CNBC, Squawk Box
BERNIE LO: It's not the buyer, it's the asset.Australia's Trade Minister yesterday reassuring an audience here in Hong Kong that last month's rejection of CKI and State Grid's bid for Ausgrid not because they're Chinese, but Steve Ciobo also stressing that of the 15,000, that's a lot, okay, 15,000 applications to Australia's FIRB, the Foreign Investment Review Board, in the last decade and a half only five were actually outright rejected. Five out of 15,000. You do the math. I don't think you're, it's too small a number for most calculators. A rule change could still be in the cards though, with the Turnbull Government expected to clarify guidelines around foreign investment, so it could go some way to appeasing those who might still worry. Well, guess who? He's in town. Steve Ciobo, Minister for Trade, Tourism and Investment of Australia joins me in Hong Kong and Matt, of course, is still with us. So it's kind of a three way convo we're going to have on the show today. Steve, welcome to Hong Kong, welcome to the show. Thanks for joining us.
STEVEN CIOBO: Pleasure.
BERNIE LO: You knew that coming here you were going to face a lot of questions about the Ausgrid thing and I'm sure you found you were peppered left and right with that. Were the audiences pretty happy with what you got, with what you gave them, the answers you gave them?
STEVEN CIOBO: Look, I think it's important to retain that sense of proportion. I mean, Australia is still a very outward looking economy. We're a very mature, developed economy. One that, of course, focuses and builds upon economic momentum off the back of foreign directed investment and foreign investment more generally. The chance to speak at the CLSA conference, the chance to reinforce the message that Australia very much is open for business and that there is that issue that you raised about the sense of proportion, which is five rejections out of around 15,000 applications to our Foreign Investment Review Board. They're pretty good odds.
BERNIE LO: Yeah. What kind of new rules are we talking about when we talk about maybe a new landscape or maybe tweaking the existing infrastructure? Are we talking about tens of thousands of pages of code right now that need to be worked and reworked? Hopefully nothing like that, right?
STEVEN CIOBO: No. So I mean, Australia as I said has a welcoming investment framework. In terms of as policy makers we, of course, want to drive investment into Australia. It's crucial to our longevity and to our economic momentum. I mean, bear in mind Australia has had 25 years of continuous economic growth. We're the envy of many developed economies around the world and we want that to continue. What I've spoken about is that we'll continue to apply a non-discriminatory approach with respect to foreign investment into Australia. What I've made clear though, and this is off the back of feedback that I've received from potential bidders and successful bidders, is that they'd like more certainty around the investment framework when it comes to which assets they can get into and which ones they can't. If we can put in place a policy that helps to drive more certainty but also still of course, safeguards Australia's national interest, then I think that that's the right outcome.
BERNIE LO: You know, the whole issue of taking the Ausgrid situation, saying it's the asset it's not the bidders, because I mean, CKI and Australia have been friends a long, long time. You know them very, very well. You don't need any introduction to the people at Cheung Kong Infrastructure, so to say that the problem is with the asset, isn't that like saying okay, here's what's up on the auction block, but this item is a little bit defective. Take it, there's no warranty on it, as is, do I have any bids, or something like that. Some people would view it as a bit of a weak argument, a bit of a scapegoat to say that after the process has started.
STEVEN CIOBO: No, I think if they recognised the way that the Australian system operates, we are of course, a Federation, so the asset itself is a New South Wales state government asset but sitting over the top of that is the Federal Government's foreign investment regime. So you've got two levels of government, one which was pushing forward in terms of the privatisation, or in this case, a 99 year leasehold on the asset and that had to then be subjected to the Federal Government's foreign investment regime, which we did. Look, I understand the frustration about it, but look, this is what's happened. What's important is that I reinforce the message that Australia is open for business. We've got a lot of very successful investment that's good for Australia, good for those parties that are coming into the stability and surety of the Australian market.
BERNIE LO: Alright. Steve, say hi to my friend Matt Taylor down in Sydney. Matt, say hi to Minister.
MATTHEW TAYLOR: Hi Steve. Good to see you up in Hong Kong. I just want to switch to the TPP because we know that the Prime Minister is in the United States at the moment. He's been in New York where he's made some comments about the government being hopeful that the US will ratify the TPP, but that's obviously going to be a big sticking block or a stumbling block. How worried is the Government that the TPP is not going to get across the line because one of the big, important partners, the US, isn't going to play ball?
MATTHEW TAYLOR: Isn't going to play ball.
STEVEN CIOBO: Well I've consistently used to the phrase that I'm 'cautiously optimistic' about the Trans-Pacific Partnership being ratified by the US Congress. I use that phrase advisedly. That's the feedback that I've had on a consistent basis from those within the United States system who indicate to me, Matt, that they think in that lame duck session post the Presidential Election, prior to the inauguration of the new President, that that's the best opportunity to seek US Congressional ratification of the TPP. Ultimately it's a decision for the US Congress. I'm going to pursue Australia's national interest in a variety of different fore including in negotiations around the regional comprehensive economic partnership, which of course embraces more than 50 per cent of the globe's population and more than 30 per cent of global GDP.
MATTHEW TAYLOR: So is there a plan B if it doesn't get across the line, you just mentioned perhaps looking at more regional pacts. I know that you've been in the UK talking about progressing a trade deal there, but is there a plan B if TPP doesn't get across the line?
STEVEN CIOBO: Well there is, and I'm certainly keen to pursue Australia's interests with a variety of different free trade agreements, both at a plurilateral and a bilateral basis. If you look at where Australia's going, and part of what I addressed yesterday, is our strong focus on what we can do around services trade. Everyone knows the biggies, which are, of course, education and tourism, but really for a developed economy like Australia the opportunity to be part of global supply chains, global value chains on services trade is good for us and we can do that through a new trade in services agreement which embraces 50 member states negotiating that agreement. Of course I'm pursuing the Australia-Indonesia free trade agreement. The discussions are underway around that Regional Comprehensive Economic Partnership. So don't get me wrong, we'd love the TPP to be ratified by the US Congress. We see it as being an important step forward, but ultimately we've got to be realistic about its prospects and make a decision post that lame duck session.
BERNIE LO: But you've also taken a look pen to paper, what the timeline is, realistically speaking, for the TPP. There are so many hurdles and barriers that have to be overcome. I mean, it's an election year and it takes an administration at least half a year, a year to get up running and then even to start entertaining and juggling the policies, which they promised during the campaign, so you have make provisions for that. It sounds like the bilat, multilat sort of channels are really where the action is going to be. That's going to prove to be the cash cows and what really keeps the wheels of commerce going for Australia in the mid to near term.
STEVEN CIOBO: And we intend to continue to engage the world through free trade agreements in these regional blocks. Obviously the multilaterals are your preferred vehicle, but they are very difficult to achieve. We've got great opportunities with some of the plurilaterals and of course the trade in services agreement, what's called TiSA, is probably I think, in the short term, the biggest option. Also, I don't want to sell TiSA short. It's a very important agreement if we can get it over the line, and I'm hopeful that we will. Look, ultimately what the US decides to do with TPP is their decision. The Congress will make that determination. We see value in being part of it. If the Americans decide not to, well, we can't change that, but make no mistake, if it doesn't go through in the lame duck session, I don't see the TPP really going anywhere from that point forward for quite some time. Now, we'll have to have a look at, for the other 11 member states, whether or not there's another option for us, but as I said, there's also the Regional Comprehensive Economic Partnership which we'll be pursuing with vigour.
BERNIE LO: Yep. The RCEP, yep. It's tough how these acronyms start off with such a bang and then you get buried in the bureaucracy. Remember when the GATT went on for years and years? General Agreement to Talk and Talk became the WTO, World Talking Organisation, you know the story after that. Steve, it's always a pleasure. Thank you very much for being with us, okay?
STEVEN CIOBO: Good to see you Bernie, pleasure.
BERNIE LO: Have a good rest of your visit here.