Newsline, Australia Network – Interview with Jim Middleton

Subject: Trade and investment relationship with Indonesia; FTA negotiations; Foreign investment.

Transcript, E&OE, proof only

12 November 2013

JIM MIDDLETON: Minister, very good to be talking to you.

ANDREW ROBB: Nice to see you, Jim.

JIM MIDDLETON: We'll talk about your impending trip in a moment, but first of all I'd like to ask you this: you have made it clear both by word and deed that you'd like to see the trade relationship between Australia and Indonesia reach its full potential.

How much though does all the to-ing and fro-ing recently over asylum seekers and espionage complicate matters?

ANDREW ROBB: I don't think it's going to make a huge material difference. The thing is that with all of the free trade agreements that we're currently looking to bring to a conclusion, there is great complementarity – in other words, Indonesia needs us and we need Indonesia. The same can be said for Korea, and Japan and China.

So, there is an imperative on both sides, even though there are things that are going to occur, I suspect, with all four of them during the course of the negotiations which might be a distraction.

JIM MIDDLETON: It can't help your task to have Australian ministers describing Indonesia's attitudes as 'very frustrating' and 'without rhyme or reason'?

ANDREW ROBB: Well, as I say, I'm finding in my negotiations and discussions with Ministers that I'm dealing with, that they're under pressure to identify opportunities and food sources and all the rest that are very important to Indonesia and the other countries. And similarly, I'm looking for trade investment opportunities to help us grow the economy here, which is under a fair bit of pressure, right?

So there is an imperative, and you do find that people can separate these things. I think it's the same in the Parliament here – you can be having a raging debate with your opposite number on something or other, and then walk outside and engage productively and constructively on another issue. So, you know, we're all adults, and I think we're all getting on with business.

JIM MIDDLETON: Indonesia's the world's fourth most populous nation, it's Australia's biggest close neighbour, and yet it's only Australia's twelfth largest trading partner. What's Australian business been doing wrong?

ANDREW ROBB: It's, you know, it's a part of history in a way. And Australian business in many respects has seen immediate opportunities, more obvious opportunities in other parts of the region in the recent decade at least, and so the absolute explosion of trade with China. I mean 50 per cent of all of our exports now go to China, Japan and Korea.

But having said that, Indonesia has really, I think, in a business sense, got its act together over the last ten to twelve years in particular. And there is now a lot of interest, there's a lot of foundations being laid – just like business people did 20 years ago, laid foundations in China – which are only in recent years starting to really bear fruit. I think the same can be said of Indonesia, and I think you'll find in the years ahead if we persist, we will start to see some very significant growth in trade with Indonesia.

JIM MIDDLETON: The head of Indonesia's Chamber of Commerce, Suryo Sulisto, told me recently that Australian business could miss the boat in Indonesia, that there are plenty of other countries lining up to invest and do business, to trade. This does suggest that Australian business does need to be more adventurous, does it not?

ANDREW ROBB: Well I can't speak for Australian business. We can try and aid and abet their access, they've got to make their own commercial decisions. But you think back just to the delegation the Prime Minister took after the election, there were some very serious players from Australia. Now nearly all of them have got a strong toehold already in Indonesia. Now, the capacity to grow those businesses, I think, is very significant. I spent a lot of time on the live cattle trade, to restore that, I think the capacity there is enormous as well.

So, we can move quickly on a number of fronts, and you know, I know that there's a lot of other competition for their business, but there is a great complementarity as I said. We've got to look over the long haul, we've got to position ourselves, it is our closest large neighbour, very important to us in all sorts of ways, as the Prime Minister has said, it is our most important relationship, is Indonesia. We intend to act accordingly.

JIM MIDDLETON: You're off to China, Japan, Korea very shortly indeed, three of Australia's four biggest trading partners. The Prime Minister has pledged to have a free trade agreement with China concluded within 12 months. He's set you quite a challenge, hasn't he, given that negotiations on this have been languishing for the best part of a decade?

ANDREW ROBB: Well, I think he set me a target for all three for within 12 months, but be that as it may, there has been a lot of negotiation go on in all three of these free trade agreements, but they have stalled. They have reached a point where they were going nowhere…

JIM MIDDLETON: What was the problem?

ANDREW ROBB: Well there were issues there which, in many respects, there were no-go areas for the previous Government. And there were no-go areas in regards to China, Japan and Korea from their end. And they got to a point where there was no movement, and they stalled.

Now, bringing a new perspective to it, some of the issues that were seen as no-go areas – which I can't really expand on because that means I'm putting my cards all on the table, to be honest, so it's not very smart in a card game – but those no-go areas I think we're able to break through some of those things in a way which does give me hope that we can in fact complete all of these three sometime in the next 12 months.

JIM MIDDLETON: Is the fact of the matter that for Australia, the playing field has in fact changed? In China for example, we had much of the playing field to ourselves. Now China's concluded FTAs with a number of countries including New Zealand for example, and it's the case that Australia does not have the leverage that it once had. It's not a matter of defending Australia's interests rather than going in as aggressively as we might have in the past.

ANDREW ROBB: Well, I do think it's in our interest to complete these negotiations as quickly and as effectively as possible and not hang out for necessarily 110 per cent. But we need quality, we need quality agreements.

But I just say to you it's in our interest to quickly conclude it, but I have discovered that enthusiasm and eagerness amongst the trade ministers in each of those three countries, and the Prime Minister has met with the leaders of all three countries and has found also there is a sense from all three that they want to quickly complete these negotiations.

So I find that there is an understanding, and I've seen it more broadly. I've met now 18 of my counterparts, trade ministers around the world. There does seem to be a sense of despondency about the way in which interventionist policies have not led to further growth, have not taken the world back out of the malaise that it struck with the global financial crisis, and they are looking for trade and growth, for trade to grow growth, for trade and investment.

And you finally get it in many places around the world and all of a sudden they're looking for new policy tools, I think, and that has given them new impetus, not just for these three agreements, but for the so-called TPP, the Trans-Pacific Partnership, and the Services Agreement, and the WTO negotiations in a narrow sense.

So we're seeing a new phenomenon, I think, in trade around the world, a new impetus, if you like, and we've got to ride that wave. That wave may not last. So if we can ride that wave, I think we'll get, you know, a common interest in all of these countries with ourselves, and we've got some real prospect I think of reaching a conclusion.

JIM MIDDLETON: Former Australian Ambassador to China, Geoff Raby, who was involved in the Chinese FTA negotiations, told me recently that Australia would have to be more accommodating on the question of Chinese investment in Australia to get a deal done. Do you accept that that is the case?

ANDREW ROBB: Well, we've been through all this. I've got, I think, what is an attractive investment package to put to the Chinese while still respecting some of the sensitivities here. I don't want to, again, put all the detail on the page, but you're absolutely right, investment is important to them. It's important to us. We need that investment. We need that investment if we are to grow the economy and to realise the opportunities that are out there.

So it is an important part of this deal and it will be an important part of what I put to them.

JIM MIDDLETON: One final subject, the first big test of this government's free trade credentials is not that far away. Do you accept that the proposed American takeover of GrainCorp is a serious test of the Prime Minister's statement, which he's made several times since the election, that Australia is open for business again?

ANDREW ROBB: Well, it's a very important deal that's on the table. It's over $3 billion. I don't accept the test side of it.

JIM MIDDLETON: Well, I do know that a lot of people in a lot of countries, business executives, governments too, are watching this very closely and they do regard it as a test.

ANDREW ROBB: Well, I know a lot of them are looking at it because I've been around the world since the election and there is a lot of interest in it. I accept that. But at the same time, we have got thresholds on investment, which are very large in the case of the U.S., $1 billion. Anything above that has to go to the Foreign Investment Review Board to look at the national interest.

Now, there is a reason for that. Every country around the world, you know, reserves the prerogative to protect their national interest. So we've got that there for a reason.

So if the Foreign Investment Review Board find reasons to object to it, well, that's part of our longstanding policy position on both sides of politics, for that matter, and we are here in the end to look after the national interest.

So I think we can be open for business. Already I think you'll find enormous clearage of, you know, environmental prospects that were not concluded, projects right across the board already Greg Hunt has dealt with. A lot of business has already been encouraged.

We are very much open for business. I don't know which way it will go, but I wouldn't hold that out as the be all and end all.

JIM MIDDLETON: Minister, thank you very much.

ANDREW ROBB: Thanks very much, Jim.

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