• Transcript, E&OE
Topics: New Trade Agreement with UK, coronavirus impact on trade with China.
31 January 2020

David Penberthy: The Federal Trade Minister in Australia and South Australian Senator, Simon Birmingham, has been listening in. Minister,

Simon Birmingham: Good morning guys, go to be with you.

David Penberthy: So our component of this now is negotiating a brand new trade agreement, I guess, with the UK. I’d put to you the same question I put to Vincent McAviney about the deal they’re going to have to negotiate with the EU. Is it going to be fairly straightforward given that we’ve been a party to a deal up until this day?

Simon Birmingham: Look, I think we will have relatively straightforward negotiations, Dave. So obviously, up until now for the last 48 years the UK have potentially handed all responsibility of trade policy over to the EU and been running out of Brussels. Now they’re on their own, at least from 1 January next year and they’ve got this interim period up till then. And our ambition is to try to strike a deal before they hit that interim period and in doing so what we want to see is that many of the tariffs, the quotas — essentially the taxes and the limits on amounts that Australia exports the we can get into the UK — are eliminated as much as possible and that we make it a much more open market as it used to be for Australian produce before they went into the EU.

David Penberthy: So what are the, what are the industries that are likely to benefit the most from this, Minister? I was reading this morning I think wine- alcohol is our biggest export to the UK, isn’t it?

Simon Birmingham: So Australian wine accounts for one in every five bottles of wine sold in the UK, and that’s despite the fact that a tariff, a tax, applies on Australian wine but currently it doesn’t apply to French or Spanish, German or Portuguese wines for example out of the EU — so there’s a real opportunity there for our wine makers to, if not increase volume, hopefully at least to increase margin and profitability in the UK market. But elsewhere again, what we’ve seen while they’ve been in the EU is that with commodities like wheat or high value meats in beef and sheep meat, what we’re seeing with grain is a huge collapse in terms of Australian volumes of products going into the UK market — a virtual elimination, more than 90 per cent of what we sent pre-1972, now is not sent. Now, some of that is that Australia’s opened up new markets closer to home and that means we may never return those trade volumes with the UK but certainly, especially with branded high value meats that we produce nowadays you would hope there’s a real opportunity to get that beef onto British shelves.

David Penberthy: Now Minister, at the other end of the continent — not the European end, but the Asian end — I was reading the other day the Chinese, as part of a trade dramas with the US — have imposed, I think, 105 per cent tariff on American wine which is triple the cost of vino from the Napa Valley and all that. Have you got any intelligence about whether that’s having or is likely to have any positive benefits for the South Australian wine industry in China?

Simon Birmingham: There probably has been, but as a result of the trade deal that the US and China have struck we expect some of those tariffs to return to a more normal level. We probably still enjoy an advantage over that because of the China-Australia Free Trade Agreement that our government negotiated. So our winemakers get a better deal than US will, even under the terms that they negotiated. But the pressure point that we’re seeing in the China market, certainly at present is of course that Chinese consumers aren’t going out. So we know our seafood industry is doing it really tough right now because they seem to be just in time, exporters of fresh seafood over to China, and I would expect that will flow through into a slowdown in wine sales in China — at least for the first part of this year and who knows how long, depending on how long the coronavirus crisis lasts.

David Penberthy: And just quickly finally, and somewhat cheekily — 4pm. Friday is normally the time when troublesome ministers shuffle off into the night. Do you think we’ll be seeing the press release today about Bridget McKenzie?

Simon Birmingham: I do not know when the Secretary of the Prime Minister and Cabinet will down its report and I wouldn’t want to politicize his independent process. So, he’ll do it when, when it’s done.

David Penberthy: Straight bat as always. Senator Simon Birmingham, the Federal Trade Minister, thanks so much for joining us this morning.

Simon Birmingham: Thanks guys. My pleasure.