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Transcript of doorstop interview of the Shadow Minister for Trade, Simon Crean: Treasury Place, Melbourne: 5 May 2005

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Simon Crean, MP Shadow Minister for Trade


Subjects: Trade Deficit Blowout

JOURNALIST: Not good news is it?

CREAN: It’s terrible. The trade figures today are terrible figures and we saw the confirmation of the damning failure of the Government’s trade policy. What we’ve got is the second largest trade deficit in history. And this comes off the back of record prices for our commodities. So we’ve got favourable terms of trade, we’ve got strong growth in the world economy, but we’ve got record deficits on the trade figures.

What this highlights is the failure of policy. And what we need to look for in Tuesday’s Budget is a demonstration that the Government is getting serious about addressing this problem. Instead of the folly of just pursuing Free Trade Agreements, the Government has to turn its serious attention to getting a successful outcome from the Doha Round, the World Trade Organisation talks. The other thing that we’ve got to look for on Tuesday night is some realism into the export figures in the Budget. The Budget has been disastrously out in the past in its forecast of export growth. This is a dose of realism at the right time. Let’s get the figures right, but most importantly change the policies, so that we turn this disastrous performance around.

Labor Government’s showed what could be done with the right mix of policies. Under Labor export growth was more than twice the rate that we’re achieving under this Government and with lower commodity prices. It can be done. But only with a change of policy.

JOURNALIST: Does this kill any future trade agreements as far as Labor is concerned?

CREAN: Well what it highlights is, you see the big drop in exports has been agriculture. And yet the Prime Minister has just been up in Japan talking about a Free Trade Agreement with them, which we all know will exclude agriculture. We know that the US Free Trade Agreement has already allowed carve outs in agricultural products. What will we get out of China, we don’t know. But the Government’s track record has been to not pursue agriculture access as it should. And these figures highlight the problem.

JOURNALIST: Indicative of Australia’s changing economy away from agriculture and towards services?

CREAN: We have to have regard to that. And obviously our best opportunities are in the services sector. But why concentrate the approach country to country. Our best chances come from getting access globally in all of the markets. Not just the services, but for manufactures and

for agriculture. The problem with this Government is its been concentrating too much on a country to country focus and not enough on the global opportunities. And we’re paying the price.

JOURNALIST: So how does Australia’s trade deficit compare to other first world industrial countries?

CREAN: Well, we are performing really badly. And we as a small population nation, with huge natural resources have always had a pretty simple message. That is, we’ve got to trade with the rest of the world because there are bigger market places out there, and we’ve got to value-add our commodity base. And that means being smarter with the way in which we produce. It means we have to invest in skills, in innovation. This Government has cut back expenditure in those areas. We’ve got to try and manage a combination of openness in trade, through the World Trade Organisation, not just bilateral trade agreements. Sensible industry policy, investment in skills, investment in innovation. You get that combination of things right, and this country prospers. As I said before, export growth when Labor got that combination of things right, was more than double what we’re achieving now. And had we had the consistency of that approach, not only wouldn’t we be experiencing the trade deficit this month, we wouldn’t have been experiencing it for the 41 months in a row, that this Government has left us with.

JOURNALIST: What happens if some of those trade conditions that we’re enjoying at the moment change, like the price of the dollar, trading prices those sorts of things?

CREAN: Well that’s a very good question. I mean these are disastrous figures, off high terms of trade, high commodity prices and strong growth in the world economy. If the commodity prices go down, if the world economy starts to slow, we’re in deep trouble. And that’s why we’ve got to have a change of policy direction. This Government has been doing nothing to maximise our trade opportunities. It talks the talk of free trade agreements, but it does not maximise the impact. We are under performing on the trade front. We’re under performing on exports because the Government has failed on so many policy fronts.

JOURNALIST: Does Labor then say, alright let’s freeze talk of any free trade agreements from now on?

CREAN: No, no. But we’ve got to re-double the effort in the Doha Round. Those talks are critical in the next six months. And we’ve got to make sure that anything that’s done in the free trade talks don’t undermine the best outcome possible in Doha. But look at what we did with the US Free Trade Agreement. We excluded aspects of agriculture, we changed the rules of origin. We’re making it harder for our products to get into those markets despite the rhetoric, sugar can’t get in and in terms of our manufactured textiles, they can’t get in because if we don’t produce the yarn in this country, they’re not allowed in. Why would we be negotiating a free trade agreement with those countries that contains those restrictions? What we’ve got to do is to focus the effort in the Doha Round. We’ve got to ensure that there is access, improved access in trade liberalisation. Not just for agriculture, but for manufactures and services in particular. This is where the big opportunity comes, plus investment flows, this is what Australia should be concentrating on. We’ve dropped the ball on trade policy. We’ve dropped it on industry policy. We’ve disinvested in innovation and skills and Australia is under-performing as a consequence. What the Budget’s got to show is a change of policy direction.