FRAN KELLY: Trade Minister Steve Ciobo joins us from our studio on the Gold Coast, which is of course Commonwealth Games territory at the moment. Minister, hello there.

STEVEN CIOBO: Good morning, Fran.

FRAN KELLY: ​We now have both the U.S. and China threatening to each slap $50 billion worth of trade tariffs on each other, neither side looking like backing down right now. Do you think the world is on the brink of a trade war? 

STEVEN CIOBO: Well, I wouldn't use that language. Certainly, there is concern that there possibly could be down the track, action and reaction, which would cause significant economic impediments to global growth. We don't want that to happen. Australia continues to be a strong advocate for the benefits of globalised trade, a strong advocate for not putting in place unnecessary tariffs, which do nothing except crimp global growth. 

FRAN KELLY: The Chinese commons minister said yesterday, quote “If someone wants a trade war we will fight to the end, if someone wants to talk our door is open.” The U.S. President Donald Trump started this. Does that mean it is up to him to drop all the threats and sort of the bellicose language about trade wars, and come to a negotiating table?

STEVEN CIOBO: Fran, you'll understand, I'm not here to provide a critique on what different world leaders say or do in relation to their actions. What I'm here to speak with you about is what's in Australia's national interest. Now Australia's national interest is best served by opening up export markets. We have seen policy orthodoxy of the past 40 or 50 years, which shows that when you reduce barriers to trade you get more trade investment, and more trade investment means more growth, and more growth means more jobs, and that's what ultimately Australia is focused on achieving. 

FRAN KELLY: Sure, and we're watching on as our two biggest trading partners are ratcheting up the threats and even the lists of where they're gonna slap trades on $50 billion each. These are our two biggest trading partners. Have you looked at the impact of this, have you had anyone crunching the numbers on the impact on our economy if the U.S. and China don't pull back from this?

STEVEN CIOBO: Well, it's difficult to do because obviously there's a lot of speculation, there's a lot of conjecture about what might be affected, what may not be affected-

FRAN KELLY: Well we've got a pretty particular list coming out now from both sides-

STEVEN CIOBO: Yeah, we do.

FRAN KELLY: Which makes it a little more frightening. 

STEVEN CIOBO: We do, and I've certainly been looking and closely studying a whole range of analysis in relation to that. The observation I'd make with respect to China is that the bulk of what we export to China isn't reprocessed and then exported from China. In fact, it's roughly about a third of what we export to China that actually would go through some type of reprocessing for then a subsequent export. The bulk of it is actually for internal domestic Chinese consumption. And what we've seen historically, is that when China has, if it has, faced a slow down, typically there's a stimulatory response from the Chinese Government, which in fact, could be a positive thing for Australian exports. So we've just gotta walk very cautiously, and calmly through all of this. I will continue strong advocacy about why tariffs do nothing except impoverish people in the future, if they are put into effect. And in the interim Australia will continue to be at the forefront of making the case about why liberalised trade investment is good for growth and good for jobs. 

FRAN KELLY: Can we just look at, though, some of those positives for a moment you mentioned there, because, you know KPMG has done some modelling, it warns of a GFC-like impact on the world economy here at home. That would mean, according to this figuring 285,000 jobs lost, so that's on the downside. But the positives, could it play to our advantage for some of our exporters, as markets are lost to the U.S., that our winemakers for instance could fill that gap?

STEVEN CIOBO: Well, Fran, that is a possibility, and like any modelling it all comes down to what are the assumptions that underpin the modelling that you take? If you take assumptions that are built around a global impact, well then clearly there will be issues in respect to that. If you take assumptions that look at our bilateral trade with the U.S., or our bilateral trade with China, then you'll get a different set of impacts. Now, just to cite one example, it's speculated that China's gonna put in place a 25 per cent tariff on U.S. beef. Now, that potentially is promising for Australia, but these things can be short lived. Traders are constantly changing terrain. You have new impediments, you have new doorways that are opened. It's constantly changing, and that, in effect, is the very real market circumstance that farmers and others have to deal with on a regular basis. 

FRAN KELLY: Our guest is the federal Trade Minister Steve Ciobo. Speaking about constantly changing, this all started with Donald Trump's move to slap a 25 per cent tariff on steel and 10 per cent tariff on aluminium. Our government mounted an all out offensive to win an all-out exemption, which we did. But it now turns out that exemption, if I'm correct, was only temporary and will expire on the 1st of May. Were you aware at the time that the victory was temporary, or is that your understanding even?

STEVEN CIOBO: Well I think it's important to unpack this a little bit. The first thing is that it is not a situation where the United States can put in place a whole bunch of different instruments for different countries at different points in time. What you have is the operation of U.S. law. The proclamation was delivered by the White House. Everyone saw that. It was indicated at that stage that it would be to enable countries to make the case to the U.S. Government up until the 1st of May. Australia has consistently done that. The Prime Minister's done that. He's secured an agreement with the U.S. President that Australia will be exempt, and that continues to be the case. 

FRAN KELLY: So, we still have to make the case up until the 1st of May, but it is your understanding, or were you given any assurances from Washington, that it will be a permanent exemption? 

STEVEN CIOBO: Well, Fran, the simple fact of the matter is, is, and you've heard the President himself and others make this remark repeatedly. They are after other countries, having a more reciprocal and fair trade arrangement with the U.S. In most cases the U.S. runs a trade deficit, which is a key measure that the U.S. Administration often refers to, runs a trade deficit with the U.S. Or I should say the U.S. runs a trade deficit with them. In Australia's case it's the opposite. We run a trade deficit with the U.S. They have a surplus with us. What that basically means is we buy more off them than they buy off us. And there's reasons for that. I mean one of the reasons, for example, is that we buy Boeing aircraft, and we need Boeing aircraft, capital intensive, you know? Expensive pieces of items. And we need those to power our tourism industry. We need Boeing aircraft to power the belly freight that goes inside that exports great clean and green produce to you know, Asian markets-

FRAN KELLY: But are you saying that because of that, because we don't run a trade surplus, we run a trade deficit, that we will get this permanent exemption, that it won't be conditional? 

STEVEN CIOBO: Well that's the agreement that the President and the Prime Minister have. And it's also, though, goes to my point, which is that it would be hard to imagine a situation where you could actually have a better arrangement between Australia and The United States than exists now. 

FRAN KELLY: And just, before I leave this topic, what about talking quotas rather than tariffs, because the U.S., some are openly saying that they're concerned. For instance, if Australia is exempt it could be used as backdoor entry point to America by non-exempt countries. Do we need to be concerned about quotas being slapped on our steel exports?

STEVEN CIOBO: Well certainly they believe that there's a possibility for Australia to be used as a transhipment port. There's a number of reasons for that. I mean we have in effect a very strong anti-dumping regime in Australia. The Coalition strengthened the Anti-Dumping Commission, which is the agency tasked with responsibility for making sure that product isn't dumped into Australia. So we strengthened the Anti-Dumping Commission a year or two ago. Now, they operate to put in place a range of different measures to counteract dumping. There's something like 75, give or take, that are in effect. More than 50 of them are in relation to steel products. So the notion that a country would export to Australia, and then trans-ship through Australia back into another country, ie, the United States, doesn't make any sense to me, when we have in place a whole range of anti-dumping initiatives already. 

FRAN KELLY: ​Minister, can we talk about coal? Because it's again causing discord within the Coalition. You've said in the past that there is, quote, ‘merit in assessing’ the push by some of your colleagues to have the Government build a $4 billion coal-fired power station in Latrobe Valley, so it's having, quote, ‘a cold hard look at’. The Treasurer's done that, and Scott Morrison slapped it down, saying building a high efficiency coal power station would not mean cheaper energy. Is that the end of the story? Taxpayers’ money should not be wasted on new generators, which would take years to build, and wouldn't ease the squeeze. 

STEVEN CIOBO: I think ultimately what matters is, what is going to be the policy approach that delivers more reliable and cheaper energy for Australians into the future? That's what occupies my mind, it's what occupies the mind of the Prime Minister and the Cabinet, and the Government is focused on delivering more reliable and cheaper energy to service the needs of Australians and Australian industry.

FRAN KELLY: ​And a large number of your backbench are coming out now and saying, well the way to do that is coal. The Treasurer, Scott Morrison, says building new coal-fired power stations, and there've been explicit calls from that from the backbench, here on this program, and other places, is not the way to do it. Do you accept that, that it is not a good idea to build a new coal-fired power station?

STEVEN CIOBO: I think, ultimately, what matters is the way in which the market is responding to this, because we need capital and the market to operate in an efficient way. Now it may be that a HELE plant, a high-efficiency, low-emissions plant produces energy at a more expensive cost-per-megawatt hour basis, than different forms of energy. And if that's the case then the market will indicate that. We'll get advice to that effect, and I think to some extent that's what the Treasurer was making reference to yesterday.

FRAN KELLY: ​But you're still saying it's worth a cold-hard look, to take a cold-hard look at building a new power station? 

STEVEN CIOBO: Well I don't think it ever hurts for us to look at different ideas and assess different ideas and effectively take them on their merits. That is, make a cold-hard analysis of what is worthwhile and what is not worthwhile. Now it may be that when you do the desktop due diligence exercise, for example, that this proves to be a non-starter. Well, okay, if that's the case that's the case.


STEVEN CIOBO: What matters though, Fran, as I said, and what I think Australians are looking for, is strong national leadership that produces more reliable energy, and cheaper energy. And the contrast, Frankly, that they will have at the forthcoming election in 12 or 15 months time will be a radically different approach than two forms of industry, energy policy. One from the Coalition and one from the Labor Party, and I think that Australians will have a very clear choice. 

FRAN KELLY: ​Okay. Tony Abbot will spend Monday, which is the day we'll also get that 30th negative news poll almost certainly, that day in Latrobe Valley on a pollie-pedal. Why shouldn't that be seen as a challenge to the Prime Minister's authority? 

STEVEN CIOBO: ​Fran, I think the media get very excited over all of these things-

FRAN KELLY: You don't think that's premeditated? Calculated –

STEVEN CIOBO: I think if he's on a push bike, riding through, you know, there’s claim's made, he's doing it for a particular reason, if he wasn't, if he was sitting behind his desk there'd be counterclaims made for a different reason. I think everyone just needs to have a glass of water and calm down about these sorts of things.

FRAN KELLY: Okay. Just before I let you go, your home base is the Gold Coast, which is of course, the venue for the Commonwealth Games. What's the level of excitement like there?

STEVEN CIOBO: Look, it's been terrific, and last night's opening ceremony was superb. It really put the Gold Coast and Australia on the global map. I think an estimated TV audience of something like 1.5 billion, and in true Queensland style, Fran, we had the absolutely torrential downpour, which I think must've stopped at about 7:59 and 59 seconds, because smack bang on 8 o'clock the skies parted, it was-

FRAN KELLY: That's great.

STEVEN CIOBO: It was a clear evening, and the performance went on, it was great.

FRAN KELLY: That's great. May the blue skies continue. Steve Ciobo, thank you very much for joining us.

STEVEN CIOBO: Good to be with you.

FRAN KELLY: ​Steve Ciobo is the Minister for Trade and Tourism, joining us there from the Gold Coast.

Media enquiries

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