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KEVIN RUDD: Good morning and I begin by welcoming Cathy Ashton to Canberra. This is the first visit by a High Representative of the European Union for Foreign Affairs and Security Policy since the position was created under the Treaty of Lisbon.

So, Cathy, you are very much a welcome guest here in Australia. You're an old friend of Australia and you've been here in many capacities over the years and we regard you as a friend of this country, but on this occasion it's also important we've had the opportunity to go through all the things we're working on together between the EU and Australia.

We've discussed this morning Afghanistan and this is a matter of deep sadness for the people of Australia today and we know that many countries of the European Union are active in Afghanistan, that many have lost soldiers.

When it comes home to your own and we are faced with the tragedy that we've seen in Afghanistan in the last couple of days, there is something which is unifying across all countries who are active in that theatre, which is that we feel these losses deeply and personally because we are the governments who dispatch these troops to these difficult, dangerous operational environments.

And to add my remarks to those which have been formally articulated by the Prime Minister and other Ministers, our condolences go to the affected families.

This visit by the High Representative follows on last month's visit by President Barroso, the first by a European Commission president in almost 30 years.

The EU has long been a significant economic partner of Australia. The figures are significant and worth reflecting on.

As a bloc the EU is our largest source of investment — $647 billion as of the end of 2010 — our second largest partner — two-way trade valued at $78 billion in 2010.

The European Union is also a significant global player, increasingly so following the concentration of its political decision-making authority in Brussels to a greater extent following the signing of the Lisbon Treaty.

Over recent years Australia has moved decisively away from the past, a narrow focus on, shall we say, trade irritants between Brussels and ourselves to a much broader engagement across foreign policy, across trade policy, across climate change policy and of course in foreign security policy as well and we're engaged in multiple activities around the world.

Most recently, for example, we've been engaged on how properly to support the National Transitional Council in Libya where, while Australia has not been a combatant state, we've been the third largest humanitarian donors in the world and have sought to coordinate our positions with Brussels, who also have considerable equities at stake in Libya.

So therefore, because of this change from a past relationship which was, to be blunt, narrow and often fractious, we've now moved to a broad relationship, which is positive and cooperative across a whole range of new theatres.

And therefore we see this as the formal recognition of the opening of a new phase in the relationship between the European Union and Australia.

Our discussions today under the auspices of the Australia-EU ministerial consultations reflect the breadth and depth of our engagement on major challenges in the international community, discussions that we'll continue after this press conference, on the G20 and other global economic issues, non-proliferation and developments in East Asia, the Pacific, the Middle East, North Africa and South Asia.

In terms of practical cooperation could I also indicate the following.

First we've agreed formally to launch negotiations on a treaty-level bilateral framework agreement between Australia and the EU. This will be focused on outcomes, the agreement will chart our shared direction from development assistance to economic cooperation across climate change, education, science, technology and through to foreign and security policy cooperation.

Second, we'll be opening negotiations for a crisis management cooperation agreement. This is designed to assist us to move rapidly to work together from the planning stages through the operational stages in crises in which we decide sovereignty to be jointly engaged at any place around the world.

And thirdly, on the development assistance front, we've decided to improve our aid delivery and to extend its reach and so we've agreed on the two first bilateral delegated aid projects in both Southern Sudan and Fiji.

The EU will deliver food security assistance on Australia's behalf in Southern Sudan and Australia will deliver a component of the EU's assistance program in Fiji. This is as united a step in ensuring effective aid delivery and outcomes as you could find anywhere in the world.

Effective aid, of course, is the key priority for both Australia and the EU.

This is a good step forward. Cathy told me this morning this is the first occasion on which the European Union has engaged in delegated assistance programs with a third country around the world and it's a great step forward.

Think of so many places in Africa where Australia wishes to do more on the development assistance front. It means that rather than us using extensive aid bureaucracies to go in and support those projects, we in fact rely upon our European friends to do that in what will be a jointly badged EU-Australia project with an EU flag and an Australian flag attached to those projects.

Similarly in the South Pacific, like Fiji. It will not make a lot of sense for our friends in Brussels to send European officials all the way out here to run projects often at a smaller scale in parts of the South Pacific and so under these arrangements, the example being Fiji, the EU will have us deliver their projects conjointly with us, again under the EU flag and the Australian flag.

And this is the first time the EU has done this and we in Australia look forward to doing this more with the EU in the future.

So this has been a productive discussion about three concrete areas of agreement as well as our broader discourse on the future of the relationship which, as I said, is going on to a new phase, one which is based on a broad canvas and one which is based on genuine, positive, substantive cooperation across all the interests and values we share with our friends in Europe.

Over to you, Cathy.

CATHERINE ASHTON: Thank you, Kevin. Can I begin by offering condolences on behalf of all of the 27 member states of the European Union to the families and friends of the three servicemen killed in Afghanistan and to those who've been injured. We stand with Australia in recognising the vital work of your servicemen and women in Afghanistan and certainly in my visits to Afghanistan one can see the tremendous work that's going on by those servicemen and women and by many others who are collaborating with them to try and deliver peace and security in that country.

This is my fourth visit to Australia, twice as a tourist, once as leader of the House of Lords and now as High Representative.

It's a fantastic country and it's a great delight to be back and especially to be back because we are able today to start doing things that I describe as being joined up EU-Australia work.

I pay tribute to the energy which has been put in by Australia and by you, Kevin, to help us get to the point where we're able to move forward on this new agreement, as you say, its purpose being to bring us closer in terms of the political and economic work that we do together.

On my way to meeting you I popped in to see an old friend, Simon Crean, and I mention Simon because I want to pay tribute to the role that Australia has played consistently on the Doha Development Round.

When I was Trade Commissioner it was an enormous privilege to work very closely with Australia as we try to push forward to deliver that round. Now, we will have to see what happens in the future but I wouldn't want to let the opportunity pass without recognising that apart from the odd trade irritant we've also been great trade partners in trying to do more to support the developing world.

As Kevin said too, it is a first for the European Union to be working in this delegated way with another country and I think it will be to the benefit of what's happening in the Pacific and perhaps especially in Fiji and to the benefit in South Sudan where we're able to join forces in a coherent way to enable our aid to be delivered more effectively.

I hope it's the first of many such opportunities. No doubt we'll learn as we go how to make it even more effective but I think it's a better use of your taxpayers' money and our taxpayers' money, a better use of the expertise and resources that we have and certainly will deliver on the ground a much more productive outcome for people who are in serious need of support.

As Kevin has said too, we're going to cover in our conversations during today a number of different foreign policy issues. I should say that we are in touch a great deal to talk about the events that go on in this part of the world and perhaps more recently in my part of the world, in what we call our neighbourhood, in Tunisia, in Egypt, with the Middle East peace process. But in all of this I look to Australia as a strong ally and friend as we look to support people in times of change, as they go through both economic change but also that tremendous change towards what we hope will be real and fruitful democracies in the future.

Thank you.

KEVIN RUDD: Thank you very much, Cathy, and we're happy to take questions. The normal convention: a couple a side. So over to you, folks.

QUESTION: Mr Rudd, what assurances did you get from your Pakistan counterpart on stopping the flow of explosive material across the border into Afghanistan, given that 80 per cent of explosives, all explosives used in IEDs now in Afghanistan can be traced to the factory in Multan?

KEVIN RUDD: I'm glad you've raised this question because it's an important one.

I had a full bilateral discussion with the Foreign Minister of Pakistan when we were in Perth. We do not normally go to the detail of diplomatic conversations and I don't propose to do so. However, as is consistent with the positions that we have taken on this matter more broadly I reinforced to Pakistan that this was an issue of fundamental concern to Australia.

I know from the conversation with the Pakistanis it's a matter which has been raised by governments from elsewhere in the world as well.

We have therefore sought further assurances from the government of Pakistan about how they intend to close this down. This led to quite specific conversations concerning the distribution, the use and licensing of the use of fertilisers within Pakistan.

This was the subject of intense conversations with Pakistan when we recently met in — in Perth.

Another question from whichever side.

I'm very happy to go to our official luncheon if that's what you are happy with. That's good. Thank you very much, folks. It's good to have you here.

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