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Transcript of telephone press conference: re Minister's visit to Japan.

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Department of Foreign Affairs and Trade E and OE

16/04/2002 / PHONE HOOK-UP

Trade Minister, Mark Vaile

Telephone press conference re Minister’s visit to Japan

MINISTER MARK VAILE: Okay, good morning everybody.  We're calling from downtown Fukuoka in southern Japan.  I just want to make some remarks about the day that we had in Tokyo.  And I'd be happy to answer any questions.

After a very successful visit to China and the Doha Forum where we had the opportunity of meeting with Rongji Zhu [?], the Premier of China, and also Prime Minister Koizumi.  We had a very busy day in Tokyo yesterday meeting with three senior Ministers - Foreign Minister Kawaguchi; the Ag Minister Takebe; and the Minister for the Economy, Trade and Industry Hiranuma.

As well at lunchtime we had a meeting with Hugh Morgan's counterpart organisation up here, the Japan-Australia Business Co-operative Committee chaired by Mr Murafuchi [phonetic] of Otochu [phonetic], a very, very large trading house here in Japan.

Of course the key focus of all those meetings through the day yesterday was our proposition to a trade and economic agreement with Japan, to enhance the already strong bilateral relationship between Australia and Japan.  But get some focus I suppose and redefine that relationship on the modern context of the way business is being done between our two countries and certainly looking at areas of improving the business environment right across the bilateral relationship.

Both report, complete with recommendations from Hugh Morgan's group and from Mr Murafuchi's group have recommended that we move in that - that the two governments - move in that direction and both indicating an ultimate objective of a free trade agreement.

Now I think that that would be down the track a little bit and certainly in discussions with senior Ministers yesterday, we've got officials working doing some preliminary work in the hope that if and when Prime Minister Koizumi visits Australia there may be a possibility of an announcement about a trade and economic agreement between Australia and Japan.

Japan is our largest trading partner and of course it requires constant attention and it is a timely opportunity at the moment that we should be looking at how we can refine it, improve the way that relationship works, and improve the environment in which our respective private sectors do business with each other.

And that all could take place within the context and under the umbrella of the current activities in the WTO where we've got a round of negotiations under way at the moment that include agriculture.  And both sides in discussions yesterday acknowledged that very ambitious agriculture agenda is clearly there

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in the WTO and continuing.  And we will be working both co-operatively in terms of pursuing the WTO agenda.

Both Japan and Australia have a commitment to see a positive outcome out of this round.  We might have differences of opinion by degree on some issues, but certainly both sides are committed to the rules-based system of the WTO in seeing that this round improves the operational aspects of the WTO.

There were a number of bilateral issues raised in discussions yesterday with regard to the issue of scientific harvesting of both southern blue fin tuna and whales and we agreed to disagree on a couple of issues there but certainly I continued to maintain Australia's position as far as the scientific, absolute scientific basis of any extra harvesting of southern blue fin tuna and our opposition to the alleged scientific research that the Japanese side is doing as far as whaling is concerned.

QUESTION:      Minister, could you speak up for a second.  You just seem to have gone quiet.

MARK VAILE: Yes, I'm on a mobile phone in Fukuoka and they're not all that flash.  The other issue of importance obviously is currently the beef trade with Japan.  Well we've seen a decline in consumption generally because of the issue of BSE here.  That is slowly starting to turn around.

There are indications of that improving but certainly we raised the issue yesterday on a couple of occasions that, having a 38½ percent tariff on imported product does nothing to secure or ensure food safety.  All it is is an extra cost to consumers, and so with both the Agriculture Minister and the Trade Minister, we raised the issue of the 38½ percent tariff and asked that that be reviewed on our beef exports into Japan.

So we've been actively both in terms of the Government, our Ambassador in Tokyo and the MLA very busily promoting the safety of our beef exports, and that Australia is free of those FMD and BSE and that consumers here in Japan can select Australian beef product with certainty.

And last night to finish the day yesterday we had dinner and a function with the representatives of the majority of Australia's major beef exporters into Japan and a general discussion about the way forward.  And the general indication was that we've done a very good job in terms of reassuring Japanese consumers about the safety of our food products and particularly our beef and that it would only be just a matter of time as the consumers came back to red meat as part of the staple diet here in Japan.  And we've got to continue to work in that regard to just keep reinforcing that message.

Okay, I'll stop there and answer any questions.

QUESTION:      Minister, there are reports this morning - it's Julie Goff from the ABC - that you might be willing to compromise on agriculture in any free trade deal with Japan.

MARK VAILE: No, our position on agriculture has been very clear all along and I reiterated that in both meetings yesterday, and just said that we are both very clear.  And we acknowledged the differences in opinion about the treatment of agriculture.  I sort of reinforced again last night that we don't believe that agriculture should be treated any differently to other commodities or products that are traded, industrials or services.

Now in terms of moving forward with a trade and economic agreement, I think it remains to be seen what takes place in discussions over coming weeks between officials.  But certainly there will be no deterioration in terms of the agricultural arrangements with access into Japan.  Certainly the negotiations

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within the WTO will continue but I think that you will find that the opportunity for significant progress is going to be within the multilateral system, and that obviously flows on an MFN basis.

QUESTION:      So agriculture will be in any trade agreement?

MARK VAILE: Well agriculture is always going to be in a trade agreement.  I mean it's I think our third largest export to Japan, so agricultural commodities particularly beef have got to be part of a trade agreement.  How exactly they get treated in that is another story and that's something that's subject to negotiation.

QUESTION:      Is it fair to say you start with a few of the easier issues perhaps?

MARK VAILE: Sorry, what was that again?

QUESTION:      Is it fair to say you could start with some of the easier issues and then leave agriculture for later discussions

MARK VAILE: Well I mean you know, and often that is the way that you embark upon these things so that you can see what can be agreed upon and then you work out what needs to have further work and what needs to have a little bit more creative thinking exercised around it.

But I mean it is still early stages.  I mean it's hard to say we're going to do this or we're going to do that or we're not going to do this and not going to do that.  The thing is that we have a comprehensive economic relationship with Japan and so we need to be able to quite maturely and professionally discuss all of those issues even the ones of sensitivity on both sides.

QUESTION:      Shane Wright from AAP, Minister.  I don't want to start talking about card games again but is there anything in terms of what Japan has raised about agricultural impediments that they see from Australia?

MARK VAILE: Well I'm just not sure the direction of the question, Shane.  But the Japanese attitude towards agriculture is that it's cultural as well as economic.  And that's the thing that slowly but surely needs to be addressed.  It needs to be addressed in a number of different ways, and certainly in the multilateral system it will be because there's been an acknowledgment and a commitment that we need to address issues like market access, export subsidies and domestic support.  But certainly in the context of sort of cross-negotiation - I think this is where you're heading - between that and the auto sector, no, there's been no suggestion of that.

QUESTION:      Oh no, just in terms of do the Japanese - have they expressed any concerns about the way Australia treats agricultural imports.

MARK VAILE: Not at all, not at all.  I mean again we had the opportunity in discussion yesterday of identifying and highlighting the absolute importance of a scientifically based quarantine system because it has protected the Australian environment from the incursion of any exotic pest or disease thus far.  And we continue to argue the case and we have an absolute right to do that.  And that has been proven  by the fact that we have not got BSE or FMD in Australia and yet BSE turned up here in Japan.

QUESTION:      Syd Marrow from The Australian.  Can I just clarify there is an in principle agreement to head towards a trade and economic agreement and that you would hope that it would be in place for the Japanese Prime Minister's visit to Australia later this year?

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MARK VAILE: Well you know, there's been a visit by Prime Minister Koizumi discussed.  I don't know that it's been official announced by the Japanese side yet.  What we did say was that we have an ambition about putting together a trade and economic agreement.  Both the business, the private sector, business communities from both sides of the relationship have very strongly recommended we move in this direction and, as a first stage in moving towards an FTA - that's in their recommendations - which I'm not sure that's been available down in Australia yet.  Hugh Morgan's is out.  I'm not sure whether you've seen the Japanese side.

And so we're saying well let's try and move this along a little bit and so that, if and when Prime Minister Koizumi visits Australia, it would be a perfect opportunity to launch a negotiation on a trade and economic agreement, to start putting some framework around it.  And what it does do is provides a much better framework to deal with the easy issues as well as the difficult issues.

QUESTION:      Andrea Hopkins from Reuters.  What are some of the issues you feel are the easier issues?

MARK VAILE: Oh look, I think you've got a fairly liberalised market in terms of industrial goods and services and the like.  I think we can certainly improve in that area.  You start looking at areas of harmonisation in the services sector.  You know people movement, those sorts of things in relationship between Australia and Japan should be fairly easy so that we get inputs from the business community saying we need to do this, this and this; where there can be a harmonisation in terms of regulatory systems.

A trade and economic agreement is not just about tariffs and market access.  It's about the ease with which the business community can be dealing with each other in a bilateral relationship.

QUESTION:      Mr Vaile, Andrew Moss.  Just want to clarify your comments on agriculture, saying it should be included in a free trade agreement.  Does that mean you…

MARK VAILE: No, no, Cameron, hang on a minute.  You mean the first stage of what is being recommended is called a trade and economic agreement.  There has been a suggestion or recommendation from the two business communities that we move - that that be a first stage of moving towards a free trade agreement.  There's an enormous amount of difference.

Now in a trade and economic agreement, basically what we're looking to do is taking a very strong bilateral relationship that exists now and seeking out ways of improving that and facilitating more trade and facilitating a better working environment for our private sector.  Now we have a certain situation that exists as far as agriculture is concerned.  That is not going to go backwards.  It will probably move forwards slower than other areas, but it will move forward at the same pace I believe as we deal with things in the WTO.

QUESTION:      Can I ask you about agriculture and linkage, Mr Vaile.  It's Tony Walker from the Financial Review.  Are you going to insist that, as part of this first step trade and economic agreement, possibly leading to a free trade agreement, that there be a definite linkage on the matter of agriculture and progress on agriculture?

MARK VAILE: Well I think that the point is that agriculture needs to be on the table at the outset.  What's ultimately achieved remains to be seen, and it remains to be seen across the board.  But it's a bit early to be starting to try and forecast what outcome there's going to be.  At this stage, what we're hoping

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to achieve is that we launch into these discussions and negotiations and that's an indication of a serious intent to improve across the board the trade relationship.

We at the outset will acknowledge that agriculture in terms of the relationship is difficult.  We have a very large trade, particularly in beef products, into this market and a growing trade in other areas.  You know we both understand and respect each other's position and we will acknowledge that we need to be doing work in that area.  Now it's impossible to forecast what's likely to get out of that.

QUESTION:      Syd Marrow again.  Does this represent a change in Australia's philosophy?  When we were at the forefront of pushing a multilateral round, one of the things we often talked about was you had to have everything in and you had to talk about everything to ensure the maximum outcome.  It seems now that we're prepared to…

MARK VAILE: No, no, incorrect.  You've got me wrong.  I just said a moment ago at the outset of these discussions everything needs to be on the table.  There are no A-priority exclusions.  I mean that's the starting point on all these things.  It's the same in the multilateral system and you are absolutely correct, where you said all along that we are not going to accept any pre-exclusions from the table in the multilateral system.

We are going to have agriculture on the table.  That is where we've got it.  And you know, broadly across the world and our farm community, have continued to acknowledge that agriculture would be best dealt with in a multilateral system as we are.  But in this discussion, it won't be taken off the table at the outset.

QUESTION:      In terms of outcomes, we seem to be now more willing to accept two different result, depending on…

MARK VAILE: No remember, no, no we're not.  Our ultimate goal and I said this in both discussions with Japanese Ministers yesterday, our ultimate goal remains to remove all export subsidies and domestic support and restrictions in terms of market access.  That is our goal bilaterally; that is our goal, multilaterally.

Now one way or the other, over time we will achieve that.  but that remains Australia's goal.

QUESTION:      Minister, Graeme Dobell from the ABC.  In terms of what the Japanese have been talking to the Singaporeans about and the Koreans about, would it be your understanding that the Japanese would see a trade and economic agreement as a way station, as a step towards this ultimate goal that you're talking about, that by all means agriculture would be on the table at the start, but that it might be left for a later stage, that ultimately that would be something you'd deal with?

MARK VAILE: Well it's impossible for me to comment on that because I've had no indication from the other side on this issue.  I think at the point we are at now, we're not getting into the nuts and bolts issues.  We are embarking upon a process of trying to get to a point of saying, let's do this.  This will be very good for the business relationship between our two countries.  We should try.  It's our responsibility as governments to try and improve things for our business communities to do more.

QUESTION:      Is the Japanese position that by all means we'll talk about it, but what we want to pocket is what the Americans would call the laying fruit in a trade and economic deal and that the agriculture will have to wait for later stages of a fully fledged free trade and as part of the WTO?

MARK VAILE: Well I don't know that because that has not been suggested to me by the Japanese

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Ministers I spoke to yesterday.  We are still discussing in very general terms moving forward and making a start on this.  When we say, yes, we're going to participate in a negotiation to put forward a framework for a trade and economic agreement, at that point we'll know and we'll get an initial indication of what their attitude is towards some of these issues.

QUESTION:      Mr Vaile, do you have sympathy for the Japanese argument that our agricultural exports to Japan are improving markedly?  I think figures around $5 million annual, about 20 percent of our exports, and that progress is indeed being made.  And therefore, you know, we shouldn't get too hung up on this issue of agriculture?

MARK VAILE: Not at all.  I mean do exporters of motor cars that we import into Australia draw a line in the sand and say, oh we've reached X level of exports to Australia, we'll stop now because we're getting good market share.  No, they don't.  I mean they continue to look for more and it's a point I made yesterday that, as far as we are concerned, there is absolutely no difference between an argument being put say by exporters in the auto sector to reduce or eliminate tariffs in our market than the argument that we put to reduce and eliminate tariffs and support in the agricultural sector.  There should be no differential between agriculture and industrial and services.

QUESTION:      Minister, Gemma Daly here from Bloomburg.  I'm just wondering what sort of response you got yesterday on your arguments about the beef tariff.  Are there any indications that you can see about consumption or demand in Japan?  Yes, those two.

MARK VAILE: No, there's not.  And I raised the issue that it was certainly disadvantaging the Australian product and, you know, my comments were taken on board for consideration and we'll wait and see.  But I'd have to be brutally frank and say I don't know in the short term that there's much prospect of an early reduction in tariff on our beef product.  And to be quite honest, given the circumstances were we are at the moment and we being all the members of the WTO, if Australia was in the same situation, you wouldn't be giving anything away when you're about to embark upon a fairly sensitive negotiation in the multilateral system.

But it needed to be said.  You know we needed to express our interest and our enthusiasm for market openings and a reduction of those tariffs.

QUESTION:      With the indulgence of my colleagues, could I just ask you about LNG?


QUESTION:      In your discussions in China and in Japan and in Korea forthcoming, did you get a sense that because of the focus that, the potential that's been on oil prices because of the situation in the Middle East, that things or circumstances are more propitious for Australian natural gas producers to sell into Asia or to make these long-term agreements that they're working on?

MARK VAILE: I think that with the sense of volatility in the global oil market, what it does do is ensure that the extra focus that a number of countries are putting on alternative energy sources, ie gas and LNG, it ensures that that continues and that planning for in terms of infrastructure and distribution networks continues.

Of course what I have found is that Australia, as a certain and secure supplier of LNG, has got a very, very good profile in the region here and certainly in what we've done over the years with Japan in

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supplying LNG out of the North West Shelf certainly is well known.

The technology that is used and the quality of product is certainly well recognised.  But it still comes down to a commercial decision.  I mean, when the Chinese Government ultimately gets to make their final decision in terms of who gets to supply the LNG into Wong Dong [phonetic] Province, it'll come down to the merits of the bid and primarily based on the commercial aspect of it.  And so the message still is very clearly that the Australian companies have got to be in there competing hard all the way to the line.

QUESTION:      Did you make any offer in your discussions with Mr Rongji Zhu [?] that would sweeten the agreement from the Chinese point of view, any offer of Government assistance?

MARK VAILE: No, I just highlighted the advantages and the benefits of Australia winning this contract.  That we've got an excellent trade relationship with China.  We continue to support China's accession to the WTO.  They are now in the WTO.  We're working very closely with them.  The fact that we have an excellent supply record, a safe, stable part of the world that that supply is coming from.  But I still sense at the end of this process there will be a significant amount of emphasis put on price and we've reinforced that also that this bid has the support of our Government obviously.

QUESTION:      Did you get any sense of the timing of the decision?

MARK VAILE: No, I think that - I'm not sure - I think the indications still are it's going to be some time in late May I think.

QUESTION:      Minister, there's a report out today from the Philippines quoting the Agricultural Assistant Secretary saying the Philippines would take Australia to the WTO if there's not a satisfactory finding on Filipino bananas and pineapples.  Do you have a response to that and are you concerned that Australia is going to face WTO action in regards to quarantine?

MARK VAILE: Well fundamental, I mean it's the reason that we are all member nations of the WTO so that there is a set of rules that we can revert to if we are not satisfied with treatment that we might be receiving from one or another of our trading partners.

Now we continue to maintain a transparency of the scientific process and the fact that the IRA process in Australia is run absolutely based on the science.  If one of our trading partners and for example the Philippines are not comfortable with that or there's an aspect of the way that's been conducted that they want to have an adjudication, well of course it's entirely their right to challenge that in the WTO.  And if that is the case, then we will quite rightly go ahead and defend our circumstance and our situation.

That option is always open to people.  And when, from time to time, we do get comments from some of our trading partners about the quarantine system that we run in Australia, the import risk analysis system we run, we say well there are mechanisms within the WTO, if you are not comfortable with that, go and have that tested.  The Canadians did it on the IRA process when we were doing the assessment for the importation of salmon, you will recall.  And when we defended ourselves in terms of the way we undertook that analysis, we won 10 out of 11 points in the WTO in terms of the way we run our biosecurity system.

And so, if the Government of the Philippines feels as thought they are not comfortable and they want to test out what is being done and the way we've been running this analytical process, then we shouldn't

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have a problem with that because, if the boot were on the other foot, we may well do the same thing.

Where we've been uncomfortable, for example, with the safeguard actin taken by the United States, we were prepared to go and have that debate in the committee of the WTO.  And certainly that right is available to the Philippines.

QUESTION:      I just want to take you to the blue fin tuna issue that you discussed.  Did you get any feeling from Japan that they will accept the concerns of Australia and New Zealand about Japanese fishing of blue fin tuna and the need to conserve stocks?

MARK VAILE: Well look, I think that the one thing is that we do agree on is we need to get to a point of having a sustainable fishery.  There still is a difference of opinion about these so-called scientific catches.

We actually have got some officials coming up here to Japan I think later on this week or next week to participate in further discussions on that, and we just saw the commitment to undertake those discussions objectively and listen to the argument that Australia is going to put.

QUESTION:      They didn't serve any up for lunch, did they?

MARK VAILE: No, we've been eating an extraordinary amount of beef while we've been here, trying to keep the market prospects up for our exporters, eating lots of Aussie beef.

QUESTION:      Just finally, have you had any discussions about Mitsubishi, or given any reassurances about Australian Government assistance?

MARK VAILE: Sorry, I didn't quite catch that.

QUESTION:      Mitsubishi.  Have you had any discussions…

MARK VAILE: Our meetings with representatives of Mitsubishi have not been from the Daimler Chrysler Corporation but the Mitsubishi trading house that has interests in the beef industry in Australia in terms of feedlots and processing plants.  But we've had no - the only discussion that we've had with any representatives of the auto sector here, I had a meeting with the senior vice president of Toyota last night and obviously it was a very positive discussion given the way that Toyota Australia has really achieved an enormous amount as far as the exports of Camrys are concerned.  And certainly requested that Toyota head office seriously consider allowing Australia to export into the Chinese market.  And that's an internal policy decision they've got to make.  But that's the only meeting that we've had with the auto sector.

Okay, guys, I've got to board a train now.  So I'll have to leave you.

CHORUS: Thank you, Minister.

MARK VAILE: Okay, thanks very much

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