I specifically, in that interview, made specific reference to the Government's policy position being against militarisation of contested territorial claims. The Australian Government's position is that we don't take sides in terms of congested- I should say contested territorial disputes. We are of course, concerned at militarisation in the South China Sea by either claimants and we encourage all sides to help resolve this issue by having ongoing dialogue. That has been our position for quite some time now and of course continues and remains our position. For me as Trade Minister though, that is predominantly of course the purview of the Foreign Minister and the Defence Minister. My focus is on our trade investment relationship. It is a broad and deep relationship with China. They are our major trading partner. It's a relationship that has grown substantially over the past three years and it's a relationship in which many Australians have their livelihoods of course, invested in access to that market. We have achieved incredible success in making sure we can get more Australian products and services into China. So, my focus, rightly I believe, is on those areas.

SABRA LANE: Nick Stuart.

QUESTION: You said 'we're making a degree of success with the relationship with China', opening it up particularly with regard to wine exports. Does that mean one bottle, a case, two cases? What exactly is the degree of success? Secondly, we're all well aware that the Mayor of Shanghai is different in the Chinese system. Zhu Rongji was the Mayor. He later went to the top job. On the other hand, it's a little bit like the Chinese Trade Minister coming to Victoria and being met by Michael Kroger. Hardly an equivalent relationship. What are we doing now to get this vital trade relationship with our most important trading partner back on track? Because a lot of import-exporters can't see anything happening.

STEVEN CIOBO: Well, again, I reject the assertion in your question. If you look at our trade and investment relationship with China it is very strong. I mean you talk about a degree of success and I don't know if it was specifically in relation to some of the reported challenges with regard to wine. But if you look at the last three years as I've said, we've gone from an industry that was exporting, I'll come to your question, an industry that was exporting $200 million worth of wine to in three years now export more than $1 billion worth of wine. So I just think it is very valuable. I'm not papering over where there's challenges, I'm not papering over where there's challenges. But it's also critical that we don't lose sight of the bigger picture here, which is a trade investment relationship that is very strong, very broad and very deep. Now to your specific question about for example, Treasury Wine Estates. As I said, I've been approached personally and asked for my intervention by one business. I have had a high degree of success in relation to that. I'm not going to into quantities because obviously that's market sensitive information and that's up to the CEO and the Board to make those decisions. What I am going to say is that the vast bulk of product that was experiencing delays, I understand is now moving. That's what I've been informed of. With respect to the relationship, as I said though, it is a broad and strong relationship and there are examples of where we do see irritation. We work in a constructive way to overcome that. We have that pretty much with all countries with whom we operate but let's not lose sight as I said, of the bigger picture and start being a little loose, frankly, with the language that suggests the relationship is in some way less than the strength it actually has.

SABRA LANE: Just on language. You've just said the 'vast bulk of materials getting through' but this is still an issue?

STEVEN CIOBO: And I've never pretended otherwise. What I have said is that we're working through those issues and we're achieving success. It goes back to I think it was Primrose's question when I said, well clearly we're achieving success and I think that says a lot about the close working relationship that we have.

SABRA LANE: Michael Keating.

QUESTION: Michael Keating from Keating Media, Minister. You argue that trade policy is best conducted within formal guidelines. From that perspective, what has happened to the trading bilateral dialogue that was established by Tony Abbott that seems to have been neglected since that time with China?

STEVEN CIOBO: Well, only last year I was in China for the Strategic Economic Dialogue. The Treasurer and I were there I think in September last year. So you know, those conversations are continuing. I obviously have the opportunity to see my Chinese counterpart- well actually two counterparts, but counterparts at various WTO and other trade related international fora that take place. So both in a formal sense that dialogue is ongoing but also in an informal sense the bilateral meetings I have at various events I go to are progressing very well. So I think it's quite a positive.

SABRA LANE: Donghui Weng.

QUESTION: Donghui Weng, Economic Daily. Thank you. Recently there was some discussion on how to reset or ease the tension bilateral relationship between China and Australia. For my personal idea, is maybe the One Road and the One Belt initiative could be a better way to enhance mutual trust and understanding. So my question to Minister, what's your attitude toward One Road and One Belt and what kind of practical action that the Turnbull Government could take to support and participate on it? Thank you.

STEVEN CIOBO: Thanks. Well I'll take the chance to repeat it again because I think it's a- it always bears repeating. The trade investment relationship we have with our major trading partner is broad and deep and the results illustrate that point time and time again. Having said that, there will be occasions where we don't see eye to eye. I'm not going to paper over that. The fact is that we do have differences of opinion in relation to certain matters. But what matters is that we approach them in a respectful way, mindful of each other's sovereignty. With respect to opportunities around the Belt Road Initiative, last year I took the opportunity to travel to Beijing for the Belt and Road Initiative Forum. That of course is one of the major initiatives of President Xi and I think that there is real opportunity for Australia to be able to participate in the Belt and Road Initiative and for Australian businesses to also play their role. This manifests in a number of ways. At the Strategic Economic Dialogue that I spoke to- that I spoke of earlier, when I was there, I signed an MOU with China for co-operation in third countries on Belt and Road projects. Australia has a really rich history of project financing, project design, construction, management, maintenance. This is an area where Australian commercial interests have, I believe, strong potential to work together with Chinese and other interests on Belt and Road Initiative projects. So there's strong interest from the Australian business community. I'm doing what I can in terms of Australia's interests to be able to facilitate them to work together on Belt and Road Initiative projects. The Belt and Road Initiative is though, an initiative of the Chinese Government and that of course is quite separate to initiatives that the Australian Government undertakes here in Australia. But of course we shouldn't pull the blinds down on opportunities for Australian businesses to participate and work together, and that is precisely why I signed the MOU on cooperation in third countries.

SABRA LANE: Chris Uhlmann.

QUESTION: Chris Uhlmann from the Nine Network. Minister, China has developed islands in the South China Sea in the face of international law. It has militarised those islands, even though Xi Jinping said in the Rose Garden that that would not happen. Your Government has been told by its intelligence agencies that it attacked the Bureau of Meteorology and the Parliament House website among other things. The foreign interference inside our borders is now so great that you are passing foreign interference laws. Which country do you believe is mostly responsible for the relationship going into deterioration now? Should Australia speak out when these things happen or would you trade that away for business?

STEVEN CIOBO: Well, that's one of the false choices I just spoke about, Chris. That was the focus of my speech. I reject that as being the premise of the question because that is not the choice. It is not a trade-off between trade policy and national security. What matters is always the Australian Government should stand up for Australia's national interest, and we do that. Our position with respect to South China Sea has been consistent and clear now for quite some time. Parallel with that, of course, though, I am going to pursue Australia's trade and investment interests. I don't see a lot of value of the Australian Government running around and pointing the finger at any particular country about any particular issue. I have said that before and I will say it again. What with will do, though, is enunciate what we believe, what Australia stands for and where our interests lay. My interest as Trade and Investment Minister is to lower barriers to trade to drive the Australian economy and to help facilitate Australian exports abroad. So that is what my focus is.

SABRA LANE: David Speers.

QUESTION: David Speers from Sky News. Minister, thanks for your speech. Can I just take you back to what you said earlier, there is an 'irritant', was your word, in the trade relationship at the moment with China. Can I just invite you to explain why?

STEVEN CIOBO: Because I have had one business raise directly with me their concerns are about being able to have their, what are called certificates of origin, processed by Chinese authorities to allow their wine to move through the port into China. When that was raised with me, directly by the CEO, I then moved, had discussions, and as luck would have it, actually was in China later that week. I was able to also raise that in meetings that I have had in China. Of course we also have our staff, great staff, working at the post in Beijing, as well as our Consul-General. This has been a team effort by the Australian Government and we've had success, as I said. I'm informed that the bulk of the product that China was seeking additional paperwork around is now moving. Anecdotally, I have heard reports of some other businesses that have experienced extra requirements in relation to their certificates of origin. I would stress that is anecdotal. I have not had them approach me directly. But again, this has been a collaborative effort by Australian officials in the embassy as well as DFAT, who are all working to move this forward. So you know, that is what has been happening in detail. As I said, we are having success. Product is moving. Ultimately, I think that is an indication of the strength of the relationship and the open lines of communication.

SABRA LANE: The anecdotal evidence, is that other wine companies or other businesses?

STEVEN CIOBO: What is the difference between those two?

SABRA LANE: Well, wine companies or other industries?

STEVEN CIOBO: Oh, other industries, sorry. No, it has been in relation to wine, in particular, wine companies.

SABRA LANE: Mark Kenny.

QUESTION: Mark Kenny from Fairfax Media. Mr Ciobo, thanks for your speech. Can I just go to this question of the trade relationship with China? You talk about how broad and deep and robust it is. In response to a number of questions now you have talked about the extraordinary growth, particularly in the wine sector, but in lots of other sectors. I think it was worth $175 billion two-way trade in the last financial year. But there is no denying there are problems now. As you said, there is an irritant in the relationship. How long before this can change? We know there has been effectively a freeze on minister-to-minister-type talks. There are all kinds of other signals that are being sent from China at the moment. We all know of businesses that have talked about having these problems. I have spoken to one - I spoke about this publicly recently - a business that was halfway through a deal in Shanghai and that suddenly was stopped on the basis of not being able to deal with Australians. So, there is no denying there is a problem here. How long will this go on for? And you say that progress is being made, what progress?

STEVEN CIOBO: Well, the progress I have spoken about on numerous occasions now in relation to getting product moving again. We also continue to see the vast bulk of Australian products not encountering difficulties. We continue to see growth in a range of sectors. At the risk of repeating myself, I do think it is very important that we take this in the aggregate context of how trade is going with China. I understand there is of course, a focus on areas where there are difficulties, but that is precisely why I as Trade Minister involve myself in those matters when they are raised with me. We have been able to work to resolve those sort of matters. That, I believe, is a big positive. In terms of for how much longer will additional paperwork be requested of certificates of origin, I can't answer that question. What I am committed to doing, though, is maintaining open dialogue, clear communication. The Prime Minister has reinforced that point himself. He will have opportunities at, for example, the G20 and other international fora to speak with President Xi. I was just at the WTO-OECD meetings last week and met with China's representative there. So these discussions are ongoing, as I said. There will be from time to time differences of opinion. I am not pretending otherwise. I don't think anyone is pretending otherwise, but it is critical that we view that in the context of the broader relationship, a very successful relationship. I am not going to apologise for refusing to characterise something as being all one colour when, in fact, the results prove the resilience of the relationship.

SABRA LANE: Nick Evans.

QUESTION: Minister, Nick Evans from The West Australian newspaper. To continue on that theme, though, you mentioned earlier on the tariffs a number of products are supposed to come off at the China end on the 1st January, 2019. Pork is one of those, 20 per cent or thereabouts. Only a couple of months ago, the pork industry body was saying that they still had not managed to get from the China end market access protocols, and I understand that similar market access protocols for some horticulture products are still ongoing. On the issue of China regulatory issues, the metallurgical- sorry, the coal industry has been complaining since 2015 of inspections at the China end that are holding up shipments. These are issues that have been going on for some time with no resolution. How confident are you by the 1st January, 2019 all of those market access protocols will be done and signed and Australian producers will be able to take advantage of those markets?

STEVEN CIOBO: Well, market access protocols exist with every trade relationship, so that's not just China. That is across the board. We see varying degrees of, in terms of the speed of resolving protocols, from market to market. Let's be frank, Australia sometimes is a little slow to deal with market access protocols ourselves. That, ultimately, though, is determined by the Agriculture Minister. He and I speak regularly. Protocols are determined by Agriculture, though, not by Trade. The only reason I mention that is because of the detail of the speed of which those protocols go forward, that will be determined between the Department of Agriculture in China and the Department of Agriculture here in Australia. But the notion that all protocols would be accepted with any country, whether it is China, the United States, Colombia, Chile, Mexico, Peru, frankly I think is absurd. That is not the lived experience. And the expectation that that would happen with China, when in fact it doesn't happen with pretty much any other country we deal with, reinforces to me that there is a warped sense around some of these questions about the nature of the relationship. I wouldn't expect it to be any different to the relationship that we have with other countries around market access protocols. We work through them in a methodical way. We have different hierarchies and, in fact, there is quite a long list that David would be able to point to where we have achieved agreement on market access protocols and, as a consequence, are moving new product into China on that basis.

SABRA LANE: Michelle Grattan.

QUESTION: Michelle Grattan from The Conversation. Could I switch to another trade issue that we haven't heard much from you about, and that is the sheep trade? If this trade is allowed to run on and given the very steep decline in the number of sheep we are exporting, live sheep we are exporting, how many years do you believe the trade still has in it? And also, in light of the strong comments made by the Israeli Prime Minister about the cruelty of the trade, have you had or your department has had representations from the Israelis about the trade or any other section of the Government?

STEVEN CIOBO: Well, I can't answer for obviously every section of the Government. I would need to come back with you on that, Michelle. With respect to live exports more broadly, this is a big trade for Australia. And I do fundamentally believe that those who argue that Australia should withdraw from the live export trade would actually see a consequent increase in the inhumane and maltreatment of animals as a result of other countries filling the void that Australia would leave. I absolutely believe that. I don't see any value in vacating the field to have other competitor nations move in on that territory with much lower levels of commitment to animal welfare standards. I actually believe Australia can help to make profound change by leading from the front, by having strong investment in terms of supply chain, by making sure we can safeguard animal welfare as much as we possibly can. And, frankly, I think Australia does that more than any country. We need to move strongly and swiftly against those who do the wrong thing, and I think Minister Littleproud has done that. And ultimately, we need to recognise it would be entirely a pyrrhic victory for those opposed to live exports to have Australia discontinue this trade for it just to be taken up by other countries who engage in practices that are far worse. So, that to me, is not what success looks like. Success sees investment, as I said, in the supply chain, reinforcement of the strong animal safeguards that we have in place, swift action taken against those who breach those standards, and the maintenance of important markets that are critical to Australia's livelihood and for the economic interests of many rural and regional Australians.

QUESTION: [inaudible]

STEVEN CIOBO: Well, I said at the outset, I would need to find out. Take that on notice.

SABRA LANE: Tim Shaw.

QUESTION: Minister, Tim Shaw, Radio 2CC in Canberra. Ahead of a very historic meeting in Singapore next week with the leaders of the United States and North Korea, the Australia-Korea Business Council reminded us this morning of the great value of our trade relationship with South Korea. They also mentioned that between US$6-10 trillion worth of natural resources in North Korea. And Australian geologists, our expertise in mining, especially our agribusinesses et cetera- we are a long way down the road from an outcome of a reunified Korea. But where are you and your department on preparation, particularly working with our South Korean trade colleagues? We have trade relationships and diplomatic relationships with South Korea. Should we use that gateway towards access to new markets for Australian exporters to a future reunified Korea?

STEVEN CIOBO: That is a high level of optimism, Tim. You certainly are an optimist. Look, the best I can do is not rule it out. But I'll be honest with you, at this point in time, I and my office haven't invested a lot of resource into looking at opportunities for trade with North Korea. I think there's a lot of water that needs to flow under the bridge first. Let's see- up until several days ago it was off. So let's see- I know it is, so let's see how things progress and then we'll have opportunity to revisit that. I think we've got a little time up our sleeve.

SABRA LANE: Amy Remeikis.

QUESTION: Amy Remeikis from The Guardian. Just to come back home for a moment, last year you reversed the Efic decision to allow for onshore resource investment. I'm just wondering what is the rationale behind that decision given that major Australian financial institutions have been pulling away from that sort of investment since 2015, and if you didn't consult with your department, who did you get advice from, if at all?

STEVEN CIOBO: Sure. Well, the rationale for it was because the decision by a number of banks and others to not invest was a consequence of social pressure rather than economic pressure. And the reason I can say that is because, contrary to The Guardian's claims and reporting, I did actually obtain advice. In fact, my decision to alter the statement of expectations for Efic went through Cabinet. And of course by definition I received advice from the department in relation to it, and they, in fact, highlighted it was a consequence of social pressure rather than economic decision-making that led to that. So that's the reason why we made the change. Because in essence it is obviously preposterous to deny viable resource projects - completely separate to the issue of coal - from securing financing for export, which creates livelihoods, drives, in many respects, rural or urban economies. I think Australia owes it to our people to do everything we can to provide and uphold their standard of living.

SABRA LANE: Everyone, please join me in thanking the Trade Minister, Steven Ciobo.