ANDREW ROBB: I’m not sure what some people wanted, another eight years, while we get left behind the rest of the world. The fact of the matter is that we’ve done something that’s never been done by any major agricultural exporting country in terms of the concessions. For the beef industry it’s unbelievably good, the dairy industry, despite a lot of the commentary, I had meetings with them the week before I left – they were very clear about the dimension of what could be achieved and they have grossly understated so much of what was achieved in the dairy package. It’s quite bemusing to me as to – are they playing just to their constituency? It really has opened up doors that were never opened before in Japan.
ANNA VIDOT: Is that really the case though, if we look at the dairy industry particularly – what the dairy industry has secured in this agreement is an expansion of Australian specific quota for tariff free importation of processed cheese. I understand though that what dairy was really after were tariff reductions for fresh cheese, what they would really have liked is tariff reductions for milk powder and butter but they didn’t even try for those as they thought they would just be a bridge too far, so haven’t they really just got extra quota that they weren’t using anyway?
ANDREW ROBB: Well, this is just not true, they get a quota currently of 27,000 tonnes
ANNA VIDOT: Globally, in fact…
ANDREW ROBB: Well, it’s part of a global quota - they get 27,000 tonnes of it duty free. On top of that there is about another 60,000 tonnes sold with a tariff of 29 per cent. They wanted that 29 per cent down, I agree with that. But they called us off in the last two weeks for reasons that I can’t get into on this programme, but the industry itself, I can show you the email, which says back off on the 29 per cent run down in the tariff and concentrate on other areas, and then they came out when it was announced and they criticised us for not getting more on that 29 per cent.
The fact is we got an extra 20,000 tonnes, there was 12 on the table when I met them, 20,000 tonnes extra duty free and not only duty free, it doesn’t have to be matched by local cheese, which is another major…
ANNA VIDOT: Which has been another restriction, right?
When you say that the dairy industry themselves instructed you to back off this tariff reduction in exchange for other things, what were the other things?
ANDREW ROBB: Well, to get a higher quota. When I met them a week before I left the offer was 12,000 (tonnes) I got 20,000 on that weekend that we closed the deal. I thought I had done fairly well, and also front end loaded it. It’s over several years, but I got the big benefits, like the beef, front end loaded so the industry would see some real advantage quickly.
But also bear in mind, we got a halving of 40 per cent tariff for processed cheese over 10 years and an under a quota of 50 tonnes rising to 100, tariff reductions on grated and powdered cheese 20 per cent tariff reduction on blue vein cheese, with no volume restrictions, tariffs on casein, milk products and lactose tariffs eliminated immediately. They are all markets that could end up as $100 million markets; gains for ice cream and yoghurt, 50 per cent reduction to a 14.9 per cent tariff and increased quotas and a review trigger if someone else gets a better deal on dairy.
As well, they also knew that diary was likely to be the big winner in China and already I have put on the table that it’s ‘New Zealand plus’. Which means they will be big winners if we ever pull off the deal with China, it’s already on the table with China, they knew that and yet we’ve got this hysteria that came out of some sections of the dairy industry and it just beggars belief really, when all those things I’ve just read through are real advantages for the industry and many sections of the industry have come back to me privately and said they are very pleased about all of these doors that have been open.
ANNA VIDOT: Why do you think then, that that has been the reaction among the dairy sector in particular?
ANDREW ROBB: I was a senior figure in agri-politics years ago, too long ago unfortunately.
Some play to their constituency and it’s happened again. I think it’s short-sighted and you never get everything in a deal. I mean I’m there, I’ve got Korea in mind, China in mind, I’ve got Japan in mind, I’ve got the TPP so-called, the Trans Pacific Partnership. I am looking at how I can advantage all of the industries one way or another. The Korean one was an enormous advantage for certain sectors, well most sectors in fact, I did see and I still see China as the big advantage for dairy.
I think the Japan one has taken us a long way but I also think that in the TPP, and I am well advanced in negotiations, dairy is well placed again in TPP, other industries, rice nothing out of this one or Korea, but I’m looking at other agreements to see where I might get some movement. Rice is very difficult in the Asian region.
ANNA VIDOT: Rice certainly is particularly difficult, they are obviously very disappointed that they missed out, sugar industry though was also very disappointed by this agreement the pork industry too, where they said they got some concessions but not on the fees and charges which currently make exporting to Japan prohibitive.
ANDREW ROBB: Well again, it’s a bit frustrating at times, the sugar people have got now, after the Korean deal, no tariff , no tariff into Korea for sugar and they were very pleased with that and acknowledged it. On this deal the principal ask was for preferential access for high polarity, or high quality raw sugar, they go it that was their principal ask.
Once we secured that, then they wanted other things. Now sure, in a perfect world, a lot of other things would have been nice. But that had particular advantages for them because they had to separate sugar going to Korea and to Japan, now they don’t, they don’t need two lots of storages, they don’t need two lots of costs, they can now sell high quality raw sugar into both Japan and Korea. This is what was explained to me in great detail, and I understood it, and we got it. So again we could do better but we are getting our foot in the door or more than that, both feet in the door in so many of these markets and bear in mind they are 51 per cent of all of our exports now.
ANNA VIDOT: Prior to making this agreement you said you would not be signing any dud deal. Now that you’ve got what you’ve got are you satisfied that you have actually signed a good deal?
ANDREW ROBB: I can only go by the commentators and the people who’ve been looking at these things for 20 or 30 years around the world and the response I tell you out of the beef industry in the U.S. is an ugly one as far as they’re concerned.
It is seen as an unprecedented breakthrough. It is not the finish, it is the start and I think things like the TPP, I was very mindful of that, I think the TPP will go further with Japan and we will get the benefit of that as well on top of it.
ANNA VIDOT: And to what extent does the fact that Australia was able to broker this agreement with Japan point to potential movement now on the TPP?
ANDREW ROBB: Well I think it does show that Japan is ready for structural adjustment and this adds weight to the fact that they are prepared to take some hard decisions which affect them internally and I think it’s only the start and all of those in the U.S. who bemoan the fact that we’ve taken the rug from underneath them on the TPP, I think it’s nonsense, I see this as a further stepping stone.
It helps Japan get its own community conditioned to the fact that the country has to slowly but surely move away from the highly regulated past if they are to see sustainable economic growth and get people comfortable with change and I think what we’ve done is just the start for Japan and not the finish by any stretch.
ANN VIDOT: The next thing of course, the next cab off the rank is China. The investment question is going to be an interesting one and certainly the Prime Minister Tony Abbott had some interesting comments to make at the end of his trip particularly the fact that he is open to at least considering whether or not Australia should soften its regulations around investment in Australia by state owned companies. To what extent is that a deal breaker for China, whether or not Australia is prepared to do something like that?
ANDREW ROBB: That is perhaps one of their major issues. We have to look at that. Clearly, every country has got State Owned Enterprises; China is predominantly State Owned Enterprises. The question is: are the State Owned Enterprises conducting themselves in the same way as a private enterprise? Now that is the sort of issue that we are looking at and there are things such as what’s called green fields development, new developments, in that case, where we can’t get anyone else to invest and they come in as a green fields development, we haven’t got a lot to lose in that situation.
They’re bringing their own money, pouring it into a new development and these are the sorts of things we’re saying, well, let’s have a look at where SOEs could come in to our advantage and still consistent with the intent of our legislation.
ANNA VIDOT: The politics of this is difficult though isn’t it, internationally, quite apart from domestically, to what extent is Australia actually in a position where we could offer such a concession to China when we haven’t offered it to other important trading partners, like Indonesia clearly, or even Japan or Korea?
ANDREW ROBB: Well, we haven’t done a deal with Indonesia. We are in the process of considering one. Japan and Korea are not dominated, Korea has got more SOEs but they’re not dominated. Japan is not, so the countries are in quite different situations. Also China is in a major transition you can see internally, in order to stop corruption and other things, they are imposing the sorts of governance requirements that we impose on private enterprise.
That is moving apace, even in the last 12 months that has gone tremendously, so, there are certain organisations that are technically SOEs but don’t operate as SOEs might from an African state or something like that.
ANNA VIDOT: So, you don’t think we would be irritating our other trading partners if we were to offer that to China?
ANDREW ROBB: No, I don’t. I mean what is it we’re offering? We haven’t made any decisions yet. We’re starting to put some ideas out there so we can explore it with the Chinese. It’s not going to be in any sense open slather, we have got rules they apply universally. Whatever rules we come up with, I think ought to be able to be applied to ultimately, other countries if they meet the same conditions that we lay down.
ANNA VIDOT: How do you solve this domestically, the Coalition obviously came to power promising tighter restrictions on foreign investment as far as agricultural land and agribusiness are concerned. There’s clearly concern in the Australian community about foreign investment, how do you sell such a relaxation of the rules?
ANDREW ROBB: Well I say to you firstly, there’s always been concern as long as I’ve been around, every time there is a new wave of investment the community gets concerned about it. The rhetoric is the same the concerns are the same…
ANNA VIDOT:Your National Party colleagues are concerned too…
ANDREW ROBB: Well, that was true in the ’80s when I running the National Farmers Federation and Japan were coming in with lots of money. The same arguments were put in the 1940s two years after the US had saved us. The whole reason the Foreign Investment Review Board is in place is because of concern about the Americans investment in Australia back after the war. The thing is, they can’t tie the tractor up to a fence and pull the farm away – I haven’t seen a farm leave Australia for a long time.
The thing is, we’ve got to be realistic, if it is green fields development, some major project in the North, which is something we haven’t exploited, they bring money in, it’s like it has been since the Vesteys owned most of the North of Australia, a foreign company, built all the infrastructure now it’s owned by Australians or others.
We’ve just got to be sensible on how we manage it, I do understand the concerns that people have. That’s why we’re not going to have open slather, that’s why the rules we set with our National Party colleagues $15 million as a threshold for agricultural land and $53 million for agribusiness, we have got both of those embodied in the Japan and Korean agreements and they’ll be in the Chinese agreement.
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