Don Farrell's high noon for European free trade deal, and hopes for lobster exports to China

Last weekend Australia had a big win when China agreed to review over the next five months its prohibitive tariffs on Australian wine, This weekend Trade Minister Don Farrell hopes to finally land a long-awaited free trade deal with the European Union, for which negotiations have been going on for years.

Farrell tells the Conversation’s podcast that if agreement can’t be reached, Australia will need to walk away because the Europeans will be entering election season.

At the end of the day, my job is to make a decision on the national interest. And if on balance, the things that are good about the European trade agreement outweigh the things that are bad – because there’s always bad things in agreements – then I feel I’ve got an obligation to the Australian people to say yes, we’ll sign this agreement.

If we haven’t got a deal, the Europeans move into their electoral cycle for elections next year. And I think we will have lost the opportunity for two, perhaps three years to come back and resolve this.

Next week Farrell will leave with Prime Minister Anthony Albanese for China. That country now has removed or, in the case of wine, is moving to remove all the trade restrictions it imposed on Australia – with the exception of those on lobsters and a handful of meat exporters.

There is light at the end of the tunnel. I think Australian [wine] producers should start thinking about getting their product back into China as quickly as they can after that date, at a zero tariff. The [Chinese] minister himself has confirmed to me just how much he likes Australian wine. The Chinese have got a very strong palate for Australian wine and I’m confident that once we get that tariff removed, we’ll get Australian wine back onto Chinese supermarkets and into restaurants.

We have found alternative markets for our lobster, but not at the price that the Chinese were buying, so it’s a significant issue. And there’s one or two abattoirs in Australia who during COVID volunteered to suspend their exports because they had COVID in their abattoirs. They have not yet been given permits to go back in. But again, that’s just a process issue and I think with a bit more push on our part, we’ll get both the lobster and the meat back in to China.

Read more: Politics with Michelle Grattan: Special Minister of State Don Farrell wants donation and spending caps for next election

In the podcast Farrell, who is also Special Minister of State, canvasses his progress on electoral donations and spending caps. Independents have expresed some reservations about the government’s intentions, exchanging views with him at a recent meeting.

I don’t agree with [the independents’] assessment of what the impact of caps will do to the election result. In fact, in many ways I think they themselves will be beneficiaries of such a system.

I’ll keep talking with them. I’ve given them an assurance that, as with the other political parties, I’ll talk with them. I hope they will see that caps are necessary to stop really wealthy Australians buying election results.

The reality is we’ve seen over the last two federal elections really, really rich Australians seeking to buy election results. And I don’t think that adds to democracy in this country. I think that takes away from democracy.

Senator The Hon Don Farrell Special Minister of State

Transcription: PROOF COPY E & OE Date: Thu, 2023-10-26 12:00 Topic(s): Trade with China, AU-EU Free Trade Agreement, electoral reform. Michelle Grattan, host: Next week, Anthony Albanese heads to China, the first Australian Prime Minister to go there since 2016. This follows the gradual unfreezing of the China-Australian relationship over the past year and a half, with the removal of most restrictions that China imposed on Australian commodities. The latest breakthrough is on wine, with China undertaking to review the prohibitive tariffs over the next five months.

Trade Minister Don Farrell has been at the centre of the negotiations, and he will accompany the Prime Minister to China. But first, he will be in Japan this weekend for the G7 Trade Ministers meeting. While there, he’ll have talks with European counterparts on the vexed issue of the proposed Free Trade Agreement between Australia and the European Union. This is likely to be the High Noon meeting for this agreement. Either it will be landed, or Australia will walk away.

Don Farrell joins us today to talk about trade and in his other role as Special Minister of State, electoral reform. Don Farrell, while in Japan you’ll be meeting with your European Union counterparts in the hope that you can ink a Free Trade Agreement. You’ve said you won’t be signing anything unless it’s in Australia’s interests. What are the prospects for success, do you think?

Minister for Trade, Don Farrell: Michelle, I’m going to meet the Europeans with an open mind and optimistic disposition. I was forced to walk away from Brussels earlier in the year when I believed that the Europeans didn’t make us a good enough offer. I’m hoping that the time lapse between then and now gives them the opportunity to make us a better offer, and on that basis if it’s good enough, I’ll be recommending to the Australian people that we should accept it.

Michelle Grattan: Now one reason why a deal hasn’t been struck earlier is that the Europeans have a desire to protect product names with geographical connotations. This would restrict Australian producers from using names like “feta” and “parmesan”. Where is that up to, and what other sticking points have there been?

Minister for Trade: Look, they have been difficult issues to work with, but I think that if we could resolve the rest of the package, then I think we can resolve all of those outstanding issues. I think they’re capable of being resolved with a little bit of goodwill, and I’m hoping that if we can get a full package, that we’ll have a successful outcome with those names.

Michelle Grattan: So, is the name issue still a really difficult thing to get resolved?

Minister for Trade: The name issue has not yet been resolved. I think it is capable of being resolved, but there’s a lot of balls in the air at the moment, and all of them have to land in the right spots for us to be satisfied that we’ve got an acceptable deal.

Michelle Grattan: What other things are still outstanding? You only have a few days.

Minister for Trade: Yeah. Well, it’s funny, I think the Europeans talk about this as the end game, and I think they sort of somehow think that everything suddenly sort of collapses and we resolve all of the issues, and I’m hopeful that that’s the way it ends. As I said, I do want a successful outcome. But our access to their agricultural markets is an important one.

Michelle Grattan: Well, that’s always been difficult.

Minister for Trade: Yeah, it’s always been difficult. They have a very protectionist system. In fact, one of their arguments to me is that we were so successful in our UK Trade Agreement that lots of their market into the United Kingdom has been taken up by Australian beef and sheep meat and sugar. So, we need a better offer from them on sheep meat, on beef and on sugar.

Again, I’m hopeful that if they understand, you know, where we’re coming from ‑ and I’m trying to make it as clear as I can ‑ that if the offer is the same as the one I got in Brussels earlier in the year, I’m going to reject it again. So, it has to be a better offer. At what point do you accept or reject? Well, that’s the really hard bit, and of course, you know, I’ll have the National Farmers’ Federation up in Japan, I’ll have the meat and livestock, and so forth, all of those people will be up there, they’ve all got an interest in it, and I’ll want to consult them.

But at the end of the day, my job is to make a decision on the national interest, and if on balance the things that are good about the European Trade Agreement outweigh the things that are bad, because there’s always bad things in agreements, then I feel I’ve got an obligation to the Australian people to say, “Yes, we’ll sign this agreement.”

Michelle Grattan: But this is the High Noon weekend, is it? If you can’t get a deal, that’s it.

Minister for Trade: Look, I think for a range of reasons, not least the fact that from this point onwards, if we haven’t got a deal, the Europeans move into their electoral cycle for elections next year, and I think we will have lost the opportunity for two, perhaps three years to come back and resolve this.

Michelle Grattan: Now let’s turn to the China trip, and the wine deal in particular. In 2019, we exported more than a billion dollars’ worth of wine to China. Now in 2022, we’re down to 16 million, so a huge, huge fall. What kind of impact has this had on producers, they seem to have had more trouble getting alternative markets than producers for some other commodities that have been hit, and I should add that you were a wine producer, and I think you still live on your old vineyard, is that right?

Minister for Trade: I do, yes. Beautiful part of the world, Clare Valley. Yes. So, look, roughly 170,000 people work in the wine industry in Australia. It’s a big employer, and it’s a particularly big employer in South Australia; 50 per cent of all Australian wine comes from South Australia, 80 per cent of premium wine comes from South Australia, and of course one of the reasons our sales were so high was we were selling a lot of premium wine into China. I’ve seen firsthand how my neighbours in the Clare Valley this year left many of their red grapes on the vines, they didn’t take them off, because their vats are already full with wine from previous years that they haven’t been able to sell.

We’ve been working really hard on this issue. The Chinese knew how important it was to us, and as you’ve correctly said, unlike other products, we found it very difficult to find alternative markets, into say India or the United Kingdom. So, this was an important breakthrough last weekend. I’m going up to China with the Prime Minister next week. I always felt that by that time we would have had an indication from the Chinese that they were prepared to move on this topic. We followed identically the barley dispute, so we’re to suspend our World Trade Organisation dispute in return for a fast-tracked review of the tariffs.

I’m confident that based on all of the previous announcements of freeing up products back into China, that we’re going to get there on wine. It will take five months, I’ve no doubt about that, but there is light at the end of the tunnel. I think Australian producers should start thinking about getting their product back into China as quickly as they can after that date at a zero tariff. The Minister, himself, has confirmed to me just how much he likes Australian wine. The Chinese have got a very strong palate for Australian wine, and I’m confident that once we get that tariff removed, we’ll get Australian wine back onto Chinese supermarkets and into restaurants.

Michelle Grattan: Now the Chinese restrictions on Australian commodities were at one stage $20 billion worth. It’s now down, I think, to about 2 billion. Does that include the wine?

Minister for Trade: That includes the wine, but if you exclude the wine, then we’re down to $1 billion.

Michelle Grattan: So, what’s left?

Minister for Trade: So, what’s left is some lobster, of all things, you might think, but we haven’t been able to get our lobster back in. We have found alternative markets ‑‑

Michelle Grattan: Put a few on the plane when you go perhaps.

Minister for Trade: Well, let’s hope so, Michelle. But we have found alternative markets for our lobster, but not at the price that the Chinese were buying, so it’s a significant issue, and there’s one or two abattoirs in Australia who ‑ or during Covid volunteered to suspend their exports because they had Covid in their abattoirs. They have not yet been given permits to go back in. But again, that’s just a process issue, and I think with a bit more push on our part, we’ll get both the lobster and the meat back into China.

Michelle Grattan: So, it’s nearly all done.

Minister for Trade: Yeah. Well, look, it’s been a difficult task, Michelle. It almost seemed insurmountable when we started this process, to get $20 billion worth of trade ‑ I mean, you think about that $20 billion, it’s twice our total sales to the United Kingdom. I mean it was a large amount of money. So, no, we’ve worked hard, the Prime Minister in particular has taken great interest in the progress here, as has the Foreign Minister, as has the Agriculture Minister. It’s been a Team Australia approach.

Michelle Grattan: So, can you give us some insights into these negotiations that you’ve had with the Chinese officialdom and political system? What’s been the flavour of them?

Minister for Trade: Look, I ask myself, how would I like to be treated? And so, I try and treat the Chinese officials, particularly, Wang Wentao, who’s my equivalent, the way I would like to be treated myself. As I said, he’s a big supporter of, personally a big supporter of Australian wine. Tonight, I’m going to visit the Chinese Embassy, and I’ll be taking a bottle of my wine with me, just to make sure that he understands just how good the Australian product is. But it’s a case of respect. China is our largest trading partner by a long way.

Last year, two-way trade between Australia and China was at a record level, $299 billion. If we’d had the wine back in last year, we would have actually hit the $300 billion mark. So, this is an important market for us. We have to treat them, I think, with respect. We never are going to agree on a range of political issues; we’re a democracy, you know, they’re an autocracy, but in a sense, we need one another. They need our products, they need our high-quality food and beverage, and we need to be able to continue to sell there.

Michelle Grattan: So, in these negotiations, not just on wine, but on other things, have you mixed the informal contacts a bit with the formal across‑the‑desk stuff?

Minister for Trade: Yeah. And so, one of the reasons I’m going to the trade meeting next week in Shanghai is, well, it’s the Minister’s own turf, he’s from Shanghai, former Mayor of Shanghai, and you’ve actually, just like ordinary relations, you’ve got to, you know, build a relationship with your counterparts, and going to his hometown, I had originally hoped I was going to stay at The Peace Hotel on The Bund, the Charlie Chaplin room, which he managed to restore when he was the Mayor of Shanghai, that wasn’t possible for a range of reasons.

But I’ll be meeting with him. We’ll renew our friendship. We’ve now met, either by Zoom or personally, three times, this will be number four. He has agreed to come to South Australia to visit the vineyards in South Australia. All of those things I think help build a relationship of trust, and hopefully, we don’t get back to the situation we found ourselves, where suddenly overnight Australian businesses are losing trading opportunities into China.

Michelle Grattan: Now I want to change to a very, very different topic. In your role as Special Minister of State, you joined the conversation to discuss your objectives for electoral reform earlier in the year. Can you give us an update where that’s all up to?

Minister for Trade: Yeah. So, what happens after every election is that the Special Minister of State refers the election outcome to the Joint Standing Committee on Electoral Matters. I did that very promptly. Since the election they’ve been looking at aspects of the last election, and in particular from my point of view, how we can improve transparency and accountability at the next election. I have a view that there’s a couple of ways we can do that. One is by reducing the disclosure amount of money before you have to disclose donations. Currently, it’s about $16,000, we want to get that down to about $1,000. But more importantly, the concept of real-time disclosure. So that if you’re in an election period and you’re contemplating voting for a particular candidate, you ought to know where that candidate’s getting their donations from.

And look, the reality is, we’ve seen over the last two Federal Elections, really, really rich Australians seeking to buy election results, and I don’t think that adds to democracy in this country, I think that takes away from democracy. So, we’re looking at things like caps, spending caps, expenditure caps. But the undertaking I’ve given to all of the parties, I’ve given it sort of privately, and I’ve given it publicly, I’ve given it in the Parliament, is that I want to talk to all of the various parties because I think electoral reform in this country works best where you’ve got a consensus position.

So, my aim is to keep walking through the JSCEM process, it will be completed by the end of the year, and hopefully, I can sit down with the political parties, the other political parties, and the independents. I’ve already met, I had eight or nine of the independents in my boardroom the other day. But I’m hopeful that with a bit of goodwill, that we can get a consensus on how we move forward with Australian electoral outcomes.

Michelle Grattan: They’re worried, the Independents, that you’ll do a deal with the Libs and the Nationals, and that will disadvantage new players or small players like them.

Minister for Trade: Look, I don’t agree with their assessment of what the impact of caps will do to the election result, in fact in many ways, I think they themselves will be beneficiaries of such a system, and what I don’t think that the Teals quite comprehend is that the reason they were so successful at the last election is that they had Scott Morrison as the Prime Minister, they had integrity issues to run on, and of course, they had climate change issues to run on. None of them will be in existence at the next election.

But look, I’ll keep talking with them. I’ve given them an assurance that, as with the other political parties, I’ll talk with them. I hope they will see that caps are necessary to stop really wealthy Australians buying election results. I just don’t think we can have another Federal Election where that’s a potential outcome.

Michelle Grattan: We’re talking here about Clive Palmer.

Minister for Trade: Yeah, we’re talking about Clive Palmer.

Michelle Grattan: But he didn’t get much, he only got one Senator.

Minister for Trade: No, but he affected the election outcome. I don’t think there’s any doubt at all that the reason Bill Shorten didn’t win the 2019 election was the more than hundred million dollars that Clive Palmer spent on that election.

These people are not necessarily after political influence in the sense of having people in Parliament. What they’re after is the result, and getting a favourable result, and I just don’t think Australians want a situation where one individual can spend so much money to get a successful electoral result.

Michelle Grattan: What’s your timetable for bringing in this legislation, and will it include truth in advertising?

Minister for Trade: Yeah, truth in advertising is a difficult one. I think most people would agree that getting accurate information about electoral issues is an important part of our democratic process. Just how you do that is a more difficult proposition. South Australia has done that, this got debated a couple of nights ago in the Estimates process. Senator Birmingham piped up that he didn’t like the way the South Australian system worked and thought it actually worked against free speech, but ‑‑

Michelle Grattan: You think it’s okay?

Minister for Trade: Look, I think it’s one option to think about. I don’t say it’s the perfect option. Some of the Teals have got some of their own ideas on this. And, of course, the other issue is who would you get to determine the truth or otherwise. The AEC have said, look, they would not be happy to do it, they’re job is to run the election, not to monitor, you know, arguments during the course of the election.

I had quite an unusual item pop up about me personally during the Referendum. I woke up one morning to discover that the allegation was that I had usurped the role of the Governor‑General in signing the writ to issue the Referendum. Now that was a completely preposterous proposition. But it was floating out there in the social media. And once it gets out there, Michelle, it’s very hard to, you know, to counteract. They had a photograph of my signature on the writ document, and of course, my signature was there, because I witnessed the Governor‑General signing the document.

So, I personally know what it’s like to have these sort of allegations made against you, but it’s a tough one. We should do something about it. It’s a question of making sure that if we do do something about it, we don’t truncate free speech in this country. I mean that’s one of the great advantages of our system. People do have the right for free speech. I don’t want to truncate that, but if it’s possible to come up with a mechanism to ensure that people are getting accurate information, or have the ability to get accurate information, then I think that would be a good outcome.

Michelle Grattan: So, you’ll try and get it in the legislation.

Minister for Trade: I’ll try and have some discussions with the other party, and other parties, and if there’s a way through this, then I’m happy to look at it.

Michelle Grattan: So, when would you be bringing in this legislation?

Minister for Trade: Okay. So, the process is nearing an end, we’ve only got, what, five or six more weeks before the end of the year. I would hope that we can make some progress before the end of the year, if not very early in the new year.

Michelle Grattan: So, a bill in either late this year or early next on at least the donation and spending side.

Minister for Trade: Yeah, yeah. The important thing here is making sure that the Australian Electoral Commission has adequate time to make changes to their system to reflect any changes in the legislation. Real-time disclosure of donations is actually quite a big task, it rolls off the tongue pretty easily, but in fact, to be able to do that, a whole lot of new processes are going to have to be set up. I want to make sure the AEC has got plenty of time to do that, to trial it, and to make sure that it works for the next election.

Michelle Grattan: And so that would take probably a year or so?

Minister for Trade: It could take as much as a year, yeah.

Michelle Grattan: Don Farrell, thank you very much for talking with us today on trade and the electoral system. Good luck for your trip to China, well, and to Japan indeed. That’s all for today’s Conversation Politics Podcast. Thank you to my producer, Mikey Burnett. We’ll be back with another interview soon, but goodbye for now.

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