CNBC Interview with Australia's Defense Industry Minister, Steven Ciobo, from the World Economic Forum 2019

Following are excerpts from a CNBC interview with Australia's Defense Industry Minister, Steven Ciobo, and CNBC's Geoff Cutmore and Steve Sedgwick.

SS: Right, let's carry on the conversation, and talk about these tensions building between China and the west, Steven Ciobo is Defense Industry Minister, Australia. Nice to see you, Steven, thank you very much indeed for joining us on set here. Look, long before I would talk to you, and your counterparts, and anyone else in Asia-Pacific, about Huawei, and about IP theft, and what have you, I would talk about potential brewing arms races, as well, about the growing of tensions, about certain islands which are being fortified, as well.

SC: Sure.

SS: The Huawei example, case, situation, it's just another version of the same story, as far as I can see. How concerned should we be, about a build-up of tension with China?

SC: Well, I think some of those forces have been at play for some time, and, you know, China asserts its sovereignty, obviously, there's contested claims, in relation to the South China Sea, and Australia's tried to be consistent in a number of respects. We've been consistent about the best approach being a multilateral approach, we've been consistent with respect to the South China Sea, in terms of advocacy, saying all the parties need to come together and work out a solution consistent with UNCLOS, with the, you know, Law of-, Convention on the Law of the Sea. So, Australia's an honest broker on this, consistent, and we've always maintained that the best support, on each of these issues, whether it's a trade tension, or whether it's a defence tension, or whatever it may be, comes back to a multilateral approach.

SS: And yet I know Australia's been concerned about an encroachment in to islands which are independent from China, independent from Australia, and actually, build-up of China assets, in those areas, as well, and, of course, then we talk about the military build-up in the South China Seas, and-, and area such as that, as well. Is there an arms race going on? If so, history tells us arms races don't end well.

SC: Well, I certainly wouldn't describe it in that way-,

SS: Is there an arms build-up going on?

SC: Well-, well, I mean what-, what-, what we're seeing globally, is that there – as there has always been – continues to be an evolution of approach and defensive mechanisms. You know, I'm Defense Industry Minister. I'm always looking at the way in which Australia can ensure that our national posture is one that is strong. If we are strong, then we know-, and-, and, importantly, a-, you know, a very big pillar of that strength comes from having a domestic sovereignty, a domestic capability, in relation to our defence forces. If we have that, then we know that that, in turn, produces a dividend, and that dividend is stability and peace. All of us are committed to that. Ultimately, the only way we maintain stability and peace in the region is, I believe, by driving prosperity, we secure prosperity through trade, and if we do that, then I fundamentally believe that we'll see a good resolution.

GC: Australia's been a terrific partner to the United States, for decades-,

SC: Sure.

GC: But, increasingly, the-, the positions that Washington is taking seem somewhat at odds with the-, the view out of Canberra. I-, I just would be interested to get your perspective on this, as we see this row rumble on, between the United States and China-,

SC: Yeah.

GC: Is Australia finding itself having to pick sides? Or perhaps having to just step away from the US perspective on this? You were a former Trade Minister-,

SC: Sure.

GC: You know, very well, how the path that Obama laid out for trade deals faltered with the new administration. Is it time, perhaps, for Australia to cut loose, a little bit, from Washington?

SC: Well, I mean, there's an assumption built in to your question, which is that our ties with Washington are perhaps too strong, and-, and I don't think that's the case, but look, what I would say, in the same vein, about multilateral approach, Australia's always had independent policy. We are going to pursue policy that's in Australia's best national interest. With respect to trade, we firmly believe in the benefits that flow from bilateral deals, from multilateral deals, from plurilateral deals, so we pursue all of those. That was part of the dance card that I had, when I was minister, and that's continuing on with the-, with the minister now. So, you know, we're striking up deals, we're looking to diversify Australia's trade exposure, South America, deals with Indonesia, with Hong Kong, with China, with the European Union-,

SS: Newly independent European countries-,

SC: Well-,

SS: Perhaps?

SC: [Laughs]. With the-, with the-, with the UK-,

SS: [Laughs].

SC: And, of course, with the EU, where we've commenced negotiations on an FTA there, as well. So, to get back to

the core of your question, we have always maintained a position that serves our national interest. Now, whether that sometimes sits in contrast to Washington, or indeed to Beijing-,

SS: Can we get a quick-,

SC: So be it.

GC: So let-, let me-, let me just ask you one-, one quick question. Do you believe Huawei is a threat to the west?

SC: Australia took a position, as a government, that we would not allow Huawei to participate in the rollout of 5G in our country. That speaks to what we believe are some of the inherent weaknesses, with respect of Huawei, that we were concerned about. If we didn't have a reason for doing that, we wouldn't have taken that decision.

SS: Can I just grab a quick 20 seconds on Brexit for you?

SC: Sure.

SS: We've got Liam Fox coming on the show, a little bit later on. Any hopes for anything quick with the British? Or do you just have to wait and see, like the rest of us?

SC: Uh, in terms of Australia's bilateral deal with the British-,

SS: Yeah.

SC: Do you mean? Or-, well, so look, Liam Fox has done an outstanding job, I mean, I think he's-, he's-, he's a very, very good Trade Minister for the UK, and-, and these are tough times, you know, clearly, there's a lot of turbulence that's happening in the UK. Australia will always be a good friend to the UK, we share so much, we have similar values, we've got terrific opportunities on the trade front, and, you know, I was pleased with Liam to be the very first country with whom we launched a bilateral agreement to, you know, commence fast tracking an FTA.

SS: Great.

SC: So, I think we can certainly do it, but-, but, I mean, speaking frankly, the UK needs to sort out where it's ultimately going to go. We're all watching, with great interest, and, you know, I think PM May, and-, and others, in the UK system, have got to work through what are incredibly complex factors, there's no simple solution here, that's clear. But we'll always be a very good friend.

SS: Fabulous. Good to hear. Thank you very much indeed, despite the fact that we're-, we've got a big cricket game coming up-,

SC: We're coming back on cricket. We're coming back.

SS: No, we didn't-,

GC: [Laughs].

SS: Yeah, we won't talk about India. Drubbing.


SS: Um. Oh, we just did. Steven, nice to see you, my friend, thank you very much indeed. Steven Ciobo-,

SC: Good to see you.

SS: Defense Industry Minister of Australia.