Category: Australia

Source: Minister for Trade

Andrew Clennell: The Trade Minister, Don Farrell, joins me now from Adelaide. Don Farrell, thanks for your time. You’re due to talk to the US Trade Ambassador tomorrow.

Minister for Trade: Pleased to be with you.

Andrew Clennell: And you spoke at two o’clock Friday morning to Commerce Secretary Howard Lutnick. How did your chat with Mr Lutnick go and what are you hoping to achieve with Mr Greer?

Minister for Trade: Look, Andrew, I did speak with Commerce Secretary Lutnick. That’s the second contact we’ve had with one another since he just recently was appointed to that position. I obviously expressed my disappointment that we had not been able to reach an agreement over the suspension of tariffs on steel and aluminium. But I did say that there’s obviously a further review, and you’ve talked about some of the issues that potentially arise, that the U.S. Government is undertaking by the early part of April. I indicated to him that we want to continue to talk with them. I find that discussion is the best way to resolve these issues. Not retaliatory tariffs, but discussion. What we need to do, Andrew, is find out what it is that the Americans want in terms of this relationship between Australia and the United States and then make President Trump an offer he can’t refuse.

Andrew Clennell: And did Howard Lutnick give you any indication of what they might be after? Because obviously you offered them some form of critical minerals deal. Did he give any, any ray of light you had a chance? I mean, I think you’ve said that President Trump allowed Australia or the Prime Minister to believe there was a chance when there wasn’t. Has he given you any suggestion there’s a chance, or was he holding the line and saying, look, this is our America First policy, that’s it.

Minister for Trade: Look, it wasn’t a pessimistic conversation, I’m pleased to say, Andrew. but look, he gave, you know, no assurances about what might happen in the next round of negotiations. Our job is to sit down and continue to talk. I think the important thing here to understand, Andrew, is that when President Trump, in his first iteration, gave Australia an exemption to Prime Minister Turnbull, it was one of over 30 exemptions that the United States gave to a range of countries around the world. So, more than 30 countries, including most of our competitors in the American market, were able to get an exemption. On this occasion, not one country, not one country got an exemption on either steel or aluminium. Now, that’s obviously, we think that’s bad news. We think it’s bad news, obviously, for the companies that trade in Australia with the United States. It’s also bad news for the Americans because what that has done is simply pushed up the price of steel and aluminium in the US market and that has to have an impact both on, on inflation and on jobs. So, part of my job is to continue to put the arguments to the Americans that in fact, this is the wrong policy to adopt. We should actually be doing the opposite. We should be making more free trade, more fair trade, rather than less trade.

And of course, one of the things that we’ve done in government is diversify our trading relationship. So, we have new agreements with the United Kingdom, we’ve got new agreements with India. I think we’re just about to get another offer from the Indians to even expand our trading relationship with India. We’ve signed a new agreement with the United Arab Emirates. This is like dealing with the Woolies warehouse of the Middle East. If you can get your products into the United Arab Emirates, then you can get it all around the Middle East. On Tuesday night, I spoke with my Korean counterpart, Mr. Ahn, and we’ve got identical problems with the United States. Of course, they sell a lot more steel into the United States than we do. But we are talking about how we can expand our relationship with Korea so that we can sell more product into Korea.

So, it’s a two-pronged approach. Andrew, we are continuing the discussions with the United States. We’ll continue to discuss. We’re not going down the track of some countries in applying retaliatory tariffs. I don’t think that will work, it hasn’t worked for any other country, why would it work for us? We want to explain our position and we want to get those exemptions for Australian companies because it’s good for prosperity in the United States, but it’s also good for prosperity in Australia.

Andrew Clennell: Well, I think you’ve got Buckley’s chance of arguing free and fair trade to the Trump administration, to be frank Minister, but what’s the worst-case scenario here? What’s the worst-case scenario? $30 billion, our exports to the U.S. Could we lose it all?

Minister for Trade: Look, I don’t believe so, Andrew. And just on that first point you made, Buckley’s chance. When I came to this job three years ago, we had $20 billion worth of trade bans in China. People told me, look, you will never, never, ever get that trade back. At the end of last year, the last of the products that had been subject to those trade impediments, namely crayfish, we got back into China. And since then, in the first month of that new trade, we got $188 million of crayfish sold into China. You can reverse these decisions, Andrew, so, don’t give up on us just yet. You can get countries to realise. You can get countries if you keep talking to them and you keep making your arguments, which is exactly what I intend to do. If you keep making your arguments, you can in fact convince countries that the policies that they are adopting are in fact counterproductive, just as they were with China.

Andrew Clennell: Okay, but what’s the worst-case scenario? What’s the worst-case scenario here?

Minister for Trade: Look, I wish I could tell you exactly what the American Government is finally going to do. To be honest with you, I suspect they don’t even know themselves right now. They’re conducting this review. They’re conducting the review in respect of every single trade agreement they have. It’s not just Australia, it’s every country. And my job in the discussions that go on in this coming week and in the weeks ahead is to get the best result for Australian producers, and that’s what I intend to do. And it’ll only be by reaching out, by having discussions, by putting our point of view that we’re going to get an acceptable outcome here.

Andrew Clennell: In any of these discussions, do you talk about the prospect of a phone call between Prime Minister Albanese and President Trump?

Minister for Trade: Oh, that’s way above my pay grade, I’m afraid, Andrew.

Andrew Clennell: Is it though? Kevin Rudd asks.

Minister for Trade: Well, he’s the ambassador, of course he asks, and that’s the job of the ambassador to do that representation on behalf of the Australian Prime Minister.

Andrew Clennell: How many times has he asked, do you know?

Minister for Trade: No, I don’t know the answer to that question, Andrew. But you know, we were amongst the first countries to ring President Trump when he was elected and congratulated him. The Prime Minister did that. And we of course got a second phone call with him to express our concerns about the direction that he was taking in respect of tariffs.

To the best of my knowledge, we were the only country in the world where he said, I’m going to give some consideration to not applying these tariffs to you. Now, I know we didn’t get the exemption in the end, but we were the only country that at least got him to say, look, we’re going to give some consideration to this. Ultimately, the consideration was that they would not do it.

As I’ve said on Sky previously, the people around President Trump, particularly Mr. Navarro, I think, were determined that they weren’t going to go down the track that they went down last time. So, I mentioned before over 30 countries got exemptions for steel and aluminium. They were determined, the people around President Trump were determined not to go down that track again. They were going to apply the tariffs, the 25 per cent tariffs, and no country was going to get an exemption. But look, we will continue to talk. As I said, I’ve spoken to Commerce Secretary Lutnick on Friday morning, tomorrow US time, so, Tuesday morning, I think 7:30, I’m going to have my conversation with Jamieson Greer. We’re going to work out firstly what it is that the Americans want out of this arrangement, because it’s still not clear to me what it is that they are seeking. But once we find that out, we’ll work through this issue and we’ll work through it in Australia’s national interest.

Andrew Clennell: Why haven’t you been to the US, yourself?

Minister for Trade: Look, can I say this, Andrew, modern communications these days, a telephone call, a video conference, which is what I’ll be doing with Jamieson Greer, Ambassador Greer, on Tuesday, we’re getting our message across. After that first conversation between President Trump and Prime Minister Albanese, we embarked on a course of action which was determined in consultation with the officials in the United States about how best to progress our concerns about the introduction or the reintroduction of tariffs. We followed that. We followed that course of action and we followed it until last Wednesday when it became clear that the Americans were not going to give us an exemption. So, we had a plan. We had a plan for how we deal with this issue. We were hopeful, certainly based on early discussions, that we would get a successful result here. In the event that that didn’t happen. But we’re not giving up. We’re continuing the talks. And in fact, in lots of ways, the talks will be beefed up in the weeks and the months ahead as we try and resolve all of these issues, but these are not easy issues, Andrew.

Andrew Clennell: No, they’re not. But Peter Dutton says you haven’t got the relationships. He’s pointed the finger at Kevin Rudd. The suggestion is Albanese, the Prime Minister, was seen as too close to Joe Biden. Penny Wong found out from the media that this had occurred. What do you say to all that? I mean, his contention as we go into an election campaign is their government would have better luck with the US Administration. What do you say to that?

Minister for Trade: Look, Peter Dutton couldn’t go two rounds with a revolving door Andrew. What happened? When we came to government, there were $20 billion worth of tariffs and trade impediments with the Chinese. If Peter Dutton’s so good at building relationships and solving problems, they didn’t get a cent, they didn’t get a cent or a single tariff removed in that previous three years in government. We got the best result or the best response of any country in the world. We got a consideration by the President to review these tariffs. Now ok, it didn’t ultimately result in us getting the tariffs removed and we accept that. We accept that situation. I’d ask your listeners, who do you think is going to be better to negotiate with the United States? Somebody with a proven record of getting results or somebody, when they had the opportunity to get some results, did nothing. Did nothing. They did nothing.

Andrew Clennell: What would a tariff do to the beef industry?

Minister for Trade: It would certainly have a clearly a negative impact. The United States I think is, if it’s not the largest export market for our beef industry, it would have a significant impact. We are expanding our beef exports, our beef exports right now thanks to the Albanese Labor Government, are the best that they’ve ever been. We’re exporting more beef than we ever have. The significance, of course to the United States about our beef exports is that most of it goes into McDonald’s hamburgers. And if you push up the price of those beef exports by 25 per cent or 10 per cent or whatever the figure is, then you simply push up the price of hamburgers in the United States. It doesn’t make any sense, Andrew. It doesn’t make any sense at all.

Andrew Clennell: Sure.

Minister for Trade: You want to be pushing prices down. You don’t want to be pushing them up.

Andrew Clennell: Indeed. There’s also speculation the trade war could harm the PBS somehow and cause pharmaceutical prices to go up. How would that occur and what do you make of that speculation?

Minister for Trade: Well, it simply is speculation. That’s all it is, Andrew. I’ve not heard one comment from any person in the United States that refers to the PBS. We’ve got a terrific health system. We’re continuing to improve all the time. Minister Butler is always coming up with new ideas to improve our health system. The PBS is an essential part of our health system and there will be absolutely nothing that the Americans can do to impact on our health system or the PBS system. And we certainly, we certainly would not contemplate doing anything at any stage that makes our health system more expensive. We want to put downward pressure on the cost of health and we’re going to continue to do that, especially if we get re-elected in a few weeks’ time.

Andrew Clennell: It’s been reported the deal that Australia put on the table was access to our critical minerals like lithium, manganese, what’s the nature of that deal? Presumably America would still have to pay for the minerals. Would they get the minerals at a cheaper rate? Would they have the first right of refusal on the minerals? What are the minerals to be used for? Making mobile phones, electric cars and the like?

Minister for Trade: Yeah, look, Australia is very fortunate in the sense that we have either the largest or the second largest reserves of all critical minerals and rare earths in the world. Now, critical minerals are different from other minerals. If you go up to the Pilbara, you can see iron ore as far as the eye can see, Andrew. Critical minerals tend to be in much smaller deposits and they’re much deeper down. Two things about that. They are more expensive to extract and they take longer to dig out of the ground and they don’t last as long so you’ve got to keep finding new resources. What this means for what we were proposing to the Americans was continued and improved investment in getting access to those critical minerals. We’ve got some of the most sophisticated miners in Australia, Andrew. We’ve got a very sophisticated mining operation here, much more sophisticated than the Americans. But the thing we often don’t have is access to capital. So, the offer to the Americans was, look, we’ll work with you. You want these critical minerals, you want them for electric batteries in cars, you’ve mentioned some of the other things, mobile phones, all of these sorts of things. But the process of extraction is expensive, we need capital. We want to work with other countries. We want to particularly work, for instance, with the Europeans. We’ve made them some offers in this regard. It’s not about cheaper prices, it’s not about preferred access. It’s about ensuring that they’ve got a reliable supply chain to ensure that when they need these critical minerals, you’ve got a reliable country like Australia who can provide them.

Andrew Clennell: So, would that be Australian money or American money? When you talk about increased investment –

Minister for Trade: Both. Both.

Andrew Clennell: Okay. So, an Australian financial offer was put on the table?

Minister for Trade: No, it wasn’t a financial offer in that sense. It was a way forward to try and get support both in Australia and in the United States for extracting these critical minerals. So, if we’re going to go down the track of decarbonising our economies, this is the way we need to go. But it’s going to require investment, significant investment. The Australian Government is already making significant investments in this area. But to get to where we want to get to in terms of that net zero project, then we need more investment and – 

Andrew Clennell: Do you see the hand of Elon Musk? Do you see the hand of Elon Musk in any of this? The keenness of the Americans for these critical minerals.

Minister for Trade: Well, look, they didn’t accept our offer. So, if Mr Musk was involved in this, then he doesn’t appear to have influenced the result, if that was what he was after. To the best of my knowledge, Mr. Musk was not involved in any of these discussions that I –

Andrew Clennell: All right, no worries. We’re nearly out of time. Overnight, the PM reiterated in a meeting with European leaders he would consider sending peacekeepers to Ukraine if there was peace. That’ll be controversial with a lot of Australians because it’s not our region. We know Peter Dutton doesn’t support this. Is the PM trying to muscle up here after Peter Dutton has continually called him weak? What’s the motivation to get involved in this conflict?

Minister for Trade: Andrew, for the last 80 years, in other words, since the end of World War II, Australia has been involved in peacekeeping missions all the way around the world. We’ve come out right from day one, Prime Minister Albanese has been very clear and very strong on this, we support Ukraine. Ukraine’s fight for democracy. Ukraine’s fight for its sovereignty is Australia’s fight. It’s Australia’s fight. We’ve made significant financial contributions to Ukraine to ensure that they can defend themselves from this illegal and immoral monster, Putin, and we’ll continue to do that. And if Prime Minister Starmer says, look, will you contribute to peacekeeping? I think that’s the right thing to do. Look, it’s not all about popularity and so forth, but it’s the right thing to do. We want to see peace around the world. The best thing that Australia can do in terms of any international relationship is to support peace. And if we can make a contribution to that peacekeeping effort, then I think we should. And I think Mr. Dutton is completely on the wrong track here. Australians support the Ukrainian fight. I was on the steps of Parliament House just a couple of weeks ago with Premier Malinauskas. His background is Lithuanian. He knows exactly what happens if you don’t stand up to bullies like Putin. It’s in our interest to defend democracy in Ukraine. It’s in our interest to be part of a peacekeeping force when there’s peace.

Andrew Clennell: Finally, and briefly, there was something of a blow to the government late last week with the default market offer out, that Australians face price rises of up to 10 per cent on their power bills. Will the government’s electricity subsidy be extended and increased in the budget?

Minister for Trade: Well, you know the answer to that question, Andrew. You’ll have to ask the Treasurer, and you’ve only got a few more sleeps to find out what’s going to be in the next budget.

Andrew Clennell: Well, I might ask him on the show next week. Thanks very much, Don Farrell.

Minister for Trade: Nice talking with you Andrew. 

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