US tariffs on steel and aluminium, steel dumping in Australia

JASON CLARE: Overnight we’ve heard that the US Government is planning to provide an exemption for Canada and for Mexico from the proposed new tariffs on steel and on aluminium. If Canada and Mexico are going to get an exemption then so should Australia. The argument, or the basis, for the exemption for Canada and Mexico apparently is going to be national security. Well America has no greater ally, and no better friend, than Australia. So if it’s good enough for Canada and Mexico to get an exemption to these tariffs then we should get an exemption as well. I know that the Government is working very hard on this, Julie Bishop is in the United States planning to meet with her counterpart. Steve Ciobo the Trade Minister spoke to Wilbur Ross on the weekend and we welcome that. I’d urge the Prime Minister, if he hasn’t already, to pick up the phone and talk to Donald Trump directly about this.

He made a speech yesterday about the perils of protectionism, he makes a number of speeches about the perils of protectionism. This is a real life example of it. You can’t rely on Donald Trump to pick up a copy of The Financial Review or The Australian of The Sydney Morning Herald today and know what the Prime Minister thinks. So I’d urge Malcolm Turnbull to drop the mic and pick up the phone, talk to the President directly and tell him what the risks are of him going ahead with this and not providing an exemption for Australia.

If we get that exemption – that’s good. But it’s not everything that we need because there is a real risk that a lot of the steel that’s exported to the United States at the moment, if it’s hit with this 25 per cent tariff, could be redirected and sent to other countries including Australia. For all the Australian steel companies that employ over 100,000 workers, if steel that was destined for America now gets dumped here at below cost price then that poses a real risk to those Aussies that work in those companies. So I also urge the Government to make sure they’re developing a plan to tackle the risk of cheap steel to be dumped in Australia.

The Anti-Dumping Commissioner last week in Estimates said that if the Americans jack up their tariffs on steel then there’s a real risk that some of that steel will be redirected and dumped here in Australia. So we need to be on high alert. That why I’d urge the Government to start talking to companies that will be directly affected by this. Talk to the Dumping Commissioner directly and make sure that you’re putting in place plans to make sure that if there’s a flood of steel coming our way that it doesn’t cost Australians their job.

Happy to take questions.

JOURNALIST: So if Australia isn’t given one of those exemptions, what should the Government do about it?

CLARE: Well just to reinforce that point the real risk here is that a lot of that steel that is destined for America, up to ten million tonnes of flat steel this year that’s destined for America, might now seek another home - might be dumped in other countries around the world. We need to be on high alert that that’s going to happen. 60 per cent of the dumping cases that the Dumping Commissioner deals with involve cheap steel and there’s a real risk according to the Dumping Commissioner that more steel is going to come our way if these tariffs are put in place.

JOURNALIST: Surely if we are subject to the tariffs the more immediate issue is what to do with Australian steel I’d imagine so what should Australia be doing in that instance?

CLARE: 80 per cent of the steel we produce is used here in Australia it’s not exported. If our exports, if the Bluescope steel that we produce at Port Kembla is subject to a 25 per cent tariff the people who are going to pay for that are the people who want a colourbond roof in California, the people who want to build a fence in San Francisco, or the people who want a garage door in California. They’ll end up paying more. It will cost American consumers more. That’s why we’ve consistently said that jacking up tariffs is a bad idea. Where we’re here, in Paul Keating Park, it’s because of Paul Keating and Bob Hawke that we’ve got the economy that we have today. The lesson from Hawke and Keating is that if you want to create more jobs then cut tariffs, don’t increase them.

JOURNALIST: So if we argue for an exemption should Australia be lodging a formal complaint at the World Trade Organisation?

CLARE: Let’s not get ahead of ourselves. I support the work that the Government is doing and they need to argue the case directly to the Americans. Julie Bishop is doing that, Steve Ciobo is doing that. I’m urging the Prime Minister to do pick up the phone and talk to the President directly and say if it’s good enough for Canada and Mexico to get an exemption, then Australia should get an exemption as well.

JOURNALIST: Do you think that’s a legitimate possibility considering the nature of Donald Trump and his Presidency?

CLARE: The Prime Minister was given an assurance by Donald Trump last year and it seems that he’s been duded there. But if the argument is Canada and Mexico get an exemption on national security grounds, then so should Australia. The United States has no closer ally, or better friend than us.

JOURNALIST: So if again, we don’t’ get those exemptions – there’s talking this could be signed off I a week – should we be looking at opposing retaliatory sanctions on US imports or investments?

CLARE: That sends you down the path of a trade war. No-one wins from a trade war. Everyone loses. Tit-for-tat tariffs just send you into the direction of a trade war and we see from history what happens when then. As I said, the lesson from Bob Hawke and from Paul Keating is that if you want to grow the economy – if you want to create more jobs – you cut tariffs. You don’t increase them.

But the real risk here is that a lot of that steel destined for America might be looking for another home. If that lands in Australia then that’s a risk to a lot of steel companies and a lot of jobs here in Australia. We’ve got a great Anti-Dumping Commission. When I was the Minister for Home Affairs in the last Labor Government I set it up. We should be very proud of it. It does a very good job at making sure that companies don’t dump cheap steel in Australia. But if more’s coming, if there’s a risk that we’re going to be flooded with more cheap steel because of this decision, then we’ve got to make sure that the Anti-Dumping Commission’s got the powers that it needs to deal with more steel coming our way.

JOURNALIST: So if those negotiations between Malcolm Turnbull and Donald Trump aren’t successful what do you suggest we do? Just deal with it?

CLARE: What I’m saying is that if they’re not successful American’s will end up paying more for Australian steel. That’s the bottom line. Also – I’ve got to make this point as well – that the steel that BlueScope exports to the United States doesn’t compete against domestic steel manufacturers in America. It competes against other exporters. So putting a tariff on BlueScope steel doesn’t help create anymore American jobs in American steel plants. It just makes the cost of BlueScope steel more expensive to Americans. So Americans have to pay more to build houses. To put a roof on their house. To build a fence. To build a garage door. So American consumers lose out. But if the tariffs go ahead generally then the risk is a lot of steel comes our way and that can hurt the Australian steel industry generally, as well as put at risk the jobs of Australians who work in the Australian steel industry.

JOURNALIST: Would the tariffs if they go ahead be in breach of the US – Australia Free Trade Agreement?

CLARE: I don’t think that’s the case. But that’s not the argument we should be making. If the argument of the Government that the United States is that Canada and Mexico get an exemption on national security grounds, then so should America’s closest ally.

JOURNALIST: What’s the point of us having a free trade agreement if the President can go ahead and do this then?

CLARE: Free trade agreements are about creating trade. Increasing jobs. Increasing growth. With America and Australia one of the interesting points is we’ve got a strong trade relationship, but America exports to us twice as much as we export to them. So I know the President’s concerned about trade imbalances. America exports twice as much to Australia as we export to America.

JOURNALIST: So you’re suggesting there that we have a certain power over the US and their exports because they export that much to Australia?

CLARE: No. I’m not saying that at all. I’m saying we should get an exemption. I’d like to not see these tariffs go ahead at all. As I said the lesson of history is cut tariffs, not increase tariffs. They shouldn’t go ahead at all. If they’re going to go ahead Australia should get an exemption, particularly if other countries are getting an exemption. So we support the work the work the Government’s doing to get that exemption. We wish them well. That’s why I’m saying in addition to Julie Bishop talking to her counterpart, Secretary Tilerson, in addition to Steve Ciobo talking to his counterpart Wilbur Ross, I’m urging the Prime Minister, pick up the phone directly and talk to the President of the United States. Remind him of the promise that he made to Malcolm Turnbull in Germany last year at the G20 and honour that commitment. Give Australia an exemption as well.