Leon Byner: Let’s welcome the Trade and Investment Minister Andrew Robb, Andrew I appreciate the fact that you’re coming on this morning.
Andrew Robb: It’s fine thanks Leon, I appreciate the opportunity there’s a lot of misinformation running around so it’s nice to get a chance to clear some of it up.
Leon Byner: According to the Bureau of Statistics, the collated figures show that past FTAs have led to relatively worse trade deficits with partner countries.
Andrew Robb: Well this is ridiculous. If you look at the figures; let’s take the best Free Trade Agreement we’ve got which is with New Zealand, now that’s been in place for 32 years, and every year for 32 years, on average the two-way trade has increased by seven per cent between our two countries. 7.9 per cent for New Zealand and 6.5 per cent for Australia, so every year – year-on-year-on-year-on-year.
Now of course the growth rates for both our countries have been three per cent or less, for most of that time, and yet the increase in trade has been of that order. Now this is true for other countries, the United States; again those who are anti-trade say the agreement we struck with the US ten years ago was to our disadvantage, but there’s been a 38 per cent increase in two-way trade in that time and there’s been a doubling of investment to $1 trillion between our two countries. Now this has all helped us double our wealth in our country over the last 10 or 15 years so…
Leon Byner: Why has the Productivity Commission suggested that there should be a cost benefit analysis done and a much more open information cycle about these agreements? I’ve been sent by Nick Xenophon four graphs; one of them is the United States exports-imports and trade balance real terms and according to this, the graph is very much in their favour, not ours.
Andrew Robb: We’ve had a 38 per cent overall increase in two-way trade, that was in the first nine years – 38 per cent – that’s very significant. Now 60 per cent of that went to the US and 40 per cent to Australia, so people jump on that and say well there you are, we’re disadvantaged, but of course through all of that period, we had the mining boom and what came from the US in significant quantities was what they call the yellow metal; all the big trucks and the huge equipment. It was far cheaper and it’s high quality – unlike what you said in the introduction – it’s the best quality in the world and we got it at the cheapest rate because of the Free Trade Agreement.
Therefore the costs of mining were cheaper and therefore we were more competitive than the rest of the world in mining partly because of that Free Trade Agreement and the imports from the United States. The net effect is that Australia gained enormously, yet if you look at the bare figures, you’d say the US got an advantage, but we got the advantage of very cheap equipment for ten years through a boom which put us in an even stronger position than we would have been otherwise.
Leon Byner: Andrew one of the realities is, that we are bringing in products of inferior quality into Australia at an ever increasing rate. Food, electrically for example we’ve got cords out there that are cheap and nasty, which are dangerous. Now we’re still selling them, and people do it at their chagrin if they buy them, because we’ve had a number of accidents. I mean, I don’t know that the people listening today Minister, are anti-trade, I think…
Andrew Robb: Well they keep buying this stuff…
Leon Byner: But hang on that’s fine they keep buying it, but if it’s going to cause a fire, do we want that?
Andrew Robb: Well you make this grand statement about ever increasing quantities of poor quality, you look at the cars. Okay, we now import cars from Korea, we didn’t 20 years ago. Kia in the first instance, was seen to be less quality than some other cars, it’s now – you look at its best range of cars, competes with the best of so many and it’s much cheaper. The quality in all of these countries, even China, they’ve produced all sorts of quality, now they’ve got the best in the world because they’re growing and expanding and increasing and improving all of their systems as they enter the world trading system in a most profound way.
We’re all better off for these things; we’re selling so much of our product at such significant prices. We’re getting the best prices throughout Asia for all of our food-stuffs, and this is to our great advantage. The trade agreements have freed-up trade which means we get to sell what we’re best at producing and we import what those countries are best at producing. It’s pointless everyone trying to do everything and you can do it, but you can do it at very high cost and the growth of all our countries has very much depended on this growth in trade around the world. And this Trans-Pacific Partnership that you mentioned, it’s going to mean more seamless trade between 40 per cent of the world’s GDP, and 12 countries which represent one third of all trade around the world. It’s going to increase our efficiency of doing business greatly, and that’s going to add jobs and wealth and growth to our economy.
Leon Byner: Why would you allow Investor State Dispute Settlements, where already, countries that have signed these, are in a bit of trouble. I mentioned Canada, I’ve got a lot of other information, you would know this, why would we do this?
Andrew Robb: Let me say to you Leon, we’ve had these Investor State Dispute Settlement clauses with 28 countries now for over 30 years. Now I got up this morning and the sun was still coming up, and you know how many cases we’ve had in 28 years against us? One, and it’s that tobacco case which is still not resolved so it’s not certain we’re going to lose that either. One case in 30 years with 28 countries. We’ve taken some action; some Australian companies have successfully taken action against companies in India, because India moved legislation to discriminate against foreign investors, and that’s what this clause is about. You said that if a country changes legislation to alter the profits of a foreign investor, they’re liable – that’s not true. There’s only two instances where you can you this dispute settlement mechanism.
Leon Byner: One of the earliest cases, launched in the nineties was a fuel additive called MMT, this is the Canadian government, they wanted to ban it – they did, concluding it could be a threat to human health and the environment. They were sued by Ethyl – an American corporation – and they had to settle in the settlement, overturn the ban and publish a statement declaring it to be safe.
Andrew Robb: In that instance, I’m not sure of all the detail, but the only circumstances where they can be liable for action is when a government takes action against a foreign investment, either in a discriminatory way – in other words they’ll discriminate against a foreign company but none of their local companies. Or they expropriate – in other words they take away the investment; they go in and take back the mine or whatever. So those are the only two circumstances so that case must have fit into one of those two circumstances.
And the reason we go into these things is firstly, we didn’t do it in the Free Trade Agreement with the US for instance because we felt confident that we knew the US legal system, and if the US government did something discriminatory against one of our companies, that our companies could quite successfully go through the US legal system. There are many other countries in the world where we don’t trust their legal system, and where judges would never rule in favour of a foreign company, so it’s been to protect our investors who are investing in other countries that we’ve entered into these agreements. I remind you, we’ve had these agreements in place for 30 years with 28 different countries and we’ve only had one case against us in all that time.
Leon Byner: A Nobel Prize winning economist says things have changed, but I’ll give you a much closer example; the Productivity Commission, they did a report in 2010. They said if any net economic benefit to Australia or its businesses through bi-lateral Free Trade Agreements are there, they’re finding it hard to see the benefits. They are recommending that a feasibility study be carried out – an independent confirmation of benefits be sought, before any further agreements are entered into. Why wouldn’t you agree to that if what you’re saying is true?
Andrew Robb: With most of these agreements, we and our predecessors – Labor and on both sides – have done benefit-cost studies to look at what the outcomes of these agreements are, but the bottom line Leon is that sometimes these things they play-out over time as well, and also there are lots of intangibles; we did this agreement with China which is going through all the legal processes, but I can tell you just doing that has had an impact on our relationship – positive impacts.
There’s a lot of business going on now, because just the act of doing the agreement has sort of been a signal to Chinese companies that the government thinks Australia is a good place to do business with. As a consequence there is a lot of trade going on and a lot of investment both ways by the way, and this is to our great advanatage.
We were restricted in the number of airline seats that could come out of China to 22,000 a week. Three weeks after we finished the Free Trade Agreement they contacted us – now we’ve been trying to get negotiations for four years – they contacted us and said we are ready, we did a deal in a day and a bit which is unheard of, and we now have access to 67,000 seats from around China from every airport, all the major airports. Now for our tourism trade, places like South Australia and Adelaide, this is a boon because the Chinese are coming down in significant numbers and spending twice as much as anyone else on their holidays.
Leon Byner: Minister, one of the realities is that business groups have polled their members and found that very few Australian businesses actually engage with these agreements after signing. There is a perception amongst them, that these agreements are largely foreign affairs victories and not much more.
Andrew Robb: Again this is nonsense; I just said to you at the start about New Zealand seven per cent year-on-year growth, a lot of firms don’t even know they’re using them, they just go and trade. The thing is that the tariffs have been removed or the ease of moving people across to do a job for six months, they don’t have to have complicated visas and all the rest; all of these things are part of making it more seamless. It’s like between our states – you can’t put protection up between states and you can move freely between states, we’re trying to increase even in Australia the same rules.
Leon Byner: On protection, one of your senior colleagues, as recently as this morning, told me that the Americans are putting significant pressure on Australia to lower our quarantine standards; are you going to resist it?
Andrew Robb: The quarantine – what they call the sanitary and phytosanitary rules – which is to animals and plant material, that is a separate international agreement, and we also have bi-lateral agreements with every country on those issues. They’re not part of the Free Trade Agreement, so whether the Americans try or not, this is not for negotiation.
Leon Byner: So you’re going to sign these abilities of countries to use these dispute settlement because you don’t believe they can work to our disadvantage, when John Howard wouldn’t have them?
Andrew Robb: John Howard signed several agreements – the US one was the only one we didn’t have the ISDS in I’m sorry, and Labor have done the same thing. As I said to you Leon, if it’s such a threat to Australia’s sovereignty and all the rest that I hear from all these anti-trade union groups, and other people in the community; there’s a group of people, every time the same people stick their head up, this time they’ve really got themselves into a lather. These things, if they’re so demonstrably a disadvantage to Australia, why in 30 years with 28 countries around the world where we’ve got these agreements, has it not caused a problem? You tell me that.
Leon Byner: Can I ask you this; I think there is a much more important question if the Trans Pacific Partnership, is as benign and advantageous as you say, why the secrecy? MPs go to your office and say I want to see the detail.
Andrew Robb: What MPs? You tell me one.
Leon Byner: Bill Heffernan was one.
Andrew Robb: I’ve offered to Bill many times – Bill’s a good mate of mine by the way – but I’ve offered to Bill many times because he comes and he stands up in the Party Room and he makes a big song and dance, I go and see him and say Bill you should have come and had a chat to me before you made a song and dance in the Party Room, but be that as it may, you come into my office and you can read thousands of pages of text any day you want to come. Now, Bill’s never come through my door, but the next week he’ll stand up or say to you or someone else I can’t get access. I’ve offered publicly, any member of parliament not just my side…
Leon Byner: Why can’t you put it in the parliament? Why don’t you do what America does and put it out there so they can all see it?
Andrew Robb: No they haven’t. Again this is a misnomer all of this stuff; it’s not your fault, this is what’s being fed – it’s misinformation. The US do confer with their congress…
Leon Byner: Before they’re signed.
Andrew Robb: But Leon hang on, we’ve had over 1000 consultations with all of the different industry groups. I’m going to be in the Philippines with negotiations in two or three weeks’ time, I know of already seven industry group representatives who will be with me; why are they going if they’re not getting access? In fact, we rely – how would we negotiate, there’s so much detail in every industry.
We’re going across industries right across the country re: the rules and the technical details and we get the US or Canada or Japan say they want to change it or they want to harmonise it or whatever they want to do, the only way we know the impact on our industries is to ask them. And that’s what we do so we share the detail but we don’t show them the whole text because nothing’s finalised until everything’s finalised. So anyone in the beef industry or the pharmaceutics industry or anywhere else, they can see and we rely on them to tell us what’s going to work. In fact, even the ACTU – there’s a chapter on labour markets – the ACTU we had 14 consultations and in fact they helped write the text that is now being considered for finalisation…
Leon Byner: Why is there such secrecy about these agreements?
Andrew Robb: Well I’ve just been speaking for five minutes about the lack of secrecy and you keep repeating the secrecy…
Leon Byner: Minister the fact is the parliament will only see this agreement once it’s signed and not before.
Andrew Robb: The fact is Leon everyone in that parliament could see any part of it anytime in the last five years. And the Cabinet; I’ve got a mandate I’ve put to the Cabinet in the first instance that I work within. The Cabinet was elected by the people of Australia to negotiate these sorts of agreements.
I put in a four inch thick document to the Cabinet which they went through each minister, each minister because every minister is involved in this had sections in there which their departments crawled all over. I can tell you this is looked at every which way, before we even started the negotiations. I’ve got a mandate, which I’ve got to work within which has been authorised by the Cabinet which is representing the Australian people.
There’s so much of this detail, there’s thousands and thousands of pages and it’s very complicated but with every industry we have gone through and we are guided by, there is not the secrecy you talk about. The bottom line is if we put it all out publicly, the whole text and our final positions, how silly would that be? We are out there trying to negotiate with all of our positions on the table and yet all the other countries I’m negotiating with, they’re holding their cards back I don’t know where their final position is.
Leon Byner: America puts its treaties out before they’re signed, we do it after …
Andrew Robb: No, Leon, you keep making these grand statements …
Leon Byner: It’s what happens…
Andrew Robb: No, no well let me answer that. The detail in the China Free Trade Agreement is out there, but the final text, we haven’t signed the China Free Trade Agreement yet. We shook on the final agreement and then we put out all of the results of it, what’s happened in the next four months is you have to translate that multi-thousands-of-pages into Chinese and then we have lawyers go through it to make sure every line in Chinese means exactly the same thing as every line in English and then, only then, once we’ve satisfied that, that it all means the same, then we sign which we’ll do in the next few weeks. So we haven’t signed yet but the detail has been out there for everyone to have a look at we’ve sent out hundreds of pages …
Leon Byner: Where can people listening today see any of this?
Andrew Robb: They just go to the web site of the Department of Foreign Affairs and Trade …
Leon Byner: And everything you’ve negotiated is in there is it?
Andrew Robb: All of the outcomes of that negotiation are in there. Not the text – the text is being verified – but that’s just how it’s explained, the outcomes of all of these things. In other words, that the tariff’s gone up six per cent or down, whatever’s happened it’s all there; there are tables and tables of it.
Leon Byner: Can you guarantee that this provision of Investor State Dispute Settlement will not be used against Australia if we pass a law that we think is advantageous to either the community or the environment?
Andrew Robb: Well we have got in the Investor State Dispute Settlement agreements that we have inserted in say the Korean one we did, the Chinese one, and the Labor Party did with the ASEAN agreement and also did with the Malaysian agreement I might add, that we have put in clauses which has meant that in regards to health, if the government does introduce legislation that it’s not able to be used this ISDS provision against Australia, and in the case of the environment. Now that has been my position going into the TPP …
Leon Byner: Okay, but for other issues they could sue if they chose?
Andrew Robb: Yes, as I said it’s more for our protection of our investors in other countries and the only real use that’s been made of ISDS clauses that we’ve entered into or Labor’s entered into over the last 30 years in 28 different cases, 28 countries, the only real use that’s been made of it, apart from the tobacco case, is by Australian companies against other companies overseas or other governments overseas that have moved legislation which discriminated against our companies, and we’ve succeeded with compensation in some cases.
Leon Byner: Well the two companies you refer to are apparently owned fully by multinationals, but minister thank you very much for coming on the program today. Apologies for how long this took, but you know what? We needed to clarify some of these things today and as I said it’s something the public needs to be interested in and again the more light on this the better.
- Trade Minister's Office: (02) 6277 7420
- DFAT Media Liaison: (02) 6261 1555