Asia-Ready People, Asia-Ready Policies: Wayne Swan Speech

This is the text of Treasurer Wayne Swan’s address to the Australia in China’s Century conference in Sydney today.

Wayne Swan

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Speech by Treasurer Wayne Swan to Australia in China’s Century conference.

Asia-Ready People, Asia-Ready Policies

Can I start by thanking you, Paul for that introduction, thanking you all here for that warm welcome, and especially acknowledging The Australian and The Wall Street Journal for putting this event together. The rise of China, and especially the stupendous growth in its middle class, sits alongside the Global Financial Crisis as one of the two defining economic events of our lifetimes. Both are transforming the world. Indeed, China’s return to pre-eminence in the global economy is the most momentous development since the industrial revolution re-shaped the Western world over 200 years ago. So what China’s rise means for our place in the global superstructure is certainly a big enough topic to warrant this high-quality gathering today. I’m thankful for the opportunity to offer some thoughts and then to discuss them with my distinguished colleagues on this panel. I know that by this stage you don’t want me to go over too much of the same ground or recite the same stats. Instead, I want to offer the personal perspective of an Australian Treasurer whose seven trips to China mean I’ve probably visited there more times than all my predecessors since federation combined. That’s not a perfect statistic, but it does illustrate the shifting focus of Treasurers since the second world war, from markets in London, New York and Tokyo towards Shanghai and Hong Kong today. [Read more…]

The Future of Trade Policy in an Uncertain World: Emerson

The Minister for Trade, Craig Emerson, has delivered a speech on trade in which he reasserted the Labor Party’s commitment to free trade, open markets and competition.

Minister for Trade, Craig Emerson

Minister for Trade, Craig Emerson

Addressing the Lowy Institute, Emerson said the Labor Party’s guiding philosophy of economic reform “has been a commitment to markets and competition”. He said the “presumption must be that competition is good, more competition is better and markets are better than governments in allocating scare resources”.

Praising the unilateral decisions of the Hawke and Keating governments to reduce tariffs without this being conditional on other countries doing the same, Emerson said he wanted to “dispense with the bargaining chip approach to the remaining Australian tariffs”.

Emerson also embraced the principle of non-discrimination in negotiations with trading partners and the maintenance of “a clear separation between trade policy and foreign policy”.

The minister said he would be conducting a review of trade policy which would be released around the end of March next year.

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This is the text of the speech to the Lowy Institute by the Minister for Trade, Craig Emerson.

As the Lowy Institute points out in its selection of the topic of my address today, the global economy is experiencing a period of unusual uncertainty, with debt crises in Europe, further quantitative easing in the United States and overheating in China. In the aftermath of the deepest global recession since the Great Depression, global imbalances are especially large. A huge excess of spending over saving in the United States and Europe is mirrored by a big excess of savings over spending in China and other surplus countries. [Read more…]

Rudd Meets With Vietnamese Prime Minister

The Prime Minister, Kevin Rudd, has met with his Vietnamese counterpart, Nguyen Tan Dung, in Canberra.

The two leaders held a joint press conference this morning.

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U.S. Ambassador Hasn’t Read ANZUS Treaty

The United States Ambassador to Australia, Robert McCallum, has admitted he has not read the ANZUS Treaty.

Robert McCallumIn a wide-ranging address to the National Press Club in Canberra, McCallum was asked about Article 4 of the treaty which states that “each Party recognizes that an armed attack in the Pacific Area on any of the Parties would be dangerous to its own peace and safety and declares that it would act to meet the common danger in accordance with its constitutional processes.”

Asked what the US constitutional process would be to invoke the ANZUS Treaty, particularly if there were a conflict between the President and the Congress, McCallum reminded his audience that he was a lawyer with 30 years experience and said:

“The answer is I don’t know. I have never read the Treaty. I have not done the Constitutional analysis and I would imagine that there would be a vast difference of opinions among academics and practising lawyers and politicians as to what might be required, so I’m not able to give you a good answer on that.”

Prime Minister John Howard invoked the ANZUS Treaty on September 14, 2001, following the September 11 terrorist attacks on the US.

McCallum has been the US Ambassador since August 2006. The post was vacant for 18 months following the departure of Tom Scheiffer.

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  • Full Text of ANZUS Treaty

This is the transcript of the Address to the National Press Club by the US Ambassador, Robert McCallum Jr.

Ken Randall (Chair): Ladies and Gentlemen welcome to the National Press Club and today’s National Australia Bank Address. It’s a great pleasure to welcome the American Ambassador Robert McCallum and his wife, Mimi.

As you’ve just heard, Ambassador McCallum was the third ranking officer in the Department of Justice before this appointment and was twenty-eight years in private sector legal practice and he’s also been – he attended Yale at the same time as George Bush Jr and was a Rhodes Scholar with a Degree from Oxford as well and at both Oxford and Yale he was a very keen sportsman, although he insists now that he’s retired to spectator status. This, this appearance today has been sometime in the making but it could hardly be more topical I suppose this week. Our relations with the United States have been on the forefront of our news for the last several days and it’s a very appropriate time to welcome Ambassador Robert McCallum.


Thank you Ken. I’d like to acknowledge obviously the – Ken Randall for the warm hospitality, Members of the Board, Members of the Fourth Estate I will call it, Distinguished guests, and Australians around the country.

It’s my real pleasure to be here today and I very much appreciate the opportunity to continue to broaden my interaction with members of the Australian media and to communicate directly to Australians across the Commonwealth.

As the British writer Anthony Sampson once said: “In America, journalism is apt to be regarded as an extension of history and in Britain, as an extension of a conversation.” As a new arrival to Australia, it was suggested to me to consider journalism in Australia as an extension of Aussie Rules football. It’s a contact sport without pads, there’s no offside rule, you’re likely to be poked in the nose during the course of a match, and a good story or a good scoop like a great mark is highly prized.

With that in mind, I’d like to set the right tone for this discussion before we have the opening bounce if you will and put the ball in play by wishing all of the journalists here Happy Valentine’s Day.

It’s not my intention though to spread love among the journalists and the media here. My real intention is to remind all of those blokes like me who have forgotten Valentine’s Day. It’s not too late to pretend that you remembered. Rush out and buy a present and never let it be said that the United States Ambassador was not doing all that he could to promote domestic tranquility in the Commonwealth of Australia.

I also want to remind all of you that I’m doing my utmost to support commercial and business activities in Australia so florists, candy merchants and jewellers, be aware. And that decent but forgetful bloke who heeds this reminder should remember one thing out of all of my comments, you owe me.

In fact, who knows – as they say in America he might just get lucky later today. And if so, you owe me big time.

Now the President told me that I – when I came to Australia, I needed to do my utmost to support relations within the Commonwealth but I’m not sure this is exactly what he had in mind.

In all seriousness though, I want to say that I do have great respect for the media even though I may not always like what is said or written about me or my country. I am impressed in Australia by the variety of the analysis and opinions expressed in the media on significant issues of the day. It seems like nobody agrees with anybody else. The media clearly intends to be independent, provocative, controversial which results in a robust and spirited public debate on the issues of the day. And that’s a good and healthy thing in a democracy. It’s a concept that Americans embrace. The style may be different here, but the function and substance is the same.

I’ve heard it said that journalists are more attentive to the minute hand of history than they are to the hour hand. That journalists must be responsive to those daily deadlines rather than to some broader annual calendar. And this is understandable to me. Given the focus on immediate events of the day, now even immediate events of the hour because it’s not limited to journalists. It fact it’s the focus that we all share in this technological age of instantaneous communications around the globe.

We, as societies, in your nation and mine, demand immediate information and the availability of such information no doubt influences the opinions of our citizens and the actions of our governments in both our nations in many different beneficial ways. In the free market place of ideas which is democracy. Accurate and timely information is critical to be accountable and responsible for the decisions made.

However, I confess to you that I worry about an excessive emphasis on the events of the day, that they may sometimes obscure the longer term perspective, a broader perspective. I worry that journalists, government officials, and citizens in general, in our two democratic societies, are sometimes at risk of not seeing the forest for the trees. Some might even say, not seeing the forest because of our focus on individual leaves in particular trees.

What I’d like to do today is to add to the public debate within Australia on some important issues affecting the national interests of our two countries by suggesting a long term analysis and view of policies and goals. These issues arise in the context of extremely positive changes generated by economic globalization and that has occurred over the past decade or so. We are presented with great opportunities but those opportunities are threatened by the contrasting, disruptive impact of international terrorism and transnational crime. We exist in an international environment that has great potential for peace, increased stability, increased prosperity because of globalization. But it’s also one that is fraught with the risk of domestic turmoil, economic dislocation, random, ruthless, indiscriminate violence against innocence that is the ultimate hallmark of terrorism. Our globally interconnected economic, political, financial, and energy systems have brought increased prosperity to many and can do so for many more in the future.

But that interdependence also guarantees that no country is immune from the consequences of terrorism ’cause terrorist attacks can have significant impact far beyond the geographic location directly affected.

On the other hand, the development of responsive governmental institutions in a free market economy can provide the hope and opportunity which can effectively eliminate one source of the dissatisfaction manipulated by proponents of extremism and thus provide an antidote to the poisonous ideology of terrorism. Let me start from an historical perspective since history affects the way both our nations view the world and informs our decision making processes. Our two countries share an abiding faith in the democratic process including importantly an independent press and media and in the free enterprise system. And that combination allows citizens to require governmental institutions to be accountable and responsive to the needs of people and allows individuals to seize control of their own destiny, to develop their talents and abilities to the fullest, and to seek a better life for themselves and for their children.

Looking back over our common histories with long term perspective – that faith in democracy and free enterprise is validated.

With the sixty-fifth anniversary of the bombing of Darwin next week, I’m reminded that Australia and the United States made great sacrifices in World War II to defeat fascism, and, after winning the war, made additional sacrifices to win the peace through aid to Japan and Germany which supported – that aid supported – new democratic governments and free enterprise economies.

The United States, Australia, and other democracies spear-headed the post-war creation of new international organizations – the World Bank, the IMF, the GATT, now the WTO, critical organizations that became the intellectual and institutional architecture for a more open international market-based system which has lifted hundreds of millions of people out of poverty around the world and served as the foundation for the global economy that benefits us all in reality today.

I’m also reminded that our two nations faced dark days in the 1950s as we dealt with the invasion of South Korea by communist forces. Both our nations experienced domestic controversy about sending troops into the Korean peninsula. However, democracy and a free enterprise system was preserved in South Korea at considerable sacrifice by both our nations, and the result fifty years later is a strong and prosperous ally and friend, whose Foreign Minister has been selected to become the next Secretary General of the United Nations. When one compares the prosperity and freedom enjoyed in South Korea against the deprivation and hardship experienced by those to the north, one can easily understand our shared faith in democratic institutions and free enterprise.

I submit to you that it is in the national interest of both Australia and the United States to promote the creation of stable, democratic governments that generate greater prosperity for their own citizens through the development of more efficient and open markets. Let me describe to you just a few ways in which the United States and Australia are working together to accomplish that.

In the bilateral context, the U.S. and Australia are vigorously implementing the Free Trade Agreement. The Free Trade Agreement presents tremendous potential for both the United States and Australia in terms of increased trade, better and less expensive goods and services for both of our nation’s consumers. It also affords the potential for increased economic activity in the entire region, and there are direct and indirect beneficial consequences of that for other nations in East Asia and the Pacific Islands region.

In the multilateral context, the U.S. and Australia work side-by-side in APEC and the WTO seeking ambitious outcomes that further a common goal of making the international market place a more open, level playing field for commercial activity. APEC is the critically important forum for regional economic cooperation as APEC’s twenty-one members span four continents and represent 60% of the global GDP and roughly 50% of world trade. President Bush and Secretary Condoleeza Rice have made clear in the recent Leaders’ Summit in Hanoi that APEC remains the pre-eminent channel for U.S. economic engagement in this region. In every meeting, in public event, they stressed that the U.S. vision for APEC transcends customary co-operation and looks to the emergence of a true Asia-Pacific Economic Community, spanning the public sphere, the private sector, NGOs, academia, and civil society. They also proposed that APEC should be in the forefront of regional economic integration and begin serious consideration of a Free Trade Agreement – Free Trade Area of the Asia-Pacific as a long term goal. Importantly, the Leaders formally endorsed that proposal.

Australia has already kicked off its year of leading APEC with a highly successful series of senior official meetings in Canberra last month, and, in the coming year, the United States will work under Australia’s leadership with other APEC members to develop concrete initiatives to advance these goals.

On the WTO DOHA Development Round, the APEC Leaders also issued a strong stand-alone statement urging APEC members and others to renew efforts to complete negotiations. One of the strongest passages in a pointed, one-page document was this: “We are ready to break the current deadlock: each of us is committed to moving beyond our current position in key areas of the Round.”

Make no mistake about it, the DOHA Development Agenda remains the U.S. number one trade priority and the United States Trade Representative Susan Schwab and the Australian Trade Minister Warren Truss have been working to keep the WTO talks alive. They most recently held talks in Davos and in Washington, and the United States still holds out hope that their efforts and the efforts of others will result in an ambitious outcome of increased market access and reductions in subsidies.

Like Australia, the United States recognizes its responsibility to assist emerging democracies and developing countries. The United States has been and remains the largest single country donor of foreign aid. Our official development assistance nearly tripled from 10 Billion dollars in 2000 to 27.5 Billion dollars in 2005. Of that, 10%, or 2.7 Billion dollars went to combat HIV/AIDS pandemics that are decimating populations in Africa, the Asia/Pacific region, and the Caribbean. Around the world, the United States provides food, medical care, education, and disaster relief to millions of people. Our development assistance program is an essential element of our policy to support and promote effective government and free enterprise. Economic development, responsible governance, domestic stability, and individual liberty are inter-related.

Moreover, we coordinate these efforts with Australia and like-minded countries to ensure that our mutual goals are achieved in an effective manner. A perfect example of this was President Bush’s rapid decision, following consultations with Australia, to commit a Billion US Dollars for reconstruction and development following the 2004 Boxing Day Tsunami, supplementing Australia’s leadership contribution of 1 Billion Australian dollars.

Terrorism though, presents a grave threat to the positive development potential afforded by these activities and the global economy. It presents significant, ongoing national security risks not only to Australia and the United States, but also to emerging democracies and developing countries in this region. The U.S. policy to combat and defeat terrorism is well defined and it’s well-known to all of you journalists. Iraq is the central front of the global war on terror, and the challenges and difficulties encountered in Iraq have provoked heated political debates on the policy, both in the U.S. and here in Australia.

A vigorous debate on this Administration’s policies is to be expected because the issues are critical to both nations. There is no easy, immediate solution to complex problems presented in Iraq, to complex problems presented in the war on terror. All the proposals addressing these issues involve significant challenges, and the consequences of all of them must be considered over the extended time horizon that I mentioned at the outset of my speech. All have potential adverse consequences because the future is never clear. We don’t have the opportunity as we do with German, Japan and Korea to look back fifty years.

However, there appears to be three factors on which there is a general consensus about Iraq. First, the vast majority of the Iraqi people desire peace, security, individual rights and liberties, and an opportunity to determine their own destiny. We all remember the millions of Iraqis who gave witness to these aspirations by voting in repeated elections over the past several years, despite the very real threat of terrorist violence. Risking their lives, both at the polls and possibly later in retribution for having voted at all, Iraqis turned out in astounding numbers. There is no mandatory voting so familiar in Australia, and yet the Iraqis proudly displayed their blue thumbs and fingers showing their courageous exercise of the right to vote in the selection of leaders for their new government.

Second, it is an undeniable fact that the duly elected government of Iraq has largely been unable to achieve its goals of domestic stability and tranquility. Although the government is trying to deliver peace and freedom to its citizens, terrorists – inspired and assisted by the forces of al-Qaeda – are trying to destroy the elected government of Iraq and, through the fomenting and manipulation of sectarian conflict, to destroy the willingness of Iraqis to work together in a democratic system.

Third, even those who propose the withdrawal of U.S. troops concede that, if the United States and other coalition partners were to leave Iraq before the Iraqi government is capable of defending its people and providing for its own domestic security, the consequences to the Iraqi people would be dire. The current sectarian violence would likely turn into a bloodbath with increased retaliatory carnage and loss of life on all sides. Additional adverse consequences outside Iraq, including the Asia/Pacific Island region, would also have to be considered.

Given those facts, the U.S. and our coalition partners remain committed to helping Iraq realize the goal of freedom, peace and prosperity for its citizens.

President Bush’s new ‘surge’ strategy has three elements to it and General Peter Pace, the Chairman of the United States Joint Chiefs of Staff, was here in Canberra this week to discuss this strategy with Air Chief Marshall Angus Huston with the Defence Minister Nelson and with Prime Minister Howard. First, a temporary U.S. troop increase will assist the Iraqi government in stabilizing the situation in Baghdad which is the locus of the most violence. The reduction in the sectarian violence between Sunni and Shiites will require disarming violent extremists in both communities and establishing a presence to secure those neighborhoods.

Second, the Iraqi government has committed to assume greater responsibility for its own security and government services and has agreed to perform certain defined benchmarks within a given time frame. The Iraqi government is on schedule to meet these benchmarks.

Third, the Iraqi government has committed to spend 10 Billion dollars in economic investment programs to revitalize the Iraqi economy. These programs will provide jobs and rebuild needed infrastructure.

All three elements are necessary for the long term stability of the Iraqi nation. There is no cookiecutter format for democratic government. The development of democratic institutions is a dynamic and continuing process, and it depends upon the creation of confidence within the society in individual rights, the rule of law, the integrity of government officials, the freedom of speech, the independence of the media, and domestic stability and security. Democracy cannot be imposed. Citizens of conviction must choose it.

The global war on terror is not limited to Iraq. Having denied terrorists a safe haven in Afghanistan, the U.S. is determined to prevent al-Qaeda and associated forces from re-establishing safe havens elsewhere. As part of that effort, the United States has detained numerous captured al-Qaeda fighters at Guantanamo Bay, and the designation and detention of those illegal enemy combatants has provoked great controversy and debate in the United States and in Australia. In Australia, the debate has focused on the case of David Hicks who’s been designated as an enemy combatant and detained at Guantanamo Bay for five years awaiting trial before a military commission for alleged war crimes.

There are numerous issues that have been raised in the media with regard to Mr Hicks and given time constraints, I would like to address in my remarks the issue which appears from the media coverage to be the one of greatest interest to Australians. However, I look forward to discussing all other issues that you might have on your mind during the question period following these remarks and I will stay there after as well if we run out of time there.

I’ve also brought with me copies of an opinion piece which I submitted to both The Age and The Australian last November on detainee issues in general. In it, I provide a more detailed analysis of various issues concerning the U.S. treatment of detainees. Those present can take a hard copy with them when they leave the premises. I believe that The Age has also posted it on their website so those who are not present here in Canberra who may be listening to my remarks can access it if they are interested in doing so.

The issue which appears to me to be of the greatest interest to Australians is why has a trial on these alleged war crimes been delayed for so long?

Australians are understandably angry at the delay. Australians believe, as Americans believe, that an accused should have a fair go through a trial under the rule of law.

And the Australian government is also angry at the delay. The Attorney General, the Foreign Minister, and the Prime Minister have all been in regular contact over the past several years with officials at the United States Department of Justice, at the Department of State, and at the White House expressing in no uncertain terms Australia’s demand that Mr Hicks be brought to trial as expeditiously as possible.

The United States understands and shares this dismay at the lengthy delay. But the U.S. has not sought the delay. The reasons for the delay is the opportunity afforded detainees under the United States rule of law to challenge before an independent civilian Federal Judiciary the very process of their adjudication. Various enemy combatants have exercised that important right. As the appellate courts considered these issues, the trials were stayed by court order pending outcome of the appeal. The United States Congress then responded to the court decision by enacting new legislation to address the legal deficiencies found by the Supreme Court. The resolution of novel and important issues before U.S. appellate courts and through Congressional action admittedly takes time. But it is time well invested for the rule of law in clarifying a specific body of law in controversial areas such as war crimes.

We should all remember that the U.S. provided, at government expense, for the counsel for the detainees and private counsel can and did also participate in the challenge process and the appeals.

There are, of course, numerous volunteer lawyers from American Bar groups who also provide free representation to detainees. Since John Adams’ represented the British soldiers who fired on colonial protesters on the Boston Green before the American Revolution, history has shown that American lawyers take seriously their responsibility to be zealous advocates for controversial clients.

And I believe that no one in Australia can claim that Mr Hicks has not been represented by zealous advocates. Given the different results reached in closely divided opinions in the United States Supreme Court and in the Circuit Courts of Appeal terrorist cases, counsel for detainees have pursued every possible defense, procedural or factual, that imaginative and talented lawyers can devise. And certainly they should have done so because that is their responsibility and obligation to their client. Issues relating to the designation, processing, treatment and trial of detainees intersect at the very crossroads of individual rights and national security, and, in America, these issues have been, are being, and will continue to be addressed by our independent Federal Judiciary as they should be in a free, democratic society that is committed to the rule of law. It is that pedigree of process, if I can call it that, with multiple judges passing upon the complex issues of the day in our appellate courts in the United States which results in the American people accepting the ultimate decision as the law of the land and complying with it. Some assert that the United States has abandoned the rule of law in this area. But rather than abandoning the rule of law, I submit to you that America is embracing the rule of law in the midst of war as no nation in history has ever done.

We Americans certainly do not agree always among ourselves on what is the ‘right’ decision, but we always recognize the legitimacy of whatever the decision may be at the end of the process. It’s one of the enduring strengths of our system of government, checks and balances, and it’s one of our enduring strengths of our people, even if it results in significant delay in the outcome of any particular case.

We’re living in challenging times. Australia and the United States are presented with remarkable opportunities to affect the entire region in a positive way based upon the burgeoning global economy. It’s a potential which could hardly have been imagined decades ago. At the same time, both our nations face continuing, serious threats from international terrorism which will not disappear without action on our part. It’s therefore distresses me when I read surveys like the January BBC/Age poll indicating a view that the United States has a negative impact on world affairs. I suggest to you that such a perception reflects a profound misunderstanding of United States’ goals and the policies that are designed to reach them. The U.S. is in fact attempting to use its influence and its resources to promote global prosperity and stability and to encourage other responsible nations to do the same. No single country has the capability to succeed in that effort on its own. The United States must work together with other nations, particularly with one of its closest allies – Australia.

The relationship between our nations is stronger, broader, and deeper than ever. At times, we have and we will in the future have disagreements and conflicting opinions. Yet, our shared devotion to democratic principles and ideals unites us and together we can bring hope and opportunity not only to Australians and Americans but also to so many others in the world. For that reason, I am honored and privileged to be the United States’ representative here in Australia.

Thanks for allowing me to share some thoughts with you and I’ll be happy to answer any questions that you might have.


Thank you very much Ambassador. As you indicated, it is time for questions. The first one today is from Cynthia Banham.


Ambassador, Cynthia Banham from The Sydney Morning Herald. Do you think that the relationship between Australia and America is so close today that it is okay for an Australian leader to make an intervention into domestic political issues in the U.S., namely a Presidential election? Or do you think there are limits on the interventions that foreign politicians can make on domestic U.S. issues? Thank you.


You will note that that issue was conspicuously absent in my remarks, no doubt. The – what you are requesting me to do is what you are raising as an issue and that is for me to engage myself in the domestic political issues that relate to Australia and the internal debate within Australia. So it would – I remember coming over here to Australia and reading about criticisms of Ambassador Schaeffer being engaged in what was conceived to be interference in the Australian internal political system. So I will politely, although I’m a recovering lawyer, I have had now four months of diplomatic training and I, I will politely decline to make any comment related to it. [Applause]


Peter Hartcher.


Well Mr Ambassador, I, I don’t know what your diplomatic training would have taught you on this particular point, but just to follow up on my colleague’s question. As recently as the APEC meeting in Hanoi, your Secretary of State Condoleeza Rice said that the Australian Labor Party policy in Iraq was irresponsible. Is that a position that you would agree with or would you disassociate yourself from that? And if I may also ask you a question about what you have called the hour hand of history, the ANZUS Treaty. The ANZUS Treaty is being invoked by Australia after the September 11 attack, never been invoked by the U.S. Can I ask you a question about your understanding of the operative clause, clause 4 which says that the countries, the parties to the Treaty would meet the common danger in accordance with their Constitutional processes. What would the Constitutional processes be for the U.S. to invoke the ANZUS Treaty? In particular, if there were a conflict between the Executive Branch and the Congress?


Right. Two questions, Peter. I don’t know whether the Chairman will allow you two questions but I’ll try and answer them both if I can. Number one, with respect to Secretary Rice’s comment. I have not seen that comment. What I have seen was Secretary Rice defining United States’ policy. Policy that’s well known to you. The United States’ policy is that the coalition of the willing and the United States being one of those, should do their utmost to assist the democratically elected government of Iraq in positioning itself and building its capacity to provide for its own domestic tranquility and stability. Now, in relation to that as I have seen the quotation, she was asked well – you know – how does the United States then view the removal of troops from that? And her response was well we obviously are grateful to those members of the coalition of the willing who have troops there. And then I found the headline the next day of Ambassador blasts Labor policy. She was not interfering in domestic politics. She was not commenting on a policy of any party as I understood it and as I have seen it, any party that was engaged in their own political debate internally. She was talking about what U.S. policy is. And I think that that was entirely appropriate. The news media tends to puts its interpretation into its own internal political process and that was not, as I understand it, the Secretary of State making any comment on internal political debate in any country, including Australia.

Second question is the ANZUS Treaty and the Constitutional analysis that I, as a lawyer from thirty years ought to be able to give you, the answer is I don’t know. I have never read the Treaty. I have not done the Constitutional analysis and I would imagine that there would be a vast difference of opinions among academics and practising lawyers and politicians as to what might be required, so I’m not able to give you a good answer on that.


Roger Hausman.


Your Excellency, I’d like to congratulate you on your succinct views on Australian football codes and to bring the discussion…>


But the terrible thing was that just as I began to understand it, the season ended and I had to start learning cricket.


They’ll both be going next week.


Yes, shall we talk about fifty overs and…?

Question cont’d:

Indeed, I was going to bring the debate probably to a more Hollywood perspective and just to keep a simple question. Could you elucidate to us the role of a Deputy Sheriff within the context of APEC?


I have – I have heard people in the media trying to focus on a, on a Deputy Sheriff comment and I don’t know exactly where that came from. The context that it’s been asked to me previously is in the context of Australia taking the lead and defining its national policies in Asia-Pacific region and the United States following and supporting that. So I don’t use the term and I’m not familiar with the context in which it came about, but I don’t think it’s an accurate term in any way, shape or form.


Next question’s from Lincoln Wright.


Ambassador, Lincoln Wright from News Limited, Sunday Publications. Welcome to the Club.


Thank you.

Question cont’d:

A very fine speech. I really wanted to ask you today but I don’t think you’re going to answer. Your membership with skull and bones with the President’s 1968 – the Class of 1968. I wanted to ask you, is it the secret society that runs America? But I’ve heard that it’s more secretive than the President’s daily intelligence brief, so let’s not go there.


I’ll be happy to answer that question.

Question cont’d:

Oh really?


That’s the one question that you get.

Question cont’d:

Oh okay. Well.


You know a card laid is a card played.

Question cont’d:

This is not skull and bones. The serious question – the serious question is Daniel Ellsberg when he was working for Robert McNamara in the mid-sixties, stumbled across a secret document which ultimately got him fired for reading which sort of said that the U.S. war plan is [indistinct] ‘I knew the war was lost in ’67, the President was saying otherwise.’ I wanted to ask you, is the War – is the War lost in Iraq? Does the leadership in the United States really think you can win this war or are you playing a clever political game until the Bush Administration finishes?


This Administration really believes that it can win the war in Iraq. It is not won without challenges. It is not won without risks and it is a strategy that will take time.


Sandra O’Malley.


Ambassador, Sandra O’Malley from AAP. If at any stage Australia decided to withdraw its troops from Iraq.


I’m sorry, I couldn’t hear.

Question cont’d:

If at any stage Australia decided to withdraw its troops from Iraq and if this withdrawal occurred prior to any American pull out, would the U.S. view Australia as having let the side down at all?


Well I’m not going to get involved in speculating about this or that, of what ifs. I don’t get paid for speculating, you all get paid for speculating. So I’ll let you speculate on all of that and what, what we in government have to do is deal with the reality of things. And so until that sort of event occurs, no one’s in a position to really say what the consequences would be or what the perceptions would be.


A question from Mark Riley.


Mark Riley, The Seven Network, Mr Ambassador. I’ll have a go. Is al-Qaeda praying for Barack Obama and the Democrats to win next year’s U.S. Presidential election?


I have absolutely no idea what, what al-Qaeda’s views on those subject are and – but I do think that as was reflected in my remarks today, and it is the view of this Administration, that a withdrawal of troops from Iraq prematurely before they are in a position to provide for their own domestic security, would have remarkably dire consequences and I have – I said in my speech that I’ve seen no one who disputes that. That there would be a blood bath far worse than the civil disturbances and sectarian violence that exist now. But I have just this day read something by Representative [indistinct] in the United States where he didn’t think that would happen. So I revise my comments to say there is a general consensus and I only know one person in the whole world who’s basically said it would not be bad – there would not be as much sectarian violence if the United States prematurely withdrew.


David Denham.


David Denham Ambassador, from Preview Magazine. I’d like to tease out a little bit more about the Military Commission.



Question cont’d:

Under which the Guantanamo detainees are being processed.



Question cont’d:

Because it seems to me, as you said earlier, that Australia and the U.S. are very close on many things. We fought the Second World War, South Korea, Vietnam, Afghanistan, Iraq. So we’re pretty closely related to this. But it seems to me unfair and unjust that U.S. citizens who might be a member of al-Qaeda don’t have to go through that Commission, where as any alien, even if they’re really closely related to the, to the U.S., any alien citizen has to go through a different process. Where you can use coercion, evidence from coercion, evidence from hearsay evidence. You can’t necessarily appeal to the – cross-examine the accused. So it seems to me very unfair that you’ve got a different process for the same crime. So I wonder if you could explain to the audience why that Military Commission process was adopted when it seems to me to be blatantly unfair and also, finally, if we’re going to win the hearts and minds of the war on terror, do you really think it’s good to incarcerate people for five years with no charge, when some of them all that they might have been is a driver to one of the high ranking al-Qaeda people?


Okay. Two questions. I appreciate very much your asking that question because, with all due respect, I think it confuses the legal systems that are applicable under established law. The legal system that you are familiar with is the domestic criminal law system. The domestic criminal law system generally involves what we will call recognised crimes, assault, fraud, you know burglary, robbery, murder, within the geographic boundaries of the nation state and under those circumstances if the Police come out, they put yellow ribbons around everything, they collect evidence, they – they interview witnesses, they provide information for the Prosecutor. The Prosecutors go out. It’s a process that we are all familiar with and therefore when we think of illegal enemy combatants we all tend to think of the domestic criminal law system that relates to punishment.

Now, there is a separate system that relates to armed conflict and it has been in existence for decades and it has to do with the difference between domestic criminal law and international armed conflict. Armed conflict, the rules of law related to war generally occur outside the geographic boundary. Often times by people, most often by people who are not subject to your jurisdiction ie they are not citizens. It occurs in a context in which there is the fog of war, the chaos of war. People are shooting at each other. It’s not possible to capture an enemy soldier on the battlefield, put a yellow tape around where you captured him and begin to interview people that might happen to be passing by. If you happened to be in a circumstance in which there were witnesses to all of this, they’re not subject to the jurisdiction of your courts and you are going to have to bring somebody over from Afghanistan or from Iraq or from some other foreign jurisdiction to be present to testify like you would have to do in the domestic criminal law system. The exigencies of war are that you eliminate the combatant immediately and for the safety of your own troops and for the military objectives of your armed conflict. Number two you detain that individual and you detain them for what purpose? Both to prevent them from returning to the battle…killing other people, and number two for intelligence purposes.

So, the United States Supreme Court in the Hamdi decision H A M D I, not H A M D A N which is the, the other decision, in a decision written by Justice Sandra Day O’Connor, now, now retired from the United States Supreme Court, held that it was in fact within the President’s powers to designate enemy combatants, number one, and number two, to detain them for the entire course and duration of the hostilities.

For instance, remember back to the Second World War, there were irregular partisans fighting on behalf of the Japanese who were not Japanese soldiers, they weren’t in uniform and they were doing damage and killing Australian troops and if you captured one of those people, you didn’t then say, well we’re just going to let you go. You detain them for the duration of the hostilities. And remember this, that on September 11 2001, eighty-eight Australians died in the attack in the United States. Imagine what would have happened, imagine what the reaction would have been if eighty-eight Australians had been killed by al-Qaeda in the geographic boundaries of the Commonwealth of Australia. You would be interested in detaining those dangerous people during the entire course and duration of the hostilities.

The, the problem that that raises for many people is when do the hostilities stop? Can you detain someone for two years but not two years and a day? Or five years? That’s too long, but four years is the right amount of time to detain somebody and then you have to let ’em go. Whether they’re going to join the conflict, whether the conflict is going on or not, you let ’em go and they go back and they shoot at you and try and kill you. There are answers to that.

Number one, when Australians detained the Japanese irregulars or the partisans supporting the Japanese, Australia didn’t know how long the War was going to last. Didn’t know whether it was going to be five years, ten years, fifteen years. Number two, with respect to that, there are theories out there that the, the duration of the hostilities can be declared over by the United States Congress. Number three, the United States does not wish to be the world’s gaoler. The President has in fact said we’d like to close Guantanamo Bay but the detention of those ideologically ruthless fanatics who would kill Australians and Americans without blinking an eye, the detention of those people is really an – of benefit to the international community and the United States is open and willing for the international community to take responsibility for detaining those people who may kill, not in Australia, not in the United States, but in many other areas of the globe.

Lastly, the United States has not been detaining people who were adjudicated as enemy combatants any longer than is necessary in order to assure that they will not return to armed conflict against the United States. There’ve been more than three hundred and fifty people released from Guantanamo Bay and they do it under a – under an administrative system that is beyond anything that has ever been done by any nation before and is not required by any international rule of law or any treaty.

The United States sets up a combat status review tribunal to determine whether or not someone is an enemy combatant and that the detainee can say I’m not an enemy combatant and can provide whatever information they want and it’s three people that do that and they make a determination. Then the enemy combatant decision made by the three person panel sworn to be objective and independent, military commissioned officers, goes through a reviewing authority. Then after that, the individual who is determined to be an enemy combatant can contest that in a United States court of law, a civilian court of law. If the determination is appropriately made that the individual is an enemy combatant, then, each year, there’s an annual review by an administrative review board, sort of like a parole board. Is this individual still a danger. And what sorts of things do you think they would consider? They allow the countries to participate in that and the countries can get information from the families.

Number two, it’s – it’s a situation in which you would look at things like what do we know about what this individual said about their motives before they ever were involved in the conflict? Were they an extremist who was saying for instance, they thought beheading infidels was a good deal. Ought to be done.

Number two, what action did they take to obtain the sort of training that would be necessary in order to put into action the professed extremist terrorist ideology that they had previously been professing? Did they train in a terrorist camp, perhaps in Pakistan and then train some more in an al-Qaeda camp? Perhaps in Afghanistan. And then after that, did they go back for additional training in sophisticated, military matters, such as improvised explosive devices, rocket propelled grenades, mortars, things of that nature?

Furthermore, did they take action after they received training to enter the fray and to kill people? For instance if someone was not in a theatre of war on September 11 and announced that they were pleased with the terrorist attacks and the killing of Americans and Australians and many other nationalities and then came into a theatre of a war and reconnected with al-Qaeda which had professed responsibility for the attack, that might be an indication that one should reasonably consider about the dangerousness of that individual and therefore consider whether to detain them because of the dangerousness.

Finally, one might consider whether the individual was co-operative and compliant during the detention. Telling you I’m an innocent person and I – you know was just in the wrong place at the wrong time. Or do they cooperate in efforts to provide resistance and to communicate about various ways to impede the stability and good order of the prison facility? All of those things might be considered. Now the United States as I said has released over three hundred and fifty of those people. But you have to understand that there should be a degree of skepticism because al-Qaeda in its manuals talks about using – quote – or I call it this – they talk about using the American legal system. I call it lawfare as well as warfare – as part of warfare. And so, al-Qaeda is trained or trains its people in deceit, deception, and denial to obtain the ultimate ends, ultimate terrorist goal. So it would not be surprising that after the three hundred and fifty people have been released, over twelve have been either recaptured or killed and identified, returning to the battlefield and trying to kill Americans. Trying to kill Australians.

So when one talks about the criminal justice domestic system, one is ignoring the exigencies of war and the chaos of war. One is ignoring a decades old system that recognises exactly how one goes about dealing with those issues, which like I said in my remarks, is a delicate area of intersection between national security and between individual liberty. And the Bush Administration believes that it’s got its right, but you know we are certainly pleased to test those things in the courts of the United States so that we are assured that we’ve got it right. Okay. Five years incarceration? I think that I previously answered that in terms of the dismay that the United States has about it having taken that long. But would you – would you then say to me well you can hold him four years, eleven months and thirty days? But when five years occurs, bingo, the doors open and people leave. There is no easy answer to that and if – if the international community is willing to take that responsibility then the United States would gladly co-operate and participate in an international detention regime that was effective to prevent terrorists from killing people around the globe.

Thank you for that. The next question’s from Robyn Fitzimmons.


Robyn Fitzimmons Freelance. If I could go to the question of Korea and the six party talks which have just concluded in Beijing. There appears to be a difference of opinion between Secretary Rice and until very recently, UN Ambassador Bolton as to the significance of the outcome with I think Ambass – Mr Bolton very much down playing it. Could you explain why there is such a difference between two such imminent learned diplomats? And I think Mr Bolton said the outcome could have been achieved six years ago and in that context what have been the nuances of Sino-US diplomacy and for that matter diplomacy in Vietnam at APEC which have enabled this to come about?


Okay. Number one, I am not privy to the nuances of the diplomacy relating to China and others. China deserves a lot of credit for having initiated the six party talks and I think the United States and other members of the responsible international community give them a lot of credit as well. They should. Number two, how do I explain the difference of opinion between two Australian journalists? Once I figure that out then I may start to try and figure out how I explain the difference of opinion between Mr Bolton and Secretary Rice. I don’t know what those differences of opinion are. I haven’t seen the, the quotes from Mr Bolton but in the United States, I mean one of the things that I think is – allows me the opportunity to comment on, there is a perception that the Bush Administration does not take in diverse views. You tell me what I want to hear or you’re out of here is sort of the attitude that most people say exists within the Bush Administration. That is not so. The President is one who solicits diverse views but the President is not hesitant to make decisions. That’s what he says his job is, to make decisions. And on any complex issue. On any complex issue, there are going to be multiple decisions, I mean multiple views of what the decision ought to be and they will be nuanced and they will be stark. And so what one has to do is to listen and the President does this. Listen to the divergent views and come up with what he and his National Security Advisor, his Secretary of State, his Cabinet members, whoever he happens to be relying upon, use them as a basis for the decision.


Next question’s from Gerard McManus.


Ambassador, also on North Korea. The ink has barely been signed on this latest agreement with North Korea which has weapons of mass destruct – real weapons of mass destruction rather than trumped up weapons of mass destruction, but already having secured plenty of oil supplies over the next few months, always the regime is talking about a temporary suspension – their understanding of the agreement is a temporary suspension of their nuclear facilities. How many times is the United States going to play sucker to this murderous -murderous and despotic regime?


What I’m a little bit confused on is what your view is of the situation? I have – have not seen the agreement as I’ve indicated. I am not privy to the negotiations. Assistant Secretary Chris Hill led those negotiations on behalf of the Department of State, on behalf of Secretary Rice and, and the President, so I’m really not in a situation to debate with you the specifics of the agreement, the consequences of the agreement and where things go from here, because I simply don’t have that information. I’m sorry.


Malcolm Farr.


Ambassador, Malcolm Farr from The Daily Telegraph. Senator Obama in response to the Prime Minister said words to the effect that well if he wants to have comments on this he ought to put in another twenty thousand troops. Isn’t that an indication that there are senior people within the American political system, including a potential Presidential candidate, who have a low opinion of Australia’s contribution to Iraq and following on from that, wouldn’t it mean that it wouldn’t hurt Australia that much if we did pull out?


I can’t tell you what Senator Obama’s view of Australia is. I do not know. I do know what the view of the Chairman of the Joint Chiefs of Staff of the United States is. General Peter Pace, the U.S. Marine Corps. He was here this week and some of you here in this room were at a news roundtable in which he lauded and praised Australia for its contribution and for the effectiveness in two provinces in Iraq which have been turned over to the Iraqis and, and which the Iraqis have assumed responsibility for the stability and security in those areas with Australian back up. And General Pace was unequivocal in his statement of the importance of the contribution that Australia had made and the gratitude that the United States Military had for being able to work with some of the finest men and women in uniform in the world. Period.


Mark Kenny.


Mark Kenny from The Adelaide Advertiser, Ambassador. Our Prime Minister John Howard has spoken of the need to protect American prestige and he says of course this would be seriously damaged if America were to pull out of Iraq in circumstances that could be seen as defeat. In your speech you also spoke of faith in democracy. I’m wondering whether, going back to Guantanamo Bay for a moment, whether you would concede that the apparent indefinite incarceration of people in Guantanamo Bay has had any negative impact on that faith around the world, and therefore on American prestige?


Well I’m sure that there are people in Australia, just as there people in the United States, who are concerned about the risk of indefinite detention. But as I indicated, there are remedies that are made that relate to that which should, if recognised, eliminate that concern. And I return to the Combat Status Review Tribunals, in which there is a process that is unlike one that has ever existed before and which has ultimately an appeal to a civilian Federal court in the Circuit Court for the District of Columbia. And then has annual reviews to determine the continuing risk to the United States. Now every situation of every detainee is obviously unique. But, I would – I would hope – well let me put it this way. I suffer no illusions from the fact that people are going to hear me say that who have already made up their mind, slap themselves in the forehead and say I now see the light. I just wish I’d understood it earlier. What I do think may happen is that people can say I strongly disagree with this policy of the United States, but I can understand how they reached it because they suffered three thousand dead, eightyeight of them who were Australian, in the United States on one day and therefore they believe that this individual still poses a risk not only to the United States but also to innocents all over the world. Terrorist attack don’t just occur in the United States, in Iraq and Afghanistan. Australia well knows this from having experienced Australian deaths in other areas outside the continent of Australia and the island of Tasmania. So, you know, it is a matter of not just significance for the United States in Australia. It’s a matter of protecting innocents who may happen to just be in the wrong place at the wrong time to create social turmoil and stability problems.


Question from Clinton Porteous.


Hello Ambassador, Clinton Porteous from The Courier Mail. You were talking about deaths there. On the issue of Iraq, Australia’s been very lucky in that it’s suffered no direct deaths in Iraq whereas I know in your country it’s been three thousand. In both countries the opinion polls are against the war. In your opinion, how much role has that – those deaths, the grieving family played in turning the opinion polls in America against the Iraqi war effort?


Gee, I – you know, one death of any military service man or woman is too many. And I have no way of gauging or even assessing the impact of that on public opinion. I suppose there are pollsters that could do that but I have no answer to that.


Mark Dodd.


Ambassador, Mark Dodd from The Australian newspaper. How would you characterise the, the value of the Australian military deployment in Iraq given the number of boots on the ground, if you take out the Warship and the Embassy guard which are about a hundred and twenty, leaves about five hundred troops, all of which are removed a safe distance from high intensity combat operations? Thank you.


Well I – I hope that I had previously answered that with respect to the comments that General Pace made when he was here to Air Chief Marshall Angus Huston, to the media, to everyone that would listen and that is that the Australian troops have made an outstanding contribution and it is, it is something for which the United States is extraordinarily grateful and it’s something that I think the Australian people ought to be extremely proud of, their military and how they have performed. If you, if you talk with an American service man and whatever the branch who has been involved in operations with Australian counterparts, they will tell you that their Australian mates are among the best there are, period.


Chris Johnson.


Chris Johnson from The West Australian, Ambassador. What is your understanding of what the reaction would be in Washington, if the Australian government just simply asked for David Hicks to be returned home?


Well I – I don’t know what the reaction of the United States government would be. I do know that anything that is of importance to Australia will be considered at the highest levels of the United States government and if that means the President, the Secretary of State, Secretary of Defence, Chairman of the Joint Chiefs, you name it. The – I personally when I was at the Department of Justice, sat in on telephone conversations that Attorney-General Philip Ruddock had with Attorney-General Alberto Gonzales, you know stressing the significance of expediting any charges of war crimes against Mr Hicks. When Australia speaks on an issue that is important to them, they are listened to at the highest levels of government. What the ultimate decision would be, I can’t comment on.


Graham Dobell.


Ambassador, Graham Dobell from Radio Australia. First of all, thank you very much for your forceful reminder on Valentine’s Day – it reminds me that I must use this platform…


Looks like he’s a forgetful bloke.

Question cont’d:

No, no. I’m actually – I actually want to owe you one. It reminds me that I have to use this platform to wish a very happy birthday today to my little girl Jacqueline Dobell.


Oh right.

Question cont’d:

And a diplomatic endorsement would…


Let’s give her a round of applause. [Applause]

Question cont’d:

So I definitely – I definitely owe you one on that. On – on Korea, does the six party agreement though suggest something of victory for what might be called traditional diplomacy. The sort of argument that the Chinese have been making about traditional diplomacy. Does it in fact mark something of a failure for the muscular pre-emptive rhetoric that we heard in earlier times from the Bush Administration and particularly, that – that phrase which now rings quite hollow, the phrase about the axis of evil?


Well I – I think what one has to, to consider is that the United States makes an assessment at whatever the issue is, whether it be Korea or Iraq or otherwise, on what is the best way for it to achieve its national interests and to protect its national security and I would say that, that the initiation, the re-initiation of the six party talks and although I don’t know the terms and haven’t reviewed the documents yet, regarding the agreement that has just been, been reached. The successful conclusion of at least a first step in the six party talks validates the United States’ assessment as to how it ought to proceed in this particular circumstance.


Two more questions. The first from Brendan Nicholson.


Brendan Nicholson from The Age, Ambassador. General Pace who you mentioned just made the observation slightly enigmatic that Iraq was not the war we chose but it is the war that we’re in, during that briefing the other day. Do you believe that if the United States had anticipated that Iraq would turn out to be as complex and as bloody as it is, that you would have proceeded with the invasion? And partly, leading on from that, there’s a concern in countries like Australia, that even among people who are close allies, or feel we’re very close allies to the United States, but have concerns about Iraq, that the United States could emerge from this experience badly bruised and unwilling to play a role on the international stage. Do you think that’s a real danger?


Let me, let me answer the last question first and that is – do I anticipate that the United States under any circumstance will become isolationist and disengage from the East Asia Pacific Islands region? And I do not. I think it is impossible for the United States not to be engaged in this area of the world because of the globalization that exists, because of the potential that exists for raising standards of living for millions and millions of people, and because it’s in the United States’ own best interest to participate in that growth and to address a number of the problems that are going to exist and going to develop over time. On the first question, that is, sort of a, a question of you know – what if pigs had wings and could fly? It’s not possible to look back and say well gee, if this then that. What one can say is as General Pace did, this is where we are, and this is what our interests are and how do we get to achieve our national interest. And General Pace – I heard his comment and I interpreted him to say this is – the debate about whether the war should have been undertaken, whether there were weapons of mass destruction, where there was manipulation of this, intelligence information? All that’s irrelevant. We are where we are and now what do we do? And that’s what General Pace was addressing and General Pace has a very clear view as you well know from, from sitting and interviewing him. As to what needs to be done and that it can be done.


Our final question’s from Laura Tingle.


Laura Tingle from The Financial Review, Ambassador. You’ve emphasised repeatedly today as has our Prime Minister, the risks of a premature withdrawal from Iraq as being catastrophic for Iraq and he’s also made the point that it would be catastrophic for the prestige of the United States and of the West. I just draw your attention to an analysis by Thomas Ricks in his book Fiasco where he talks about one of the strategic errors being the cost of being backed by a phony coalition that – that in the – in a sense the US had run into troubles in Iraq because it had the appearance of a coalition of the west but it didn’t have its resources and thus it’s increased the risk of withdrawal for the prestige of the west. And in that context I’d like to ask you when would a withdrawal from Iraq not be premature? And given the importance of the coalition, should the actual question being – be being asked in the Australian government now not that it withdraw its troops, but that it actually increase its number of troops committed to Iraq?


Let me, again, because I’ve got short term memory, I’m going to answer the second question first and that is, the question was about an increase in troops by Australia in Iraq. That is an internal matter for Iraq to determine based on what its national interests are and what its resources are. And so I make no comment on, on that whatsoever. That’s an internal matter which will be, will be determined by Australians. The, the – you know – question – what was the first question again? Short term memory.

Question cont’d:

The first question was about when will it not be premature?


I think Justice Potter Stewart had a, had a great phrase in one of his opinions in the United States Supreme Court when he was asked to define obscenity. He says I know it when I see it.


Ambassador, thank you very much.


Ambassador, congratulations on your performance today. Thank you very much. We’d like to give you a membership card to entice you to come back here fairly soon and a pen to just sign yourself in and out and I’m sure you didn’t forget St Valentine’s Day, but we’d like your wife to have this, irrespective of …


Thank you so much Ken.


I appreciate it very much.


Australia’s Trade Performance: Speech by Kevin Rudd

This is the text of a speech on Australia’s trade performance by Kevin Rudd, shadow minister for Foreign Affairs.

Text of Kevin Rudd speech to National Union of Workers Conference.

I want to use the opportunity today to address two key challenges confronting Australia’s trading regime:

  • Australia’s continuing poor trade performance; and
  • The impact of China on the future of Australian exports.

Australia’s Trade Performance

The Federal Parliamentary Labor Party remains strongly of the view that Australia’s engagement in an open international trading system is an overwhelmingly positive force for our community, our workers and our economy.

The reasons are numerous:

  • One in five Australian jobs rely on exports. In rural and regional Australia one in four jobs rely on exports.
  • Exports are good for workers with exporters on average paying higher wages and salaries than non-exporters. This is because exporters are often more innovative than non-exporters, investing in technology and using advanced management techniques and their workers are typically highly skilled. The higher productivity generated enables exporters to pay higher wages.
  • Given Australia’s strong demand for imports as inputs into our production base, including in the production of goods for export, or for domestic consumption, we need export income to meet our import bill.
  • Exports are also a way of reducing what has traditionally been a balance of payments constraint on Australia’s economic growth. While an increase in exports is not the only means by which our balance of payments constraint can be reduced, it is an important means.
  • Exports are also good for the long-term competitiveness of firms.

Australian exporters competing in the global market are more likely to adopt leading-edge business practices, innovative techniques, new technologies and so on.

Knowledge transfer arising from exports contributes to economic growth. As exporters benefit from ‘learning by doing’, their knowledge and access to technology will potentially spill over to the rest of the economy. This will lift the competitive performance of all firms and improve the efficiency of the Australian economy.

International evidence shows that exporters help the long-term survival of firms in the economy. According to AusTrade economist Tim Harcourt, this is because they enjoy faster sales and employment growth than non-exporters, enabling a higher rate of survival and contributing to overall allocative efficiency in the economy.

Labor understands the imperative of Australia’s engagement with the international economy and that is why the Hawke and Keating Governments opened up the economy to international trade in the 1980s and 1990s.

Over the course of thirteen years, Labor implemented a major reform program enhancing the capacity of our economy to respond to internal and external shocks and contributing to what is now the 15th consecutive year of economic expansion.

As I have said before, those reforms were not easy by any means.

Some generated great opposition in the community.

They challenged business and employees to respond to the opportunities they provided.

But they were right for the country and they were in our long-term national economic interest.

Those reforms included:

  • Floating the Australian dollar;
  • Deregulating interest rates;
  • Cutting tariffs – transforming Australia from a highly protected inwardly focussed economy to an internationally competitive economy;
  • Major tax reform – cutting the very high marginal tax rates and corporate taxes we inherited from Treasurer Howard;
  • The deregulation of the financial services, communications and aviation industries;
  • The introduction of competition policy in 1995; and
  • Industrial relations reform that contributed so much to productivity growth in Australia.

They were no small matters.

Each reform contributed to the overall policy framework.

Their implementation required the expenditure of substantial political capital – political capital the Hawke and Keating Governments were prepared to spend in the long-term interests of our economy to enhance our international competitiveness and prosperity.

In contrast, most within the economic commentariat would agree that the Howard Government has failed to build on the economic reform legacy it inherited from Labor.

Reform fatigue that has reached such a point that Professor Garnaut characterises it as the “great complacency of the 21st Century” – a reform challenge that must be addressed if Australia is to stem the decline in our productivity and international competitiveness.

Through the combination of an activist trade policy supported by appropriate industry policy, education and skills initiatives along with investment in research and development, Labor revived Australia’s trade performance generating particularly strong export growth.

Strong export growth that has not been maintained by the Howard Government at considerable cost for Australian jobs, workers and the broader community in terms of lost exports, lost opportunities and lost national income.

For far too long, the Howard Government has relied on debt-financed domestic consumption and government expenditure to shore up economic growth, ignoring the contribution exports can and must make.

The Government has been saying that there will be a rebalancing of economic growth from domestic to external sources based on the full flow-through of record commodity prices.

If and when it does occur, there is an open question as to how sustainable this will be.

Australia’s record current account deficits and foreign debt expose us to a sudden downturn in global economic growth, or adverse shifts in international investor sentiment.

Our trade figures tell a sorry story:

  • Australia has now recorded 46 monthly trade deficits in a row – the longest run of any Australian government.
  • Australia has recorded significant trade deficits during the past eight years – including our largest ever trade deficit last year of $25.5 billion – compared to a deficit of only $864 million
    in 1996.
  • Australia’s current account deficit last year of $57 billion is the highest ever on record.
  • As a result, our foreign debt keeps getting higher and higher – blowing out to $430 billion.
  • Export volumes have been flat for the last four years right across the board – commodities, agriculture, manufactures and services.
  • Net exports have now made a negative contribution to economic growth for four years in a row – another dismal record.
  • Australia’s share of world exports is now at a historically low level – falling from a high of 1.22 per cent in 1989 to 0.99 per cent in 2004.

This performance has occurred despite strong global economic growth, historically high commodity prices and our best terms of trade in 30 years.

As Access Economics said recently “the best global growth in a generation is passing us by”.

What is more alarming is the decline in Australia’s export performance when compared with the growth we got in the 1980s and 1990s.

  • Annual export growth under the Howard Government is 5.3 per cent – less than the 10.8 per cent achieved by Labor.
  • The performance on all manufactured exports is even worse – 3.7 per cent under the Howard Government compared to 13.7 per cent under Labor.
  • If exports had continued to grow at the rate achieved by Labor, Australia would have recorded a trade surplus last year of $12 billion rather than a deficit of $26 billion – that is a $38 billion turn-around.
  • That is a lost opportunity for Australia – lost exports, lost income, lost jobs.

The trade figures released earlier this week point to a worrying reversal in a more recent short-term improvement in the trade performance, with the trade deficit for August blowing out again by
$300 million to $1.6 billion.

Worryingly, exports declined by 3 per cent in August compared to the previous month.

This is despite buoyant terms of trade arising from the flow through of higher commodity prices – fuelled in part by the rise of China.

This begs the question of what will happen to Australia’s export performance once there is a downturn in global commodity prices.

That is not the type of picture that indicates an improvement on the trade front is just around the corner.

If Australia is to once again become a strong trading nation we need a NEW EXPORT STRATEGY – of the type I outlined in an address to CEDA in Perth last month, and I’d draw extensively on those remarks today.

A NEW EXPORT STRATEGY that rebuilds the skills of our nation – the skills demanded by Australian exports industries.


A NEW EXPORT STRATEGY that plans properly for our national infrastructure needs – rather than standing passively by while infrastructure bottlenecks occur.

A NEW EXPORT STRATEGY that lifts export promotion.

A NEW EXPORT STRATEGY that rebuilds Australia’s export culture.

Labor has been developing detailed policies in this area over the past year, including the Skills and Schools Blueprint released by Kim Beazley last week.

The Skills and Schools Blueprint proposes fundamental changes to secondary schooling in Australia to offer young people better choices by teaching trades, technology and science in first class facilities.

Apprenticeships in Australia will be overhauled, including through the establishment of a Trades in Schools scheme to double the number of school-based apprenticeships in skill shortage areas and to provide extra funding per place. A $2000 Trade Completion Bonus will also be paid directly to traditional apprentices.

Labor is also committed to tilting the balance back towards training Australians first rather than having to rely on skilled migration.

John Howard relies on skilled migration to cover up the skills shortages he has produced.

Labor will review the skilled migration program to assess the needs of companies reliant on skilled migration and will put in place the right incentives to encourage those companies to train Australians first.

To support our Skills and Schools Blueprint, Labor will also address the infrastructure crisis confronting our country via the establishment of Infrastructure Australia.

Infrastructure Australia will be charged with responsibility for developing a strategic blueprint for our nation’s infrastructure needs over coming years and facilitating its implementation, in partnership with the States, Territories, local government and the private sector.

Above all, we need more innovation and R&D. That’s the research that is most likely to generate wealth, and it’s where we’ve had the worst performance in the past decade.

Labor will examine the reasons for the significant declines in our levels of innovation and R&D and mechanisms for restoring R&D to the levels previously achieved by Labor Governments.

Another challenge is to examine carefully the Government’s role in export promotion in this country.

In its first budget, the Howard Government either abolished or substantially cut back many of the export promotion programs put in place by the Hawke and Keating Governments. We need to review the impact of those cuts, along with the contributions of the programs currently in place.

In that regard, Labor is assessing the results of the Review of the Export Market Development Grants program to see if there is not more that can be done in the trade promotion area.

Finally, if we are to restore our export performance to where it should be, a key challenge will be to engender an export culture right across Australian business.

An export culture that was developed under Labor but has been allowed to wane under the Howard Government.

Four years ago, the Deputy Prime Minister and Trade Minister, Mark Vaile, established a national target to double the number of Australian exporters from 25,000 to 50,000.

This target was to be achieved by 2006. Over the last two years, according to the ABS, the number of exporting firms has actually declined from just above 31,000 to just below 31,000 – this is not exactly heading in the right direction. It does not say a lot for the Government’s practical implementation of its rhetorical commitment to the development of a widespread Australian export culture.

An important component in establishing an export culture will be to ensure that Australia has the foreign language skills necessary to provide the next generation of entrepreneurs with the best possible chance to excel in the international market.

Regrettably, the Howard Government abolished a national program initiated by the then Federal Labor and State Governments (Labor and Liberal) back in 1995 – the National Asian Languages and Studies Strategies for Australian Schools.

This was truly an inter-generational project. The Commonwealth and the States agreed to a 12 year program. They invested half a billion dollars together over eight years resulting in 750,000 school children studying one of the four priority languages of Asia by the year 2003.

Then the Howard Government decided unilaterally to pull the plug on federal funding. And this is the Government that says it’s committed to establishing an Australian export culture that focuses on the expanding economic opportunities of our region.

Australia China Free Trade Agreement

As part of its regional trade efforts the Government has embarked on free trade agreement negotiations with China. When announcing that FTA negotiations would begin Trade Minister Vaile stated that:

“Engaging more closely with this emerging industrial power will enable Australia to set the terms for our future trade and tackle current trade impediments, including many “behind the border” issues that act as serious barriers to our exporters and service providers in the Chinese market.”

The stated purpose of this FTA is to help shape our future trading relationship with the fastest growing, large economy in the world, particularly by assisting exporters gain a competitive edge in the Chinese market.

The Government’s trade policy is the pursuit of FTAs.

That is unfortunate as FTAs of themselves will not correct Australia’s woeful trade performance in the short-term.

Labor’s trade policy priority is the WTO Doha Round of negotiations.

The Doha Round offers the best opportunity to open up new export access for Australian business and new jobs for Australian workers.

The Government has nonetheless gone down the FTA path.

That being the case we need to look at the opportunities that an FTA with China may present.

China’s Impact on the World Economy

If not for China’s contribution, world economic growth would have been significantly weaker in recent years.

China is already, and is likely to remain, the single greatest source of growth in the world economy, surpassing the United States in that role in 2004.

China accounted for 13 per cent of world output in 2004 (up by 2 percentage points in just 4 years), dwarfing France, Italy and the United Kingdom.

A Goldman Sachs report of 2003 suggests China could overtake Germany within the next four years and Japan by 2015, making it the world’s second largest economy. And by 2039 China could overtake the US as the world’s largest economy.

Longer-term projections of this nature are, of course, subject to considerable caveats and assumptions however they remain a useful guide to give us some idea of the order of the international economy in a generation’s time.

As noted by the Australian Chamber of Commerce and Industry, China, by its sheer size as an importer of commodities and an exporter of basic manufactures, is also having a profound impact on the world economy through its capacity to influence relative prices and international terms of trade.

China’s exports to the world more than doubled from $US278 billion in 2000 to an estimated $US583 billion in 2004.

Between 2000 and 2003, China accounted for all of the world’s growth in demand for aluminium, copper and steel.

In 1990, China accounted for 7 per cent of world imports of cotton and by 2004 that figure had increased to 25 per cent.

In 2004, China produced 40 per cent of all personal computers manufactured in the world that year.

In the same year, China also manufactured 50 per cent of all digital cameras, and 60 per cent of all microwaves, photocopiers and DVD players produced in the world.

These are enormous influences on the demand and supply of internationally traded commodities and manufactured products. Benefiting many countries through higher export prices and also alleviating inflationary pressures through lower priced imports.

Impact on Australia

Australian economic growth is currently underpinned by record commodity prices and our best terms of trade for 50 years.

This is largely a result of China’s insatiable demand for our resource exports.

For example in 1995, China accounted for 5 per cent of world steel imports, by 2004 it had doubled to 10 per cent.

Consistent with that, Australia’s exports of iron ore to China increased by 41 per cent in 2004 with significant increases in our exports of coal, copper, nickel and other ores.

In 2004, China overtook the United States as Australia’s second largest export market and it is also now our third largest trading partner.

Trade statistics released this week also show that China has now overtaken the US as our largest source of imports.

In coming to grips with China’s emergence, Australia must define what it means by a strategic economic relationship with China.

At present our relationship is dominated by the energy and resources sector. This of course is not necessarily a bad thing given our comparative economic advantage.

But within those parameters, we must also resolve how we are going to deal with difficult, diplomatically sensitive and commercially significant factors including long-term resource pricing, Chinese anxieties about security of supply as well as where our national interests lie on the question of resource ownership.

Beyond the energy and resources sector, Australia also has a clear interest in a strategic economic relationship which includes elaborately transformed manufactures, the new technology industries (particularly biotechnology) as well as burgeoning demand in the services sector – including financial and legal services, education and tourism.

As someone who has been in and out of the China business for the last twenty years or so, I understand fully that there are already a plethora of economic framework agreements. But what I am talking about is something qualitatively different.

What I am talking about is Australia identifying strategically what we are likely to be best at in our long-term economic engagement with China, to harness our national political and commercial resources accordingly, and to go for it.

That is why I have argued at length for the development of an Australia-China 2025 Engagement Strategy.

In that strategy, Australia must:

  • define (as I have noted above) what it means by a strategic economic relationship with China;
  • articulate in absolutely clear cut terms to Beijing our enduring alliance relationship with the United States;
  • dedicate our diplomatic resources to the core task of avoiding conflict;
  • leverage Australia’s new found position as an inaugural founding member of the East Asian Summit and prospectively of the East Asian Community where we will come together in the region with China in the absence of the US;
  • engage China with a consistent approach on human rights, and the environment;
  • transform Australia into the most China-literate and Asia-literate economy in the Western community of nations; and
  • accelerate rapidly the breadth and depth of our bilateral diplomatic relationship with Beijing.
  • Regrettably, there is little evidence that the Howard Government is engaging in this level of strategic analysis on our country’s long-term engagement with China.

    Australia cannot afford for this type of complacency to continue. The interests that we have at stake are simply too great.

    As we know, the Howard Government has initiated negotiations with China for a possible Free Trade Agreement.

    Labor’s final position on the China FTA will depend on our assessment of whether it is in the overall interests of the Australian economy.

    The devil will lie very much in the detail.

    As the negotiations proceed, and the FTA begins to take shape, we must look at the opportunities the FTA could provide Australian business, workers and the broader community. And we must also look at the costs.

    Many countries, including Australia, are now positioning for the next phase of China’s development, particularly the emergence of an expanding middle class with a growing appetite for Western goods and services.

    This has broadened Australia’s export profile to China. Although resources still account for around 60 per cent of goods exports there have been continuing increases in Australian agriculture, manufactured and services exports.

  • Australia currently supplies around one quarter of China’s dairy imports. It is our third largest market for sheep meat in North Asia and our second largest global offal market. Growing affluence will strengthen demand for higher value-added foodstuffs from Australia.
  • Australian exports to China of STMs and ETMs have grown at an average 27 and 19 per cent respectively each year since 1998. Between 1999 and 2003, Australia’s manufactured exports to China increased by 134 per cent vis a vis a 13 per cent increase in our manufactured exports to the rest of the world for the same period.
  • Australian services exports to China are now more than $1 billion. In 2004 China was expected to be our third largest source of tourists, nearly 60,000 Chinese students study here each year (20 per cent of all foreign students) and Australia is also well placed to provide many other services China desperately needs such as insurance, banking, and telecommunications.
  • China’s tariffs (average 10%) and other barriers have been cut following WTO accession but border protection is still higher than in Australia (average tariff 3.8%).
  • China’s highest tariffs apply to agriculture products (average 15.6%) with the highest applying to wool and wool tops (above quota 38%) although this is not applied in practice.

As with all FTA negotiations there will of course be sensitivities for both sides to address. China is concerned about Australia’s request for greater access for agricultural produce.

Australia’s legitimate sensitivities relate to areas of the manufacturing sector exposed to increased competition from China. Although it is important to note that given the relatively low tariff levels in Australia we are already confronted with strong competition from China even without an FTA.

Labor does not believe in simply sending all of our manufacturing offshore.

While Australia’s services, agriculture and some manufacturing sectors may benefit, including sectors covered by the National Union of Workers, there will certainly be additional pressure on our textile, clothing, footwear, passenger motor vehicle and car component sectors.

Reflecting this, the Australia China Business Council has noted that this may:

…in effect, highlight the need for different policies and strategies under a broad agreement that encourages and facilitates greater emphasis on joint ventures and other collaborative arrangements between Australian and Chinese firms. Moreover, the challenge that the growth of Chinese productive capacity will pose for Australia’s manufacturing sector highlights the need for a clear articulation in Australia of an overarching national policy and framework in support of manufacturing.

Concerns have also been expressed in relation to:

  • Whether or not an Australia -China FTA could be conducted on an equitable basis.
  • Whether or not an Australia-China FTA would do permanent damage to Australia’s manufacturing industry while providing little in the way of additional benefits to Australia’s primary industries – bearing in mind our manufacturing industry is already competing with China regardless of the FTA.
  • Whether or not the growing trade deficit on manufactured products with China reflects illegitimate cost advantages that contribute to growth in China’s manufacturing exports to Australia – and whether or not there are problems with domestic policy settings which limit the export and import-competing potential of Australian industry. Australia’s current overall export performance strongly suggests there are problems with our policy settings.
  • Whether or not China’s currency arrangements gives it an unfair advantage – although it has recently adopted more flexible currency arrangements setting a clear direction for policy in this
  • In addition to these concerns, AIG research indicates that some 68 per cent of Australian manufacturers believe China is a critical issue for the future of their business. Manufacturers have to again rethink their business. The challenge is clearly on companies to lift competitiveness – a shift that involves game changing strategies – continuous improvement models alone are not sufficient. The fact is China, with or without an FTA, will simply not just go away.


    In prosecuting the FTA, the Chinese will prove to be very tough-minded negotiators. They have been in the past.

    Australian negotiators must be equally tough-minded in their approach to these negotiations with the object of producing an FTA which is to our genuine mutual economic benefit.

    The Australian Government should not under any circumstances accept an FTA with China at any price – that is an FTA for the sake of having an FTA for the political reason of simply adding to the list of other bilateral FTAs the Government has negotiated.

    A concern for many in the union movement is China’s failure to adhere to fundamental labour standards and continuing human rights abuses that occur in China.

    While labour standards are not normally addressed in trade agreements – the US FTA was an exception – we believe that we should be using all appropriate opportunities to raise labour standards and human rights abuses with relevant Chinese officials. That fact is that while improvements have occurred, abuses remain widespread.

    While we are not negotiating the FTA – that is the prerogative of the Government – against the backdrop of the FTA negotiations Federal Labor will continue to raise these matters with the Chinese Government in a manner conducive to encouraging a more positive attitude from China.

    In concluding, I would like to emphasise that the FTA negotiations with China are in the very early stages and it may take many years, perhaps two to five or even more, for the negotiations to be completed.

    The final outcome of those negotiations is still to be determined and it is too early at this stage to assess whether or not the outcome will be in Australia’s national interest.

    But I reiterate, the devil will very much be in the detail.

    But whether or not these FTA negotiations succeed, an FTA is no substitute for the development, articulation and implementation of a longer-term strategic economic relationship that we believe to be so important to Australia’s long-term interests in China.

    That is why Australia needs an Australia-China 2025 Strategy.

    And that’s also why we also need a NEW EXPORT STRATEGY for Australia to once again take on the world.

Howard Talks Of Trade, Plays Down Chances In Werriwa

John Howard has played down the Liberal Party’s chances of winning the forthcoming Werriwa by-election.

Speaking in Davos at the World Economic Forum, the Prime Minister sought to lower expectations that footballer Paul Langmack can win the traditionally Labor seat. Werriwa, held by Gough Whitlam (1952-78), is vacant because of Mark Latham’s resignation last week.

Howard also spoke of a number of bilateral meetings he has conducted with a range of Asian and European leaders.

This is the transcript of the press conference held by the Prime Minister, John Howard, in Davos, Switzerland.


Well what happened today?


Well what happened today was I’ve had some bilateral meetings with the Prime Minister of Pakistan which was a very good meeting and also the Minister for Reunification from Korea and we talked about North Korea and also of course about possible further sales of LNG from Australia to Korea and there’s another decision, another big contract coming up and we have four or five competitors so we’re hopeful, but we can’t put it any more strongly than that at this stage. I thought the meeting with the Prime Minister of Pakistan was very valuable and we have agreed to endeavour to achieve a strengthening of that relationship, it has a lot of natural complimentarities but I think it could benefit from a bit of additional effort on both sides and we were both very much of that view.

I attended two of the sessions, one on the world economic outlook and also one on China’s economic outlook which is very important not only to the world but it’s particularly important to Australia. And at lunchtime I attended a session dealing with the issue of terrorism which was chaired by ElBaradei, the head of the IAEA and involved Senator McCain and the former Irish President Mary Robinson, the Secretary General of the Arab League, and the Foreign Minister of Afghanistan, the Polish President, the Norwegian Prime Minister, and quite a wide range of people and it was a very interesting meeting, I did take the opportunity of stressing the significance of the transition to democracy that taking place, or has taken place in Indonesia and how very important it was for the long term fight against terrorism that the manifestation of moderate mainstream Islam was seen to be successful and how very important it was for the world to support Indonesia.


In what way could the world do that do you think?


Well I think there are different ways, I mean we’re obviously doing it in the wake of the tsunami tragedy but what the world can do about further investment in Indonesia, obviously there have to be changes in that country to provide appropriate levels of assurance in relation to investment. But I made the broad point that Indonesia being the largest Islamic country in the world that what happens there is crucial to the I guess view the world has of, and of the interaction between moderate Islam and Islamic fanaticism because if moderate mainstream Islam succeeds and democracy remains strong, as it appears to be in Indonesia, well that is a huge rebuff to the terrorists because the terrorists do not want a stable, successful Indonesia. I made the point at this meeting that a modern successful country in Indonesia is anathema to the terrorists’ objectives.


Was there much criticism about the United States in that debate? And also the discussion you attended for the BBC World seemed that there was a lot of so-called “Bush bashing” going on and you did step in to defend the United States, do you think that the US has come under attack here at this forum?


Well I think some of the criticism by some of the Europeans is unfair and irrational and I have said so.


Do you fear that that’s the way the world appears to be heading?


No, no that is not because that is the view in some parts of Europe, it’s not the view in Eastern Europe for example, you talk to somebody like the President of Latvia who took part in that meeting, you talk to the representative of Afghanistan, that is not their view, one of the other people who attended the session at lunchtime was of course the national security adviser from Iraq. Now sure, he’s part of an interim government, we’re having an election there on Sunday and it’s starting the process. I think what happens on Sunday in Iraq is very important and I hope there’s a good turn out, I don’t know what it’s likely to be, I don’t think anybody does, but I hope it’s a good turn out.


There was a session on terrorism earlier today and they were talking about the issue of Iraq and what’s happened there in relation to the wider war on terror and one of the guys from the Rand Corporation was arguing that in fact the US presence there has almost made the situation worse because it’s created a whole new group of insurgents who…


That’s not a new argument, there’s nothing particularly novel about that argument. I don’t share that view, I made the point today and I’ve made it before on numerous occasions that whatever view you may have had about the action in Iraq, everybody knows my view, leaving that aside there’s no doubt that the terrorists have adopted Iraq as a battleground and if a democracy takes root in Iraq then that is a setback for terrorism, and they’re throwing everything they’ve got at the task of stopping the elections being effective.


Prime Minister, Kim Beazley has been campaigning in the seat of Werriwa, where is the selection process at for a Liberal candidate for the by-election?


Well that is a matter for the organisation. But the party, my understanding, the organisation is considering that issue and they’ll be making an announcement about it in the next week or so.


Does Paul Langmack has what it takes to take the seat from Labor?


He’s a wonderful footballer but I don’t know anything more about his intentions, I did read this morning that, some reference to him, I don’t know how accurate that is, I don’t want to assume anything that may not be the case but he’s certainly a very fine citizen and a very fine rugby league player.


Do you think there is a chance the Liberals could take the seat?


Take the seat? Oh come on, that’s a very big challenge. But we haven’t decided what we’re going to do yet, that’s a matter for the party organisation.


Mr Howard, beyond the issue of America bashing there is an obvious high level of anxiety here across the board about the American economy and what the outlook is and what the impact will be of the Bush budget. Do you share that anxiety and what is your view about it?


Well I certainly don’t like the fact that the US budget is so heavily in deficit, that’s a view I’ve expressed before. I don’t know that I have an anxiety, I wouldn’t express it that way about the American economy, but the American economy is still making a very big contribution to world growth, it always will, however I would like to see a lower budget deficit.


And would you like to see the Chinese contribute to rebalancing the various aspects of the world economy, I went to that discussion today, there was a lot of views expressed by the Chinese about…


I thought the Vice-Chairman of the Central Bank gave a reasoned defence of their exchange rate policy. I think China’s exchange rate policy is a matter for the Chinese.


You having any luck on wheat, Prime Minister?


Wheat? What aspect of wheat?


Well you were very exercised on your…


Oh yes, we’ll continue to be, most of the people I’ve interacted with today are not really to blame.


The Chinese, Prime Minister encouraged the world to invest more in the country as it developed, is that an important issue for Australia, to invest more in China?


Well Australia has invested quite a bit already. But these things in the end have got to be determined by individual commercial decisions, I mean we don’t direct businessmen to invest in a particular country, we encourage them to take advantage of commercial opportunities. I wrote to a large number of Australian countries encouraging them to participate in an infrastructure conference that President Yudhoyono convened in Jakarta earlier this month and I believed a lot of them responded to that invitation. The question of whether they invest depends upon their commercial assessments and we don’t seek to influence those in any kind of overt fashion.


Prime Minister, just on Iraq, Mohamed ElBaradei has come out pleading with the global community to be patient with Iran, that they’re co-operating, how much time should the country be given?


Well I would like the discussions that are occurring between the three European countries and Iran to continue. I hope those discussions can produce a satisfactory result. That’s the view I expressed yesterday when I saw the Iranian Foreign Minister and continues to be our view and I hope it can work out. I don’t think there’s anything to be gained by more or anybody else nominating times…


Did he give you any encouragement?


Well he told me that Iran’s motives were positive. I think we have to wait and see.

Howard Has Trade Talks With World Leaders In Davos

This is the transcript of the doorstop interview given by the Prime Minister, John Howard, at the World Economic Forum Congress Centre in Davos, Switzerland.


Well today I had bilateral meetings with Bob Zoellick, who is the new US Deputy Secretary of State, still Trade Representative, the Foreign Minister of Iran, and also the Senate Majority Leader, Bill Frist. In addition to that I participated in the BBC world debate, along with sundry other people, including John McCain and Joe Biden and the Secretary General of the Arab League and a cross section of commentators and other political figures. I specifically raised in that my concern about the need for America and Europe to work together to make the Doha round a success, there was a lot of criticism from the Europeans about the Americans over a number of issues and some people were calling for areas where there could be co-operation and I suggested that I hope that one area they might co-operate was to remove some of the agricultural protections and that would work very much to the advantage of developing countries and obviously Australia has a vested interest in that, but quite separately from our interest there’s a very big developing country interest in that. That’s all I want to say, any questions?


How did that go down, that sort of suggestion?


The Europeans didn’t say much about it.


And the Americans?


Well I think the discussion kept going on other issues, they were very focused on aspects of the interaction between Europe and the United States.


Are you concerned that there hasn’t been much happening since the July breakthrough agreement on the Doha round?


Yes I am, and I don’t think this wheat development is helpful, I think it’s very unhelpful. I said something about that to some of you earlier today and I think it’s…




Well we don’t want to accelerate the (inaudible). Well Bob Zoellick and I talked about that, he said (inaudible), and he’s moving out of the trade area very shortly, but he’s still very committed to bringing it about but he recognises what an enormous administrative challenge it is. It’s complicated not only by the normal barriers to movement but it’s also complicated by the fact that it’s not just the Americans and the Europeans, although they’re the major players, there are other players in it as well. I think we can continue through our role in the Cairns group to have a positive influence.


What came out of your talks with Iran’s Foreign Minister?


Well we talked about the importance of keeping a dialogue going between our two countries and I think that is important, we’ve kept a good diplomatic relationship with Iran, we have quite a good trade relationship, I encouraged Iran to work closely with the three European countries in relation to nuclear matters.


Because of Australia’s diplomatic relationship with Iran do you see your and Australia’s role as perhaps a lead role on behalf of the international community on issues like the…


Well I think the lead role in that should be taken by the three European countries, I think what, I mean I made the point that there should be full co-operation and full compliance by Iran with the understandings that have been reached with the three European countries.


What sort of a lifeline or lifespan does the European negotiation with Iran have do you think? I mean the country claims that it will have nuclear proficiency by next year, does that…


Well I am hopeful that that initiative, those three countries can bring about a result that we all find acceptable.


The key agenda for this forum is poverty, addressing these problems of poverty in the third world. What’s going to be your contribution to that debate?


Well I think the biggest thing the developed world can do to alleviate poverty is to remove trade barriers. The benefits of that are infinitely greater than benefits from direct aid, direct aid works well in some cases, in many other cases because of poor governance it works very badly.


There are (inaudible) importers though.


I beg your pardon?


There are countries that are net agricultural importers who would not necessarily benefit from…


No, no that’s true, there are some, that’s quite true.


Prime Minister, the global launch against poverty today highlighted not only the trade issue you’re talking about but also the key issue of third world debt relief. I know that you’ve had some concerns in the past, particularly over the tsunami, about whether or not that debt relief actually helps people on the ground I guess. Is that your concern about where that debate’s going?


Well sovereign debt relief in the short term rewards the treasuries of the indebted countries and unless there’s a guarantee that that is then channeled to poverty alleviation it can be very unproductive, but that’s not to say we’re opposed to all debt relief, we have involved ourselves in programmes helping the highly indebted developing countries. But the principle applies whether you’re dealing with a tsunami situation or not.


Prime Minister, there are two proposals that (tape break) tax on everything from plane tickets to secret financial transactions. Can I ask you what you think of that, and secondly that’s a proposal that’s been supported today by Gerhard Schroeder who has also supported Gordon Brown’s proposal of establishing a monetary fund to bring forward the goals of the millennium goals. Can I ask you what you think of each of those proposals?


Well I’d like to study President Chirac’s proposal.


That’s what Tony Blair said.


Well I didn’t know that, but there you go.


Do you think that they’re interesting proposals, ones that you might favour?


I’m not normally attracted to proposals for new taxes.


And Gordon Brown’s proposal Prime Minister, establishing an interim financial fund to which countries would contribute as they go towards 2015 rather than just sitting…


Look I don’t mean this facetiously but I would like to study that a little more carefully before I give a response.

Trade Issues On Agenda For Howard’s American Visit

Prime Minister John HowardThe Prime Minister, John Howard, has left Australia for a week-long trip to the United States.

The main purpose of the visit is to attend a meeting of the International Democratic Union, an organisation of centre-right political parties (see earlier report). He will also address a Joint Session of the US Congress, fulfilling a commitment derailed by the September 11 terrorist attacks. [Read more…]

World Trade Talks Collapse; Australian Farmers Lose Out

Australian farmers have suffered a setback following the collapse of the World Trade Organisation negotiations over the weekend.

According to the Financial Review agricultural exports are worth $25 billion to the Australian economy. The Australian Bureau of Agricultural and Resource Economics has predicted that a 36% reduction in all forms of global farm assistance would see Australian exports of rice grow by 54%, wheat 15%, meat 16% and sugar by 12%.

The collapse of the talks in Seattle, and the likely delay of another couple of years, most benefits French and Japanese farmers.

Queensland sugar growers, currently experiencing the lowest world prices in 30 years, will be hardest hit by further delays in global trade liberalisation.

What Is the World Trade Organisation?

The World Trade Organisation was established on 1st January 1995, arising out of the so-called Uruguay round of negotiations. It replaced the General Agreement on Tariffs and Trade and consists of 135 countries, has a staff of 500 and a budget of 122 million Swiss francs.

The WTO styles itself as “the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible”.

The WTO has a consensus-style one-country, one-vote structure and this appears to have been part of the problem in Seattle. Developing countries now comprise 3 in 4 of WTO members and are demanding a greater say than they have had in the past. This is partly because these poorer nations have what the richer nations need most: a market for their products.

All Politics Is Local

A report in today’s Financial Review, (“No trade-offs in a sleepless Seattle”, page 14) provides an interesting account of how the United States pulled the plug on the World Trade Organisation talks in Seattle.

It is even argued by some that the talks were deliberately sabotaged by President Clinton in an interview he gave to a newspaper on his way to Seattle. Clinton said he favoured the eventual imposition of punitive sanctions on countries that failed to meet core labour standards. The US Trade Representative, Charlene Barshefsky, is quoted as saying “my god, he’s blown it” when told of the comments.

Poorer countries see demands for labour and environmental safeguards as a ploy by richer nations to advance their own economic interests in the guise of freer trade.

Some see the Clinton remarks as part of an attempt to win the support of labour and environmental groups in the lead-up to the 2000 presidential and congressional elections.

At a broader level, the impact of local politics can be seen in the huge protests that took place outside the WTO conference last week. Furthermore, the recent New Zealand election can be seen as part of an electoral reaction against globalisation. The protestors, ironically, took advantage of the globalisation of communications by conducting a large part of their campaign via the Internet.