Trade talks could lead to Asia Pacific free trade zone
Updated
Australia has told China's government not to get involved in iron ore price negotiations, as demand drives prices up and Chinese steel mills face increases of as much as 90 per cent this year. Australia's Trade minister Simon Crean says China has been recognised as a market economy and should behave like one. But key Chinese steel producers are pressing Beijing to get involved. The trade issue between the two countries comes amid a flurry of free trade activity elsewhere, including the start of negotiations that could eventually make the Asia Pacific region a free trade zone.
Presenter: Linda Mottram
Speakers: Simon Crean, Australian Trade Minister; Barack Obama, US President
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MOTTRAM: Eight countries most importantly the United States have signed up to start work on the Trans Pacific Partnership. APEC's vision for shaping an Asia Pacific free trade zone. Officials have gathered in a less than salubrious room at a conference centre in Melbourne this week to start the long, detailed process that may shape a framework, that may enable the realisation of the ultimate goal. It'll be a long, difficult process. And Australia's trade minister Simon Crean is adamant it is not a replacement for the troubled Doha round of World Trade Organisation talks.
CREAN: Now I don't want it to be taken that we're going in this direction because we've given up on Doha. I certainly haven't given up on Doha. Doha in many ways still holds the best and the quickest approach to trade liberalisation in the short term if we can find the political will.
MOTTRAM: And there's the obstacle of course. Hence the plethora of bilateral and multilateral Free Trade Agreements around the region .. indeed Australian officials are also this week in the latest round of talks with South Korea .. as hopes for a new global free trade agreement have repeatedly faultered. But even bilateral deals can fall foul of politics. The United States has several FTA's still unratified by Congress .. not least the one with Korea, which has seen the Korean ambassador to the United States reportedly meet with congressional leaders 300 times on the issue.
President Obama used a trade speech last week to again endorse the Trans Pacific Partnership, as part of a wider exposition of policies aimed at boosting U-S exports and creating U-S jobs.
OBAMA: And we will pursue negotiations in the Trans Pacific Partnership that we launched last year with some of the most dynamic economies in Asia, negotiations that I believe will result in a new standard for 21st century trade agreements that aren't just good for workers businesses and farmers but also consistent with our most cherished values.
MOTTRAM: Should it become a reality, the TPP envisages eventually including the region's other big economies, like China's .. though there's a more immediate issue of trade causing a new headache for Australia and China .. it's the trade in iron ore .. again.
Again this year, price negotiations are proving tense, with iron ore prices predicted by some analysts to rise by 80 to 90 per cent this year. Concerned Chinese steel mills -- which produced half the world's steel last year -- have petitioned the Chinese government to get involved on their behalf.
So if China does get involved, should Australia do likewise? Simon Crean again.
CREAN: Well we won't be getting involved. We've made it quite clear to China and I repeat the point. We recognised China's market economy status. All we ask in return is it act in accordance with market principles, not seek to get government involved.
MOTTRAM: Mr Crean says the issue has been raised with him in the past by Chinese officials, but not during his most recent visits to China .. suggesting Australia believes China understands the market imperatives. The Australian trade minister also says that while iron ore negotiations will always be robust, the solution to high prices is to be transparent about projected needs and creative in the ways those needs can be met .. and to expand supply.
CREAN: That's why I am one of those that actually has welcomed foreign investment in our iron ore industries, including by China, when it is about expanding our productive capacity.
MOTTRAM: And on the issue of Chinese investment in Australia, Mr Crean has welcomed a report from Beijing that an official Chinese analysis had concluded that the collapse last year of the 19-Billion U-S dollar Chinalco-Rio Tinto investment deal was all about economics .. mentioning neither Australia's Foreign Investment Review Board nor Rio Tinto as forces contributing to the deal's failure. Mr Crean says it was a learning process and provides the basis for moving forward with the Australia-China relationship on a more solid footing than during the tumultuous second half of 2009.
