Topics: Trade disputes between Australia and China, carbon emissions and trade, Mathias Cormann’s candidacy to lead the OECD, the Foreign Relations Bill



David Speers: Simon Birmingham, welcome to the program. Why do you think China has done this to Australian wine exporters?

Simon Birmingham: Well, David, this is one of a number of actions that we have seen now. There’s a cumulative effect dating back over quite a period of time, indeed, going potentially all the way back a couple of years ago when China instigated its investigation into the barley industry that led to anti-dumping duties being applied there and a range of other adverse decisions. So I can well and truly understand why the perception is growing, particularly off the back of the remarks that China’s ambassador made in Australia earlier this year, that there are other factors driving this, beyond those claims of dumping or the like, that China makes. Because we know that Australia’s wine producers, far from dumping their product in China, actually get their best price per litre in the Chinese market compared with any of their other export markets. We are a high priced wine exporter into China and our wine producers do this, an incredibly good job in terms of

providing high quality high value wine at an entirely commercial level. And that’s why we will stand with them in fighting these claims of dumping.

David Speers: So if there are other factors at play here, as you say, what are those factors? Are you going to call this out?

Simon Birmingham: David, we do see a much more aggressive or assertive China in terms of the way it engages with the world. Now, Australia welcomes the fact that China is more economically prosperous, the Prime Minister made that clear again just in the last week, that we are very welcoming of the fact that China has grown enormously as an economy, lifted hundreds of millions of people in their own country and across our region out of poverty. This is good news, and unlike other parts of the world, we want to see China continue to grow and economically prosper. But we also want to make sure that across our region all nations engage in a way that is respectful of the sovereignty of one another and supports and underpins the peaceful

development and prosperity of our region.

David Speers: Sure, we accept that’s the Australian position. But what’s going on here from China? They’ve hit our barley, our beef, our lobsters, our timber, our coal, now our wine. What are these other factors? Is this economic coercion?

Simon Birmingham: Look, it’s a matter for Chinese authorities to explain what is driving this. The fact that we see such a consistent flow of events, means that I well and truly understand that perception and that understanding that is taking hold, not just in Australia but around the world. And this is why I would urge Chinese authorities…

David Speers: But is this your perception? Sorry to jump in, I’m just wanting to come back to this question. Is it your view now this is economic coercion from China? Will you call it for what it is?

Simon Birmingham: David, I think right around the world people are posing that question, and I understand

absolutely why. It really is, though, a matter for Chinese authorities to speak plainly and clearly about what it is that is driving this consistent trend of actions that are disrupting Australia’s trade.

David Speers: Will you speak plainly and clearly as to how you view this?

Simon Birmingham: David, I view this as something that we want to resolve, so I’m not going to escalate it in my language. I am going to work as hard as we can to resolve it. Australia has not changed. Australia is still a nation that supports the free flow of trade and goods according to the international rules and norms that not only we have committed to, but China has committed to as well. We support the flow of foreign investment into our country on the same terms, as long as it’s in the national interest, as we always have. We’re not going to change any of those things, and we have not changed. We do see, though, the fact that China, with the welcome rise of its economy, has also become more assertive in other ways and what we want to see is that assertiveness channelled into good, into engaging in ways with the rest of the world, that helps to drive economic growth rather than dampens it. These types of actions don’t just hurt Australian businesses, they hurt their Chinese counterparts as well. They undermine confidence in the global economy and that’s not good for the world’s recovery from COVID, not just our own.

David Speers: When you were on this program six months ago, I asked if you’d mounted this bid through the World Trade Organisation against China, that was in relation to barley. You said you would have a look at it. Are you still thinking about it now? Will you finally take China to the World Trade Organisation?

Simon Birmingham: That is now a point that we are actively discussing and resolving with industry representatives. In the interim, we had to go through a period, or we chose to go through a period of using

China’s domestic processes. There was an appeal mechanism that we could apply and out of respect for those processes we sought to engage in good faith. Again, we’re disappointed at the fact that all of the evidence, compelling as we are confident it is, was rejected by the Chinese authorities and that appeal was unsuccessful. So now the WTO appeal for barley is the next step. We are engaging there with the grains industry and other sectors to make sure we have strong industry buy-in and support before we launch…

David Speers: What do they say? Does the barley industry want you to lodge this case?

Simon Birmingham: There are different opinions, to be quite frank, there. But, on the whole, Australia stands by the rules-based system for international trade. If you stand by the rules-based system, you should also use that rules-based system, which includes calling out where you think the rules have been broken and calling in the international umpire to help resolve those disputes…

David Speers: That sounds like an argument for doing it.

Simon Birmingham: And I expect that that is the process that we will go through with, David, as we have said right from the moment that decision was handed down. We reserved our right to go through that.

David Speers: You expect you will go ahead with this case?

Simon Birmingham: I expect that will be the outcome, but we’re working through just exactly how, when, and making sure we have all of the evidence lined up. Just in the last week, through the Trading Goods Committee at the World Trade Organisation, Australian outlined quite seriously our range of concerns that we have in terms of this accumulation of instances from China of adverse trade decisions against Australia. We do see those as a very concerning development, as I said. And we are calling them out through the WTO, whilst also still using all of those processes in the Chinese system to try to resolve them. But ultimately,

these are Chinese decisions, China has chosen to apply them on Australia, and only China can choose to reverse them.

David Speers: Just to be clear, though, you’re talking about barley the case would be in relation to, not wine?

Simon Birmingham: The wine dispute, this is an interim application of tariffs at the very early stage of the anti-dumping investigations, so we still have parts of that Chinese process that we have to work through before we get to the point of a WTO dispute there.

David Speers: Okay. Can I just, in response to- We heard from one wine maker earlier this view that the Australian Government has gone too hard on some fronts, like calling for the inquiry into the coronavirus origins. Even in the last week or so, overselling a reciprocal access agreement, defence agreement with Japan as some, something more than it is. What do you say to that criticism that perhaps Australia’s rhetoric and, indeed, actions, has been over the top?

Simon Birmingham: Well, take the reciprocal access agreement with Japan as an example. That had been something we’ve been negotiating for many years. So the fact that it has come to a point of finality right now shouldn’t be read into these issues. Because it is something that Australia has been working on with a close partner like Japan for a very long period of time. It’s a little over a week ago that we saw the apparent circulation of a list of some 14 concerns by, allegedly, the Chinese Embassy in Canberra. Firstly, I would say that’s certainly not the way our embassy in Beijing operates. Secondly, I would make the point that topics on that, like the way we handle foreign investment, or the way we protect our communications or security infrastructure and our national security policy settings, these aren’t things that we will change for any country in the world. These are things that we have consistently applied as a nation. I emphasise again, Australia hasn’t changed there. We still welcome foreign investment and we still welcome and have an open rules-based trade approach to things. It is other nations who changed their approach, or in this case particularly the way China is disrupting that trade.

David Speers: On another trade front, you will soon wrap up in the portfolio, so, keen for your thoughts on a shift that’s happening globally when it comes to trade. Europe is now drafting a policy for a carbon border tax on imports. It will be finalised next year. Certainly, Joe Biden in the United States has signalled a similar approach to punish climate laggards through trade means. If Australia doesn’t embrace a net zero by 2050 target, are we ultimately going to be punished? Are our exporters going to pay a price?

Simon Birmingham: I think Australia’s actually very well-placed in these discussions, David. Just in the last week, Prime Minister Morrison had leaders-level dialogue with the leaders of the European Union, that was a very positive engagement. It helped to advance further our free trade agreement negotiations with Europe. We talked about the opportunities for climate change collaboration there, particularly in relation to technology collaboration. But in terms of measures that might assess how Australia stacks up in terms of our reductions of emissions, we stack up very well. We’ve reduced emissions by levels greater than Canada or New Zealand, for example. We’ve actually gotten on with the job of meeting and exceeding our commitments that we’ve made. And we also…

David Speers:  But do you think failing to agree to this net zero target by 2050 will ultimately cost Australia?

Simon Birmingham: Well, I think that the Prime Minister’s been clear and indeed he made this clear in discussions with the EU, that we want to see net zero as soon as possible. That’s what we are striving towards. That could be earlier than 2050. What we have to do is make sure we all have a clear plan on how to get there, how to deliver the technologies that get you there…

David Speers: Yeah but we haven’t set the target, that’s the point. Sorry, but the point I’m trying to make, I think everyone understands that we haven’t set the target. Do you agree with that? Do you think we should set that target?

Simon Birmingham: David, we’ve set a 2030 target and we’ve committed to the Paris Agreement that also commits us to setting targets every five years…

David Speers:  But I’m asking you about the net zero by 2050 target, Minister.

Simon Birmingham: But I’m just telling you what we have done. In that Paris Agreement, committed to net zero by the second half of the century. We have said we want to do it as early as possible. You’ve asked me in a trade context what that means. In a trade context, what I see is that Australia is very, very well placed in our engagement with other countries because of the scale of our investment, the record levels of renewables energy uptake in Australia, the fact that our reductions in emissions in Australia exceed many other countries, and our achievement in relation to delivering on Kyoto 1 and Kyoto 2 and what we will do in relation to the

Paris Agreement as well.

David Speers: Now, as Finance Minister let me ask you about your predecessor Mathias Cormann. How much has the Government committed to supporting his bid to become Secretary-General of the OECD?

Simon Birmingham: We have stood up in the Department of Foreign Affairs and Trade a central unit that helps to run our candidacies, that helps to ensure that when Australia puts figures forward for key roles in the world, we do it with the commitment to win and succeed. That recently helped secure Natasha Stott-Despoja a win in terms of the Committee for the Elimination of Domestic Violence against Women, an important win in that regard. In terms of the OECD, we’re in it to win it as well. Australia is the 13th largest economy in the world, we ought to be playing on the world stage in a serious way. The OECD…

David Speers:  And I’ll come to that, what the job would mean. But one bit you left out is the RAAF flight that’s been made available to him to jet around Europe. I mean, how long’s he got that for? And coming back to the question I asked: how much has been committed to this?

Simon Birmingham: Well, David, I was outlining that. There’s personnel in a standing unit that is there within the Department of Foreign Affairs and Trade to support these types of candidacies. Yes, we deployed a RAAF flight for Mathias Cormann to be able to access the various members of the OECD. There are ten candidates running for this, 7 of those 10 candidates are from Europe. Mathias is the only candidate from the Southern Hemisphere. He’s the only candidate from the Asia-Pacific region. In fact, the OECD has never been led by a candidate from the Asia-Pacific region. We believe…

David Speers: So what do we get out of it? What does Australia benefit here if- we already have an ambassador to the OECD, they’re the ones who make the decisions. What’s the benefit for Australia of having the Secretary-General an Australian?

Simon Birmingham: The Secretary-General helps to set and drive the leadership and strategic direction of the OECD. The OECD brings together 50 per cent of the world’s economies, roughly. Those economies are liberal democracies like Australia, and at a time of the post COVID recovery, at a time of the type of tensions and geo-political challenges that our region, the most dynamic region in the world, but also the one with the greatest strategic challenges in the world at present, ought to be taking on leadership roles. That’s why we think that given the Asia-Pacific has never led the OECD before, this is the opportunity for us to shape its direction in the future. The OECD helps to shape policies right across the globe through all of those economies. It’s work in terms of tax policies, environmental policies, a range of different measures that help to provide analysis and standards that inform the budgets and approaches that global leaders take. It can work as the policy machine for the G20. Are all crucial roles, and Mathias Cormann is very well placed to make sure our nation’s interests and our region’s challenges are well understood in those policy settings.

David Speers: Just to be clear, you don’t know how much has been committed here?

Simon Birmingham: It’s a mixture, David, so it is partly the resourcing of personnel.

David Speers: What’s the total cost?

Simon Birmingham: David, all of that will be made clear through the usual processes. There’s no secret about the fact that there is a plane in Europe. That’s well known. That will be published and reported by the Department of Defence in the usual way.

David Speers: All right, so you don’t know right now?

Simon Birmingham: I think it’s a very small Australia attitude if you’re questioning the relevance…

David Speers:  No, I’m just asking on behalf of taxpayers what this costs. We hear the Prime Minister shocked and appalled about watches at Australia Post. I’m just wondering what the cost is here. You don’t know?

Simon Birmingham: And when we contest these races we should be in it to win it. There’s no point in putting an Australian candidate forward and then running a half-baked campaign. We’re running a proper campaign because we believe that the influence of this position in the OECD is important in terms of the future policy settings for the post-COVID recovery.

David Speers: Okay. Final one, it’s the last couple of weeks of parliament coming up. You’re now the Government’s Senate leader as well. One of the Bills that is expected to go through is the Foreign Relations Bill. It gives the Commonwealth the power to veto, to terminate state government or university agreements with foreign powers. One of the concerns Labor has is whether you’ll publish the reasons for terminating an agreement. Is that fair enough? Will you do that?

Simon Birmingham: David, the Foreign Minister, Senator Payne, has been working through the responses to the inquiry that was held. We are looking to get bipartisan support in relation to the passage of this. We see it very much like the way in which the Treasurer assesses foreign investments against the national interest, that equally, there ought to be a similar type of standard that when states, territories or other bodies want to engage with foreign powers and foreign governments, there ought to be a role for the Foreign Minister in leading Australia’s foreign policy, to be able to ensure that those sorts of agreements are in the national interest. Of course, the Foreign Minister is always subject to the scrutiny of the Parliament, of Senate Estimates, of all of those processes. So there’s plenty of avenues to scrutinise the decisions in the future.

David Speers: All right. Finance Minister, Trade Minister, Tourism Minister Simon Birmingham. Thanks very much for joining us this morning.

Simon Birmingham: Thank you, David, my pleasure.