RN Breakfast interview

FRAN KELLY: Trade Minister Steve Ciobojoins us from our studio on the Gold Coast, which is of course CommonwealthGames territory at the moment. Minister, hello there.

STEVEN CIOBO: Goodmorning, Fran.

FRAN KELLY: We now have both the U.S. and China threatening to each slap$50 billion worth of trade tariffs on each other, neither side looking likebacking down right now. Do you think the world is on the brink of a tradewar?

STEVEN CIOBO: Well, Iwouldn't use that language. Certainly, there is concern that there possiblycould be down the track, action and reaction, which would cause significanteconomic impediments to global growth. We don't want that to happen. Australiacontinues to be a strong advocate for the benefits of globalised trade, astrong advocate for not putting in place unnecessary tariffs, which do nothingexcept crimp global growth.

FRAN KELLY: The Chinese commons minister said yesterday, quote "Ifsomeone wants a trade war we will fight to the end, if someone wants to talkour door is open." The U.S. President Donald Trump started this. Does that meanit is up to him to drop all the threats and sort of the bellicose languageabout trade wars, and come to a negotiating table?

STEVEN CIOBO: Fran,you'll understand, I'm not here to provide a critique on what different worldleaders say or do in relation to their actions. What I'm here to speak with youabout is what's in Australia's national interest. Now Australia's nationalinterest is best served by opening up export markets. We have seen policyorthodoxy of the past 40 or 50 years, which shows that when you reduce barriersto trade you get more trade investment, and more trade investment means moregrowth, and more growth means more jobs, and that's what ultimately Australiais focused on achieving.

FRAN KELLY: Sure, and we're watching on as our two biggest tradingpartners are ratcheting up the threats and even the lists of where they'regonna slap trades on $50 billion each. These are our two biggest tradingpartners. Have you looked at the impact of this, have you had anyone crunchingthe numbers on the impact on our economy if the U.S. and China don't pull backfrom this?

STEVEN CIOBO: Well,it's difficult to do because obviously there's a lot of speculation, there's alot of conjecture about what might be affected, what may not be affected-

FRAN KELLY: Well we've got a pretty particular list coming out now fromboth sides-

STEVEN CIOBO: Yeah, wedo.

FRAN KELLY: Which makes it a little more frightening.

STEVEN CIOBO: We do,and I've certainly been looking and closely studying a whole range of analysisin relation to that. The observation I'd make with respect to China is that thebulk of what we export to China isn't reprocessed and then exported from China.In fact, it's roughly about a third of what we export to China that actuallywould go through some type of reprocessing for then a subsequent export. Thebulk of it is actually for internal domestic Chinese consumption. And whatwe've seen historically, is that when China has, if it has, faced a slow down,typically there's a stimulatory response from the Chinese Government, which infact, could be a positive thing for Australian exports. So we've just gotta walkvery cautiously, and calmly through all of this. I will continue strongadvocacy about why tariffs do nothing except impoverish people in the future,if they are put into effect. And in the interim Australia will continue to beat the forefront of making the case about why liberalised trade investment isgood for growth and good for jobs.

FRAN KELLY: Can we just look at, though, some of those positives for amoment you mentioned there, because, you know KPMG has done some modelling, itwarns of a GFC-like impact on the world economy here at home. That would mean,according to this figuring 285,000 jobs lost, so that's on the downside. Butthe positives, could it play to our advantage for some of our exporters, asmarkets are lost to the U.S., that our winemakers for instance could fill thatgap?

STEVEN CIOBO: Well,Fran, that is a possibility, and like any modelling it all comes down to whatare the assumptions that underpin the modelling that you take? If you takeassumptions that are built around a global impact, well then clearly there willbe issues in respect to that. If you take assumptions that look at ourbilateral trade with the U.S., or our bilateral trade with China, then you'llget a different set of impacts. Now, just to cite one example, it's speculatedthat China's gonna put in place a 25 per cent tariff on U.S. beef. Now, thatpotentially is promising for Australia, but these things can be short lived.Traders are constantly changing terrain. You have new impediments, you have newdoorways that are opened. It's constantly changing, and that, in effect, is thevery real market circumstance that farmers and others have to deal with on aregular basis.

FRAN KELLY: Our guest is the federal Trade Minister Steve Ciobo.Speaking about constantly changing, this all started with Donald Trump's moveto slap a 25 per cent tariff on steel and 10 per cent tariff on aluminium. Ourgovernment mounted an all out offensive to win an all-out exemption, which wedid. But it now turns out that exemption, if I'm correct, was only temporaryand will expire on the 1st of May. Were you aware at the time thatthe victory was temporary, or is that your understanding even?

STEVEN CIOBO: Well Ithink it's important to unpack this a little bit. The first thing is that it isnot a situation where the United States can put in place a whole bunch ofdifferent instruments for different countries at different points in time. Whatyou have is the operation of U.S. law. The proclamation was delivered by theWhite House. Everyone saw that. It was indicated at that stage that it would beto enable countries to make the case to the U.S. Government up until the 1st ofMay. Australia has consistently done that. The Prime Minister's done that. He'ssecured an agreement with the U.S. President that Australia will be exempt, andthat continues to be the case.

FRAN KELLY: So, we still have to make the case up until the 1stof May, but it is your understanding, or were you given any assurances fromWashington, that it will be a permanent exemption?

STEVEN CIOBO: Well,Fran, the simple fact of the matter is, is, and you've heard the Presidenthimself and others make this remark repeatedly. They are after other countries,having a more reciprocal and fair trade arrangement with the U.S. In most casesthe U.S. runs a trade deficit, which is a key measure that the U.S.Administration often refers to, runs a trade deficit with the U.S. Or I shouldsay the U.S. runs a trade deficit with them. In Australia's case it's theopposite. We run a trade deficit with the U.S. They have a surplus with us.What that basically means is we buy more off them than they buy off us. Andthere's reasons for that. I mean one of the reasons, for example, is that webuy Boeing aircraft, and we need Boeing aircraft, capital intensive, you know?Expensive pieces of items. And we need those to power our tourism industry. Weneed Boeing aircraft to power the belly freight that goes inside that exportsgreat clean and green produce to you know, Asian markets-

FRAN KELLY: But are you saying that because of that, because we don'trun a trade surplus, we run a trade deficit, that we will get this permanentexemption, that it won't be conditional?

STEVEN CIOBO: Wellthat's the agreement that the President and the Prime Minister have. And it'salso, though, goes to my point, which is that it would be hard to imagine asituation where you could actually have a better arrangement between Australiaand The United States than exists now.

FRAN KELLY: And just, before I leave this topic, what about talkingquotas rather than tariffs, because the U.S., some are openly saying thatthey're concerned. For instance, if Australia is exempt it could be used asbackdoor entry point to America by non-exempt countries. Do we need to be concernedabout quotas being slapped on our steel exports?

STEVEN CIOBO: Wellcertainly they believe that there's a possibility for Australia to be used as atranshipment port. There's a number of reasons for that. I mean we have ineffect a very strong anti-dumping regime in Australia. The Coalitionstrengthened the Anti-Dumping Commission, which is the agency tasked withresponsibility for making sure that product isn't dumped into Australia. So westrengthened the Anti-Dumping Commission a year or two ago. Now, they operateto put in place a range of different measures to counteract dumping. There'ssomething like 75, give or take, that are in effect. More than 50 of them arein relation to steel products. So the notion that a country would export to Australia,and then trans-ship through Australia back into another country, ie, the UnitedStates, doesn't make any sense to me, when we have in place a whole range ofanti-dumping initiatives already.

FRAN KELLY: Minister, can we talk about coal? Because it's again causingdiscord within the Coalition. You've said in the past that there is, quote,'merit in assessing' the push by some of your colleagues to have the Governmentbuild a $4 billion coal-fired power station in Latrobe Valley, so it's having, quote,'a cold hard look at'. The Treasurer's done that, and Scott Morrison slapped itdown, saying building a high efficiency coal power station would not meancheaper energy. Is that the end of the story? Taxpayers' money should not bewasted on new generators, which would take years to build, and wouldn't easethe squeeze.

STEVEN CIOBO: I thinkultimately what matters is, what is going to be the policy approach thatdelivers more reliable and cheaper energy for Australians into the future?That's what occupies my mind, it's what occupies the mind of the Prime Ministerand the Cabinet, and the Government is focused on delivering more reliable andcheaper energy to service the needs of Australians and Australian industry.

FRAN KELLY: And a large number of your backbench are coming out now andsaying, well the way to do that is coal. The Treasurer, Scott Morrison, saysbuilding new coal-fired power stations, and there've been explicit calls fromthat from the backbench, here on this program, and other places, is not the wayto do it. Do you accept that, that it is not a good idea to build a newcoal-fired power station?

STEVEN CIOBO: I think,ultimately, what matters is the way in which the market is responding to this,because we need capital and the market to operate in an efficient way. Now itmay be that a HELE plant, a high-efficiency, low-emissions plant producesenergy at a more expensive cost-per-megawatt hour basis, than different formsof energy. And if that's the case then the market will indicate that. We'll getadvice to that effect, and I think to some extent that's what the Treasurer wasmaking reference to yesterday.

FRAN KELLY: But you're still saying it's worth a cold-hard look, to takea cold-hard look at building a new power station?

STEVEN CIOBO: Well Idon't think it ever hurts for us to look at different ideas and assessdifferent ideas and effectively take them on their merits. That is, make acold-hard analysis of what is worthwhile and what is not worthwhile. Now it maybe that when you do the desktop due diligence exercise, for example, that thisproves to be a non-starter. Well, okay, if that's the case that's the case.

FRAN KELLY: Okay.

STEVEN CIOBO: Whatmatters though, Fran, as I said, and what I think Australians are looking for,is strong national leadership that produces more reliable energy, and cheaperenergy. And the contrast, Frankly, that they will have at the forthcomingelection in 12 or 15 months time will be a radically different approach thantwo forms of industry, energy policy. One from the Coalition and one fromthe Labor Party, and I think that Australians will have a very clear choice.

FRAN KELLY: Okay. Tony Abbot will spend Monday, which is the day we'llalso get that 30th negative news poll almost certainly, that day in LatrobeValley on a pollie-pedal. Why shouldn't that be seen as a challenge to thePrime Minister's authority?

STEVEN CIOBO: Fran, I think the media get very excited over all of thesethings-

FRAN KELLY: You don't think that's premeditated? Calculated –

STEVEN CIOBO: I thinkif he's on a push bike, riding through, you know, there's claim's made, he'sdoing it for a particular reason, if he wasn't, if he was sitting behind hisdesk there'd be counterclaims made for a different reason. I think everyonejust needs to have a glass of water and calm down about these sorts of things.

FRAN KELLY: Okay. Just before I let you go, your home base is the GoldCoast, which is of course, the venue for the Commonwealth Games. What's thelevel of excitement like there?

STEVEN CIOBO: Look,it's been terrific, and last night's opening ceremony was superb. It really putthe Gold Coast and Australia on the global map. I think an estimated TVaudience of something like 1.5 billion, and in true Queensland style, Fran, wehad the absolutely torrential downpour, which I think must've stopped at about7:59 and 59 seconds, because smack bang on 8 o'clock the skies parted, it was-

FRAN KELLY: That's great.

STEVEN CIOBO: It was aclear evening, and the performance went on, it was great.

FRAN KELLY: That's great. May the blue skies continue. Steve Ciobo,thank you very much for joining us.

STEVEN CIOBO: Good tobe with you.

FRANKELLY: Steve Ciobo is theMinister for Trade and Tourism, joining us there from the Gold Coast.