Hamish Macdonald: Well, the US President Donald Trump has lauded the closeness of the Australia-US alliance during a dinner with the Prime Minister on the eve of the G20 Summit at the Japanese city of Osaka. But Scott Morrison took advantage of that close and candid relationship to tell President Trump and his senior advisers about the effect the US trade war with China is having on the rest of the world, including, of course, Australia, particularly when it comes to trade. And when reporters asked the President whether he realised the impact his America First strategy is having, he gave this response:

[Excerpt]

Donald Trump: Yeah, well I think I can say very easily that we've been very good to our allies. We work with our allies, we take care of our allies. We generally speaking, I've inherited massive trade deficits with our allies and we even help our allies militarily. So, we do look at ourselves and we look at ourselves, I think, more positively than ever before. But we also look at our allies, and I think Australia is a good example. We've worked together very closely. Just recently on a big trade situation, and we had a little bit of a trade deal going and worked out very well for both of us.

[End of excerpt]

Hamish Macdonald: Well that is the US President Donald Trump speaking there. The Trade Minister Simon Birmingham was at that dinner with the President. He joins us on the line from Osaka. Welcome back to Breakfast.

Simon Birmingham: Good morning, Hamish, good to be with you.

Hamish Macdonald: We heard President Trump offering reassurance that Australia, that America does look after its allies. What precisely did the Prime Minister tell him about how this trade war is hurting Australia?

Simon Birmingham: Hamish, you won't be surprised to know, I'm not going to go through verbatim everything that the Prime Minister said. The Prime Minister, of course, reflected remarks that were entirely consistent with the speech he gave in Australia prior to departing for the G20 about the fact that we believe that engagement across our region, as well as engaging in a positive sense around trade-related issues, is critical for the future prosperity of the world, of all countries. That nobody wins from a trade war. That's been Australia's consistent public position for a long time, and we really do continue to urge parties to work together to try to resolve their differences wherever possible. But this was a very positive, a very positive catch up between the President and Prime Minister Morrison. It was the first opportunity, really, the Prime Minister Morrison has had to have a lengthy conversation with President Trump and to discuss a whole range of issues. So obviously, they seized that opportunity and canvassed the depth and breadth of our longstanding relationship with the United States, as well as a lot of other regional issues.

Hamish Macdonald: Sure. I mean, I'm not asking for a verbatim account, but, I mean, the Prime Minister is there representing Australians, and I think it's fair to ask for some sense of how he has explained the impact of this trade war on Australia.

Simon Birmingham: And Hamish, as I said, the Prime Minister's comments in his meetings here in Japan so far - with Prime Minister Abe from Japan, President Trump from the United States - are consistent with the speech that he gave outlining Australia's concern. The reality, as I said before, that the impact of an ongoing trade war on the global economy is that it dampens global economic growth. The impact of it therefore on Australia and other nations is that it can dampen our economic growth, and that's not something we wish to see. We want to, of course, see the issues that are underlying that trade tension resolved. Issues that sit there such as the way in which fast growing economies acknowledge and accept their roles as new great powers.

And I guess that was the speech the Prime Minister made, talking about the responsibilities of great powers. The United States has been a great power for a long time, since the post-World War Two era, building the type of global institutions that we have. China has risen as a great power in more recent times, and with that comes more responsibilities for China as well, to recognise that their role in global affairs is not just their own interests but to make sure they recognise the impact of their decisions on others and that's a message for both big nations.

Hamish Macdonald: On that point you're making about global growth, the latest figures show annual GDP growth fell from 2.4 per cent in Australia to 1.8 per cent in the March quarter. How much of that decline can be attributed to this trade war in your view?

Simon Birmingham: Hamish, I'm not going to do my own economic analysis there but we've seen from the IMF and the OECD that they have acknowledged that there is now an anticipated lower rate of growth in global trade. It has been downgraded by a few points in terms of the expected rates of growth there and as that flows through in terms of the impact on global economic growth.

Now, of course, there are always in those circumstances that potential short or medium term opportunities, which I have acknowledged before, that if you have nations shifting their supply from one purchasing nation to another then potentially Australia may be able to fill some of those voids but it has caused that broader global impact on economic growth.

Hamish Macdonald: But I mean I'm sure the Australian listening population wants to understand precisely what the implications are of this situation. I mean you're making great play of the fact that Australia has a good relationship with America, you're able to make a case to the US President and also to some members of the Chinese leadership about the need for some kind of agreement here to bring it to an end. But I'm not clear on what you're saying the impact is on Australia given that you won't really engage with this question about our GDP growth in the context of what you're saying the global implications of the trade war are.

Simon Birmingham: Well Hamish, our GDP growth we would expect would be a little bit faster into the future if you didn't have these type of trade tensions occurring. These trade tensions have been known for some time, they've been built into the budget projections around growth that were released in the budget before the election earlier this year. But the corollary I guess is that if you didn't have the global trade tensions then you would expect to see slightly faster economic growth in Australia and in other parts of the world.

So, you know, that's why we urge these nations to not worsen the situation in terms of the trade tensions. But if we were to see a doubling down on the application of higher tariffs against one another, a further lack of cooperation in different ways, well then that may have further impacts into the future. But what we have assessed to date is reflected in the budget projections that show Australia will continue to grow but not as fast as we could grow if you didn't have these types of trade tensions occurring.

Hamish Macdonald: Notwithstanding the worries that you might have about possible tariffs on aluminium imports for Australia, do you come away from this dinner with any sort of substantial optimism about an end to this situation between the United States and China? I mean do you see tangible off ramps as it were for these great powers?

Simon Birmingham: I come away certainly encouraged and positive about the Australia - United States relationship, long and deep that it is (Indistinct)

Hamish Macdonald: Sure. But that's not the question.

Simon Birmingham: … for us to continue to cooperate. I was about to, in terms of the trade tensions between the United States and China, these are clearly difficult issues to resolve between the two. They don't just go to the volume of trade that extends between the US and China, they also go to the issues related to the scale of China's development (indistinct)] how China now considers their approach to the rest of the world around the protection of intellectual property and other big factors there.

Now, we've acknowledged, I said in a speech to the Australia-China Business Council earlier this week, that Australia cannot expect to fix the United States - China trade tensions. What we can urge them to do is to try to resolve those tensions and to work through the various issues. And the PM will make that point again today in the plenary session of the G20 which you would expect both President Trump and President Xi to be at.

Hamish Macdonald: The tensions, on other matters, between the US and Iran are escalating. The US Secretary of State, Mike Pompeo, has said the US would welcome new Australian sanctions on Iran. Are we going to oblige?

Simon Birmingham: We continually consider and update our sanctions. We do already have economic sanctions in place in relation to Iran. The situation there is certainly a troubling one. Nobody wants to see how we develop further …

Hamish Macdonald: Sure. Are we entertaining that option though? Let's just be straight about this, are we entertaining that possibility?

Simon Birmingham: Yeah. Yeah. We continually look at whether we can manage to, and to apply those economic sanctions in a different way or a better way, and whether they are fit for purpose. Our belief is that to date the economic sanctions we've put in place are fit for purpose but we're looking closely at what additional steps the United States is taking and whether that mandates or warrants any change in the economic sanctions that we already have in place.

Hamish Macdonald: Alright. And briefly Minister, has the Australian government been able to confirm whether this Australian student Alek Sigley is in fact being detained in North Korea, or indeed what his condition might be?

Simon Birmingham: No Hamish, we have not. We continue to seek clarification about his whereabouts. But the fact that we have not been able to confirm that is a demonstration as to how difficult it is in terms of dealing with North Korea. And that's why our advice to people is to reconsider your need to travel if you are looking at going to North Korea. It is an unpredictable destination to travel to with the circumstances that are well beyond Australia's control in terms of what they may encounter.

We have diplomatic relations with other nations who are helping us in this regard, in particular with Sweden. And so their embassy in North Korea is trying to work with us in our assistance and in the meantime, we provide whatever consular assistance we can to the family, giving them any updates on information or activities to date.

Hamish Macdonald: Simon Birmingham, as always we appreciate your time.

Simon Birmingham: Thank you very much, Hamish.

Ends.

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