Sky News interview

PETER BEATTIE: Ofcourse, we've got the Minister for Trade, Steven Ciobo, who's joined us; healso has tourism in his portfolio. And the Minister, I must say, is also arepresentative of the Gold Coast, so he's in the heart of the CommonwealthGames. So, Steven, firstly thank you for your support for the CommonwealthGames as the local member, and it's great to have you on the show.

STEVENCIOBO: Good to be on with you both, and thanksvery much. I'm looking forward to the Games. The countdown's on, as you know,Peter. It's not far away.

PETER BEATTIE: No,it's not far away. I have anxiety every morning. Steven, talking, getting pastmy anxiety, but getting to the issue of free trade, Steven, one of the thingsin theory as both Campbell and I, 'cause we've talked about it, is that there'snot enough appreciation about what free trade means. And a lot of good peopleactually oppose it because they don't understand the benefits of it. I justwonder, can you explain to our audience what does free trade mean and what arethe benefits for Australia as a country?

STEVENCIOBO: Well, free trade, or liberalised trade,basically means removing barriers to trade, and more often than not, thosebarriers are tariffs, Peter. A lot of Aussies would realise that these days inAustralia you can get access to pretty much anything. There's a lot of foodstuffs that we have here, there's a lot of products that we have here, a lot ofthem have come down in price. I mean, we, for example, have seen the prices offresh food, as well as consumer goods like TVs, and a whole range of differentitems declining over the years, and part of the reason they've been decliningis because we've put in place these liberalised trade deals. Now, also, theother big benefit that flows from it is we can export so much more to theworld. Two-thirds, two-thirds of the food that we produce here in Australia weexport, so our regional and rural sector, in particular regional and ruralAustralia, they absolutely must have access to overseas markets, in order to beable to generate prosperity and wealth for not only their own families, but thecommunities in regional Australia as well, which rely on those exports.

PETER BEATTIE: So, let me ask you this, then. Does Australian business need to take moreadvantage of these free trade agreements? Can they do more? Should we be outthere more aggressively taking advantage of these deals that the government'sdone?

STEVENCIOBO: We've seen really strong growth inexports. If you look at the last calendar year, more than half of Australia'sgrowth in GDP actually came from exports. We've put in place as a Government,we've been unapologetic about it, we've put in place really comprehensive freetrade agreements with China, with Japan, with Korea. We just did one the otherday with Peru, and I'm about to go and sign the Trans-Pacific Partnership,which represents 10 other countries that Australia's joined with, some $13.7trillion, not billion, $13.7 trillion worth of economic activity, so these arereally big markets and the fact is we are getting Australian produce,Australian goods, Australian services, Australian manufactured items out thereinto those markets and generating wealth for our country.

CAMPBELLNEWMAN: Steve, just before I ask this question, Ireflected that you must be dead on your feet. I note that you've just come backfrom, I think, United States as well. The PM was over there, so thank you forbeing with us. I hope the jet lag's not too bad. But, look, what do you say tothe increasing chorus of voices, we were reflecting on this just prior to youjoining us, where people are sort of pitching this sort of, "Oh, it isn'tworking for Australia. It's hurting Australia. We've got to have fair trade notfree trade," all that sort of stuff. What do you say to the critics?

STEVENCIOBO: Sure. Well, I think you know, if you wantto the extreme example, Campbell, and they want to see the difference between acountry that engages with the world and a country that shuts itself off fromthe world, in other words a country that doesn't want to do trade with theworld, look no further than the Korean Peninsula. When you've got South Korea,which is open to the world, attracts investment, exports products around theworld, including Samsung and LG and Kia motor vehicles, for example, and lookat how prosperous South Korea is, and then compare it to North Korea, whichputs up barriers, says, "Oh, no, we're not going to deal with theworld," has all sorts of sanctions imposed on them, and you can see howimpoverished those people are. But there's other examples globally. I mean, youcan look at, for example, in Latin America, countries like Argentina. Argentinaused to be one of the richest, if not the richest country in the world on a percapita basis. They've put all these barriers in place and said, "We'reonly going to trade with ourselves. We want to stop imports coming into thecountry. We don't want to have to compete with foreign countries," and loand behold, what happened? Their standard of living collapsed, and Argentinathen became much poorer as a direct result of following those kinds ofpolicies.

CAMPBELLNEWMAN: Well, why do you think it is, Steve, whydo you think it is that this sort of anti-free trade rhetoric, though, isgetting a bit of a leg-up in Australia? That's my sense of it.

STEVENCIOBO: Sure. Well, it's not just Australia, andwhat I actually think it is, to answer your question really directly, is we'vegot this convergence right now, a convergence where we're seeing, for example,the loss of competitiveness in some manufactured items. People will often sayto me, "Oh, Steve, you know we don't make cars anymore. We used to makecars. We should've kept tariffs in place, we should have kept barriers in placeso that Australians can keep making cars." But what they fail to recogniseis that Australians are voting with their feet, Campbell. I mean, we saw yearafter year, where Australians were choosing to buy cheaper imported cars overthe big Australian-made cars. We saw, for example, where cars were becomingmore and more and more expensive because we kept having to put taxes in placeto try to shield the local industry, when all we actually need to do is makesure that we can compete. The way we compete is by making sure that thoseproducts that we can sell to the world really cheaply and you know we're reallystrong in resources, we're really strong in agricultural products, andincreasingly, we're really strong in new services, things like lawyers,architects, a whole range of other services like that, where we can exportthose services to the world. That's what's creating job growth in this country,and really strong job growth.

PETER BEATTIE: Steven, as you gather, Cam and I are both strong supporters of free trade, butwhen we were in office, and we both had this experience, we were prevented frompursuing a tender process, which gave preference to local companies. I justwonder whether sometimes these free trade agreements go too far in limitingstate and local government in a tender process. What's your view on that?

STEVENCIOBO: Well, look, Peter, I don't think they doand here's the reason why, because there are actually a whole range ofexemptions that are in place. If you're in government, for example, you cangive extra weighting to businesses that are small businesses, or medium sizedbusinesses. You can give extra weighting if you're a local council to localbusinesses in that local council area. What we want to achieve for taxpayers isvalue for money, so if there's an Aussie product, or an imported product, andthe Aussie wants the same price, then you can get the Aussie product. That'snot a problem. If you're a local council and you say, "Well, it's nuts.I'm not going to get a service from Singapore somewhere if we can buy itlocally," again, of course, that's just common sense. So what I often see,though, is people will blame trade agreements for things that actually havenothing to do with trade agreements at all. I see it time and time again wherepeople say, "Oh, we didn't get that contract," or, "We lost outon this deal," and then you ask them "Well, why is that?" Andthey say, "Oh, it was because of a trade agreement." But then whenyou actually dig a bit deeper, you find that it had nothing to do with a tradeagreement at all.

PETERBEATTIE: Okay.

CAMPBELLNEWMAN: Do you think though that the peakbusiness bodies, perhaps in this debate, should be more assertive about yourbenefits for their memberships and business and economic activity in Australiagenerally, or are you getting good support, do you think?

STEVENCIOBO: Well, look, I'm certainly not pointing myfinger of blame at anyone. That fact is we all have to do the heavy liftingwhen it comes to defending why free trade is good for Australia, but I'm reallypleased because what I think makes Australia a bit unique is that, for example,the National Farmers' Federation, our peak body representing the farmers acrossAustralia, they are the ones that are out there saying trade is good forAustralia. This is creating prosperity for our country, it's creating employmentfor our country. If you look at just some of the details, for example, I mean,why? Our biggest export market for wine now is China. We export around $500million worth of wine to China. If you look at beef, we export over $2 billionworth of beef to Japan. You know, this is all about driving jobs back inAustralia, and the proof of the pudding is in the tasting, as they say,gentlemen. As a Government, under the Coalition, we've seen, in the last 12months, 403,000 new jobs created here in Australia, 75 per cent of themfull-time jobs. That's over 1,100 jobs a day that are being created, and thereason that we're creating these jobs is because we are growing export marketsfor our country.

PETER BEATTIE: Steven, the TPP, you've just been to the United States and Washington, andyou're aware what the Prime Minister and the President had to say. Do you thinkthat President Trump is going to reengage with the TPP? You said you're justabout to sign, if you like, the abridged version, because the Americans are outof it. It's still important, don't get me wrong. I'm not trying to demean it.So are the Americans likely to come into the TPP? What was your view of theflavour from the President when you were in the United States?

STEVENCIOBO: Well, I've been in politics long enough,Peter, to know not to sort of crystal ball gaze and forecast what might happen.What I will say is that certainly there's been a slight change in languagearound the TPP. President Trump initially indicated no interest in joining theTPP and then, more recently, both now on our visit to the United States as wellas the speech that he gave in Davos in January this year, the President said,"Well, look, if it was renegotiated so it was a better deal for America,then we'd look at re-joining." So, you know, it's a slow change inlanguage. I welcome it. I actually think that the Trans-Pacific Partnership isa really good deal not only for the USA, but for Australia and the othercountries as well. And, gentlemen, I make one key point as well. A lot ofpeople think trade is a zero-sum game, and what I mean by that is they think,well, if one country wins, another country has to lose, but that's not how itworks. How it works is that you actually create win-win outcomes. So a good tradedeal is good for Australia, it's good for the United States. It's good forAustralia, it's good for Japan. That's how these trade deals work best.

CAMPBELLNEWMAN: Steve, would you like to just take anopportunity, 'cause often politicians don't get enough time on these programsto really get into some detail. Do you want to just talk about, at a highlevel, the TPP and how you see it benefiting Australia? What are the key winsthat we should get out of this?

STEVENCIOBO: Well, there are some really big wins thatcome from a Trans-Pacific Partnership. First and foremost, 98 per cent of thegoods under TPP will be tariff-free, which means that it won't be extra taxeson them. Now, that's great at making Australian exports much more competitive,plus we also now have access, as I said, to 10 other markets besides Australia.That's a total market size, in terms of economic activity, of over $13.5trillion. This is going to mean that Australia could export, let's put it inconcrete terms, you know we've been talking about beef. Australia can exportbeef now to Japan much more competitively than without the TPP. So if you lookat, for example, our position compared to the United States, well, US beefgoing into Japan has to pay a whopping, great, big tax or a tariff on that USbeef. The Australian beef goes in much more cheaply, so if you're a Japaneseconsumer, you're saying, "Well, where am I going to buy my steak?"the Australian beef is much more competitively priced than the US beef. Thatmeans more demand for Aussie product.

PETER BEATTIE: Steven, let me ask you the question that I get quite regularly, and the factthat I was at an event in Redcliffe on Saturday night and a local businessmancame up and asked me this very question. He's in manufacturing, and whathappens is he's worried that in the construction industry, for example, cheapChinese imports, kitchens and so on like that, are forcing his company out ofbusiness. So, are there some companies that are in manufacturing forconstruction, are they disadvantaged, and if they're not, then how do they copewith that? How do they deal with that sort of internal, those products that arebeing imported?

STEVENCIOBO: Well, the answer's it depends, Peter. WhatI mean by that is it depends on which space you're in. Now, I was talkingbefore about televisions, for example. We did used to have a couple ofbusinesses that manufactured TVs in Australia, and that's no longer the case.The reason it's no longer the case is because they weren't competitive. Australianswere voting with their feet, they said, "We can get better quality TVsmore cheaply from overseas," and that's what they started buying. Now,that's actually good news for Australian consumers because it means that theycan get better quality products more cheaply. Now, the flip side of that coinis that if you happen to be a manufacturer who's making something that's wantedaround the world, well, guess what? You can manufacture that item and now getaccess to export that item into overseas markets, more competitively priced,which is seeing really strong growth. Now, we've got some great examples inAustralia of manufactured, in particular, what we call advanced manufacturing,where we've got Aussie businesses employing local Aussie workers, creatingamazing new manufactured items which they are then exporting, and really stronggrowth in those areas.

PETER BEATTIE: Okay. Steven, unfortunately we're out of time, but can I thank you for yourtime? We intend to pursue this, and it's an issue where I think we need to havemore, and I know Cam shares this view, we need to have more constructive debateabout this 'cause otherwise, it's misconceptions that will confuse people andfree trade won't have the support it deserves, so thanks for being with us.

CAMPBELL NEWMAN: Thanks, Steve.

STEVEN CIOBO: Good to speak to you both. Goodnight.