BECKY QUINN: Joining us right now to weigh in is one of the big players in this game. Steve Ciobo is Australia's Minister of Trade, Tourism, and Investment. And Minister Ciobo, thank you for being here today.
STEVEN CIOBO: Good to be with you.
BECKY QUINN: Let's talk about how things have changed over the last year and a half or so. It's not just the United States, but a lot of different nations, that are looking at things a little differently.
STEVEN CIOBO: Sure.
BECKY QUINN: But certainly the United States is kind of leading the way in terms of trying to change trade policies that have been in place for years. What do you think about all of this?
STEVEN CIOBO: Well, I mean we are, we're seeing what I would call some headwinds on the trade environment. Australia has been very focused on making sure we continue to open up trade opportunities, and perhaps that's best exemplified by the fact that we pushed ahead with the Trans-Pacific Partnership, the TPP-11. We've done that deal now, and that will hopefully come into effect at the start of next year. But in terms of US policy, President Trump's been pretty clear now for quite some time about the recalibration that's taking place, and his strong desire to reign in the trade deficit. You know, we understand that, there's some policy differences in terms of Australia's approach to the US approach, but we've been good and pragmatic friends for a long time. I've got a great relationship with USTR Lighthizer and we'll continue to work through it.
BECKY QUINN: President Trump hinted, or at least - he actually said outright that he was considering TPP, trying to get back into it, when we were with him at Davos. There's been a lot of hopes around that but that situation looks a little bleaker after some Tweets last week. What can you tell us about this? Have there been talks between the United States and the other TPP nations? What do you think might happen?
STEVEN CIOBO: I think at its core, the challenge, and the President you know, said before the election, that one of the first things he would do would be to withdraw from the TPP.
BECKY QUINN: To be fair, the other candidates said the same thing.
STEVEN CIOBO: Yep, Sure. And so when that happened, we were disappointed, but we weren't surprised, because it followed through on a pre-election commitment. The challenge is, though, that given the 11 of us have expended a lot of time, effort, and energy to make sure that we can do the deal and lock it in, we're not now going to be able to renegotiate big chunks of the text. I mean the market access where it’s goods, services, investment, all of that is in place. It's a really comprehensive deal. There's a lot of other ancillary issues that are sort of incorporated in the TPP-11 as well, so you know, there's a lot of momentum. We want to get it done. We want to make sure that we can have this come into effect as soon as possible. So ultimately, that won’t be put on pause to have the US come in.
BECKY QUINN: Does that mean that you and the other 10 nations in TPP automatically get drawn a little closer into the Chinese orbit, that they become closer with you?
STEVEN CIOBO: Look, not at all. And I've made the point, we would love for the US to come back into the TPP-11. That would be terrific, and I'll say it repeatedly, because especially from Australia's perspective, but also more broadly, we think that there's a lot of benefit for the US, and indeed for all of the countries, if the US is at the table. But my observation is simply to say that there's not an appetite, and I know, from speaking with my colleagues in the TPP-11 countries, there's not an appetite to renegotiate vast tracts of text, because that will take a long time to do.
BECKY QUINN: Meaning take it or leave it to the United States.
STEVEN CIOBO: Well, I mean, the deal is what the deal is as it is agreed now, and my point is simply, it would be a new deal if we started renegotiating all aspects of it, and that would take a long time, and you know, there's not an appetite to do it.
BECKY QUINN: So back to my question about China, because those who here in the United States have been in favour of TPP have said that we need to do this in order to ensure that those 11 nations don't wind up in China's orbit, that they don't become closer with China, that this is kind of a bulwark against China in the region, and are entering into it. Is that the case or not?
STEVEN CIOBO: No, it's not, and I think it's a false construct. It's not that binary. It's not a case of, you either trade with the USA or you trade with China. I mean that the fact is that in Australia's case, for example, China is our largest trading partner. We do about $175 billion worth of two-way trade with China. We run a trade surplus with China. But you know, we've been strong allies.
BECKY QUINN: You run a surplus with China?
STEVEN CIOBO: Yeah, sure. And we run a trade deficit with the United States. And the reason we run a trade deficit with the US is because we buy Caterpillar equipment, and we buy Boeing aircraft, and that powers exports for us, in terms of our resources industry and our tourism industry. So I don't get too, personally, too caught up on the deficit surplus scale, because what matters is the composition of your trade, and what you're able to achieve overall. But you know, look, there's strategic benefit if the US wants to come back to the table around the TPP-11, but you know what, I think a lot of this is academic now. The President's made his position, I think, quite clear. All I can say is, the TPP-11, we'll want to press ahead with it. We want the deal to come into effect, and we would welcome the US to come back, but ultimately, that's a decision for the US.
ANDREW R SORKIN: Does that imply, you said Caterpillar equipment and such, that you have a goods-based deficit with the United States on trade? In other words, just focused on goods versus services, than something the Trump Administration-
STEVEN CIOBO: Yes we do, but by the same token, if you look at the Australian economy, and it's like this with most developed countries, 75 per cent of our economy is services-based, but services exports only account for nearly 22 per cent of our exports. So I see services exports as being the real growth industry for Australia, and where we're putting a lot of focus and emphasis, which of course gets back to things like tourism and education in particular. We can do a lot in that space, but that’s at the core of – you know, we have the most active trade agenda in Australia's history right now, and at the core of that is what we should do on the services side, as well as our traditional strengths in resources, energy, those types of things.
BECKY QUINN: So what would you like to be telling the United States right now? If TPP looks like that ship has sailed, doesn’t look like that's going to be something that happens, where do we kind of have common agreements, and where would you like to improve the relationship?
STEVEN CIOBO: Well, the relationship with the US is really strong, so I'll make that plain. And we've had a free trade agreement bilateral FTA with the US for over a decade. That relationship is strong. Ultimately, from Australia's perspective, we want to avoid at all costs, there's an opportunity where you may have action and retaliation in relation to trade.
BECKY QUINN: Is Australia going to be permanently exempted from some of these tariffs that have been mentioned recently?
STEVEN CIOBO: Well that's the deal that's been reached between the Prime Minister and the President, yes, so obviously we're watching May 1 as it rolls around, and what happens in terms of the exemptions. We recognise that the US Administration has got to make, put in place policy tools that reflect, you know, what they're doing with all countries, not just Australia in isolation. But having that agreement reached between the Prime Minister and the President, we're working closely with the US Administration on actually what that looks like.
BECKY QUINN: If China is your biggest trading partner, are there repercussions? Are there waves that you feel, when these negotiations between China and the United States get so tense?
STEVEN CIOBO: Well, it's not just confined to China. I mean, these are implications that are global in context. I look at, for example, some of the discussions between the USA and Europe. I look at the discussions that are taking place between the USA and China, or I look at the discussions between the USA and Canada or Mexico as part of NAFTA. From my perspective, as I said, they're are some headwinds in the trade space at the moment. As Australia's Trade Minister, the best thing I can do to help mitigate against downside risk is to ensure that we continue to diversify. And that's precisely the reason why we’ve really pushed - we're really forward-leaning on the most active trade agenda. I've got trade negotiations either underway or shortly to commence with the European Union, with the UK, with Hong Kong, with Indonesia, with the Pacific Alliance Countries, with Mexico, Columbia, Chile, and Peru, so you know, that speaks to a huge appetite to diversify as much as we can.
BECKY QUINN: Which are the trickiest of those negotiations?
STEVEN CIOBO: They're all tricky. These are always fraught with challenges. The hardest thing, I think, is to get the kind of quality deal that you want, which does produce a win-win outcome. One of the biggest narratives on trade, especially in terms of Joe Public, is they'll often view it as a win-lose. One side wins, one side loses. And it's just actually changing the narrative around that, to highlight that it's win-win outcomes that we're after.
BECKY QUINN: Is it fair to say, when you say you're looking to diversify with all of these different instances, is that because you don't think you can count on the United States down the road?
STEVEN CIOBO: Well, it’s not a reflection of the US, it's just about diversification mitigates risk. We need to ensure that we continue to open our export opportunities for Australian business, whether it's goods, whether it's traditional strengths, resources, energy, or what we're doing now in services. The more that we can open up the export markets, and you know we've seen this - we've just concluded the high quality FTAs with China, with Japan and Korea, and Singapore, for example, we've seen off the back of that a huge surge in export growth from Australia. And that's helping to drive our economic growth, and it's also driving, of course, a job surge in our country as well.
BECKY QUINN: Minister Ciobo, I want to thank you for your time today. Appreciate it.
STEVEN CIOBO: Good to be with you.
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