E&OE
5 November 2008
Doorstop Interview
Subject: US Presidential election, Australia-US relations, trade, visit of Mr Zhou Yongkang, Chinese investment
STEPHEN SMITH: Firstly, can I on behalf of the Australian Government join with the Prime Minister to congratulate President-elect Obama. Can I also compliment Senator McCain for the courage and distinction and dignity with which he has conducted himself. And his concession speech, in particular, was a measure and a hallmark of his contribution to public life.
Firstly, can I say that this is, indeed, an historic occasion. The election of the first African American as President of the United States. And this, I think, is both historic in its significance, but also provides great opportunity to the Obama-Biden Administration.
The election of any Government, or any new Administration brings with it the chance for fresh approaches and fresh enthusiasm to long standing problems, challenges or difficulties. And without, in any way, reflecting upon the Bush Administration, because bear in mind that the Bush Administration remains in office until the 20 January, as the current Government has been working positively and constructively and productively with the Bush Administration, and will continue to do that until the 20 January.
But having made that point, the election of a new Administration does provide the opportunity for fresh approaches to old challenges. It also, because of the historic significance of the election of the first African American, does present the opportunity for brand America to display itself in a modern, different format in the world.
From Australia's perspective, we think that in the first instance the ongoing importance of the Alliance is of considerable significance to Australia. The Alliance has served both Australia and the United States well for very many years. And whether it's a Labor or Liberal Government here, whether it's a Republican or Democratic Administration in the United States, the Alliance continues to serve both nations well. And we expect and anticipate, just as with the change of government here, that the change of administration in the United States will simply see the alliance continue to prosper.
QUESTION: Can you see any real changes from the Rudd Government in regards to the way that they interact with the new American Government?
SMITH: Well we will interact with the new Obama-Biden Administration, just as we have been with the Bush Administration and we would have with the McCain Administration if Senator McCain had been elected.
QUESTION: Do you expect a seamless transition though?
SMITH: Absolutely, absolutely. But bear in mind whilst the Prime Minister, of course, will make telephone contact with the President-elect and offer congratulations, and whilst there may be a chance of some contact, some informal contact in the course of the G20 meeting, the tradition in the United States is for the President-elect to not play a great role during the transition period. That's left largely to the transition team.
The one exception to that, I think, may well be the global financial crisis, because as you will recall President Bush involved both Senator Obama and Senator McCain in the consultations.
In addition to the Alliance, can I just make a couple of points. We will continue to impress upon the United States the importance of the United States engagement in the Asia-Pacific. The Bush Administration, as you know, has continued the American tradition of an engagement in the Asia-Pacific, as in this century economic, political, strategic significance shifts to the Asia-Pacific region, to our region. This will become increasingly more important. So an ongoing role by the Obama-Biden Administration in the Asia-Pacific is very important.
There are a number of opportunities, we think that will be thrown up by the new Administration. The Rudd Government, of course, came to office with a commitment to enhancing its engagement in disarmament and non-proliferation matters. And Senator Obama, in the course of the campaign, indicated that he was open-minded about the United States entering into the comprehensive Test Ban Treaty. So that's an area where, we think, there may be opportunities with the new Administration.
The ongoing issues and difficulties, of course, will remain. The difficult problem of Afghanistan and Pakistan and the President-elect, in the course of the election campaign, indicated that he wanted to see an enhanced United States commitment - not just military, but also civil and political - to Afghanistan and Pakistan. And that is something that we would endorse.
QUESTION: What about trade? There's been a lot made of Obama potentially being a bit protectionist?
SMITH: Well we have made the point, the Australian Government has made the point, whether it's the Prime Minister, whether it's the Minister for Trade, whether the Treasurer Mr Swan, and myself, that Australia believes very strongly this is not the time to retreat to protectionism. We've made that point in the context of the Doha Round generally, very strongly believe that we need to get a positive outcome from the Doha Round. Simon Crean's been working very hard to get life breathed back into the Doha talks.
I've also made the point that given the global financial crisis, this is the last time that we would want to retreat to protectionism, or move away from openness. So Australia's very strong view about the Doha Round, about being open, about being open into entry into the economies around the world, remains very important.
The global financial crisis, of course, is one area where as I say we might discover there's more of an active role by the President-elect, than would have been the case historically.
We're very pleased that the G20 has been chosen by President Bush and President Sarkozy and President Barroso from the European Union, as the international instrument to address the global crisis and it may well be that the presence of the 20 leaders and President Barroso from the European Union in Washington on the 15 November, will present some opportunities for some informal contact with the President-Elect.
QUESTION: Mr Smith, what about on a personal level, relations between Mr Rudd and yourself, and the incoming administration? How well do you know them?
SMITH: Well the Prime Minister has spoken on a couple of occasions to Senator Obama. When I was last in Washington, I met with then Senator Biden, now Vice-president elect Biden and had a good session with him.
The Government and its members know senior Democrats well. When I was in Washington for my first visit I met not just with members of the…
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When I was last in Washington, I met not just with members of the Administration, but also members of the Congress, including senior Democrats. So we'll expect that the opportunities will arise in the course of the first half of next year to establish the formal contact.
QUESTION: Is it just…
QUESTION: Would you be [indistinct] inauguration?
SMITH: Well the tradition has been, so far as the inauguration is concerned, that whilst Ambassadors from the various countries are invited, other foreign dignitaries or heads of state, or heads of government generally aren't. So we'd expect, in the normal course of events, that we'd be represented there by Ambassador Richardson, our Ambassador to the United States.
But also in the first half of next year we'd expect that I would make contact with the new Secretary of State. That Mr Fitzgibbon, the Defence Minister, would make contact with the new Secretary for Defence. That Simon Crean would make contact with the new Trade Representative. And that Mr Swan would make contact with the new Treasury Secretary.
One important ongoing institutional arrangement we have with the United States is, of course, AUSMIN, the Australia/US Ministerial Talks. The next talks are scheduled to occur in the United States. We'd expect that they would occur in the middle or the second half of next year. And that would be, if you like, a good opportunity for the formal alliance relationship between the two countries to be dealt with in an institutional setting.
In the normal course of events, we would expect that in the first half of next year I would meet with my counterpart, the new Secretary of State and those other important portfolio ministers, the Treasurer, the Minister for Defence, Minister for Trade, doing likewise.
Also bear in mind that when it comes to those key appointments they are, of course, subject to Congressional approval. So it won't necessarily be the case that they will be in place on the 20 January, although one would expect that in the course of the period of time, through the transitional arrangements, that the senior figures will be nominated by the President-elect.
QUESTION: Just asking about the Chinese visit. What significance do you attach to that?
SMITH: Very significant visit by Mr Zhou. Mr Zhou, of course, is one of the nine members of the Standing Committee of the Central Committee of the Chinese Communist Party. A significant visit. And the visit today, we think, was very important and very productive, underlining the long-standing relationship between Australia and China.
The Whitlam Government, of course, one of the current Government's predecessors recognised China in 1973 and did so with the adoption of Australia's One China Policy, which is held as true and held good through both political parties for a long period of time. And, of course, when recognition was given by the Whitlam Government, it wasn't necessarily fashionable to do so. And the Chinese appreciate that.
Since then, we've seen the very strong economic relationship, and a lot of that has been as a result of the minerals and petroleum resources industry in Western Australia. Historically, of course, with the Channar agreement under the Hawke Government and more recently with liquefied natural gas. So it's…
QUESTION: It's a trade and investment visit though?
SMITH: …it's not just a trade and investment visit. The trade and the investment is very important to us. But earlier this year I conducted, in Canberra, the first strategic dialogue with Foreign Minister Yang. I'm going to China in the first quarter of next year to do, if you like, the return leg. And I made the point today that not only am I looking forward to visiting Beijing and possibly Shanghai, I also want to visit some of the important centres in the west to make the point that both in China and in Australia, not all of the country is about the eastern seaboard. It's about important economic and social contributions that the west of both countries make. It is a point that I made to Mr Zhou today.
We, of course, had a conversation about the election. And I made the point to Mr Zhou, over lunch, that Australia sees the US-China relationship as being very important and very significant. As China emerges, in the course of this century, as India emerges in the course of this century, as we find the shift of influence to the Asia-Pacific, the relationship between China and the United States is a very important one. And, of course, we urge that not just Australia has a good relationship with China and that Australia has a good alliance relationship with the United States, but that China and the United States also have a good relationship. That's very important and that point I made to Mr Zhou over lunch and he, of course, agrees with that proposition.
QUESTION: [Indistinct] Mr Zhou says he was looking for cooperation from countries to help China through the economic crisis.
SMITH: Mr Zhou and I spoke at our formal meeting about Australia and China's response to the financial crisis. We both agree, Australia and China both agree that the G20 is the appropriate vehicle to address this issue.
We both agree that Australia and China's response in a sense has been comparable. There has to be a global response to the global crisis and we see the G20 as being an important vehicle and Australia and China will work closely with each other in that respect. We also had a conversation about the adverse implications of the global financial crisis for China's economy.
They're expecting still to have high economic growth but lower than is currently the case. But because of Australia's economy - even though as the Treasurer has outlined, not just today but in previous weeks, that in the last couple of weeks it's become clear that the adverse implications are much worse than we originally expected or hoped for - that because of Australia's strong prudential and financial arrangements, because of now the diversity of our trade, not just the historical trading partners of the United States and Europe but also China and India and the ASEAN economies, that to some extent will be buttressed from the worst excesses. But it is going to be tough, which is why we've embarked upon programs that the Prime Minister and the Treasurer have outlined, whether they go to infrastructure or business investment or domestic consumption through the $10 billion package.
QUESTION: Did you discuss concerns about investment in Chinese investment in resource projects in Western Australia?
SMITH: Well, we traversed the array of issues and not just the implications of the global financial crisis but also the free trade discussions or negotiations between Australia and China, looking to a free trade agreement between Australia and China. And also Chinese investment in Australia and I made the point which has been made before publicly and privately that Australia of course welcomes a foreign investment in Australia.
But they're subject to the national interest provisions of the Foreign Investment Review Board and the Treasurer, but we welcome investment, Chinese investment in Australia, just as we welcome overseas capital investment in Australia provided that is in our national interest and in the normal course of events that is regarded as being in our national interest.
From time to time the Treasurer makes a judgement that it's not and we proceed accordingly but we encourage investment in Australia and we don't discriminate in the sense of where that investment comes from.
QUESTION: What do you say to concerns that the Chinese are using the global crisis to take advantage of the situation, stockpile or landbank mining projects in the Midwest almost build a strategic reserve that they won't develop, they will hold onto, for long-term, sort of, development.
SMITH: Well, I am not saying that I agree with that criticism, but let me make this point: historically that criticism has been made of any number of projects and any number of countries and any number of companies. I think the starting point with the global financial crisis is that the international community quickly understood and certainly now very much understands that we need to have a global solution to this issue.
And we are now facing much more in the nature of challenges then we are in opportunities though I don't think we're necessarily talking here about stockpiling. We're talking about trying to ensure that international economic growth is not completely negative. But we have some prospect of that in Australia, there's some prospect of that in China, there's some prospect of that in parts of Asia.
But currently if you look at the traditional economies, the G7, very much of the G7 is now expecting to have negative economic growth and that is, that has adverse implications for Australia. It also has adverse implications for Asia and for China. So the starting point has to be what are the things we need to do to quickly ensure that there is capital available internationally, that we don't have a credit squeeze and that we continue to have positive economic growth.
We are going to go through a tough time. People are looking more at the challenges then they are at the opportunities.
QUESTION: Did you discuss uranium - sorry…
SMITH: No.
QUESTION: Just on this telephone conversation that the Prime Minister supposedly had with Mr…Mr Bush about the G20 has - can you confirm that the US ambassador has made a complaint about that?
SMITH: Well, I can confirm the US Ambassador has not raised the matter with me. Whether he's raised it with other people, you'd have to ask them, that's the first point.
Secondly, I think, the essential point about the reporting of the phonecall is this: both the White House and the Prime Minister's office have made the point that the report itself was wrong and it's regrettable that that report occurred. But the White House said it was wrong, the Prime Minister's office said it was wrong, the Prime Minister has said it was wrong and from time to time these things occur.
I think what's important so far as the G20 is concerned is that President Bush, President Barroso, President Sarkozy wanted to come to a conclusion about what was the best international institution to use and they came upon the G20. That was always Australia's view and that was the view we put, not just to the United States. It was the view that we put to the European Union.
I spoke to my counterpart Foreign Minister Kouchner, the French Foreign Minister, France of course currently the EU presidency. The Prime Minister spoke to President Barroso from the EU so Australia's position was well-known and to suggest that whether it's President Bush, Sarkozy or Barroso, that people don't know what the G20 is, I think, is drawing a very long bow.
So the fact that it was reported was regrettable, but in the sweep of these things doesn't stand in the way of a positive ongoing relationship that we have with the Bush administration nor will it be relevant to the relationship we have with President-elect Obama and Vice President- elect Biden.
QUESTION: Have you discussed the matter with the Prime Minister, do you think he needs to be more discreet?
SMITH: I've discussed the matter with the Prime Minister's office. I haven't had the chance of discussing it with the Prime Minister and frankly given the way it's been handled by the Prime Minister's office and by the Prime Minister himself I don't see the need.
In the great sweep of things there are two centrally important things here . . .
[outside interference]
I think there are two centrally important things here, firstly, the G20 being chosen as the international institution to deal with these matters, that's very significant from Australia's point of view, we welcome very much that that's been chosen and not just because Australia is in the G20 and secondly, whatever's been reported won't stand in the way of a first-class relationship with the Obama/Biden administration nor will it stand in the way of what's been a very good and productive relationship with the Bush administration since we came to office.
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