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Transcript: Howard In The USA

11 July 1999

TRANSCRIPT OF THE PRIME MINISTER THE HON JOHN HOWARD MP PRESS CONFERENCE WILLARD INTER-CONTINENTAL HOTEL WASHINGTON, USA

Well, ladies and gentlemen, starting with this afternoon and this evening is the intensive part of my visit to the United States. I'll be seeing the President tomorrow and I'll be talking to Dr Alan Greenspan this evening. It's always an interesting experience talking to Dr Greenspan given his immense responsibilities and enormous success as undoubtedly the most significant economic administrator and regulator, not only in the United States, but in the entire world.

The issues that I'll be raising with the President obviously include the Australian Government's intense disappointment regarding the American decision regarding lamb imports. However that won't, of course, be the only issue that I'll raise. The full gamut of the bilateral relationship will be canvassed. No doubt we'll discuss in some detail the present situation in Indonesia and East Timor and we'll be putting certain views regarding not only Australian policy but also United States policy regarding Indonesia.

I'll be interested to get his assessment of the current situation in Yugoslavia and in the wake of the cease fire and the apparent pressure developing on the Milosevic Government, I will renew my entreaties to him in relation to our two aid workers, Pratt and Wallace. The Australian Government remains still very concerned about their situation and we'll seek every opportunity we can, not only with President Clinton, but also with other world leaders as I did with the Prime Minister of Japan, Mr Obuchi, a few days ago to intercede on their behalf.

We still don't know what is going to happen. We remain hopeful, we remain optimistic. The briefing I received from the Australian Ambassador in Belgrade last weekend when he returned to Australia was positive although indeterminate as to when he thought it likely that Steve Pratt and Peter Wallace would be released.

The visit to the United States gives me an opportunity not only to talk to the President and the Chairman of the Federal Reserve, I'll also have a chance of talking to the newly installed Treasury Secretary, Mr Summers, who, of course, along with Robert Rubin and Alan Greenspan have formed something of an economic troika advising the President over the past couple of years. Both countries, of course, are enjoying almost unprecedented sustained levels of economic growth and the experience of both of us in that regard I am sure will be instructive. The indications are that the American economic boom ought to continue. There are no apparent reasons on the horizon, as far as I can see, as to why that should be interrupted although some people operate on the principal that nothing goes on forever, but certainly the signs now are extremely good and they are certainly better in the experience I have had observing the American economy; they're certainly stronger and they're certainly better than they have been at any time over the last 25 years.

After being in Washington I'll be going to New York where, of course, the focus will be very much built around our ambitions to see Australia and I guess by dint of the accumulation of financial businesses there, Sydney, become a world financial centre. We have gone a long way towards making Australia more attractive; not only our economic strength, our good record of corporate governance, of prudential banking supervision but also the tax changes that we have made and others that are in prospect as a result of the recommendations of the Ralph Committee.

So it will be a very intensive period of days but it's time extremely well spent. This does remain still by any measure the most important relationship that Australia has, although we have a number of very important bilateral relationships. But we should remind ourselves against the background of our understandable anger over lamb that our exports to the United States in 1998 raised by 34 per cent. And it is because its economy is so strong it's an extremely good market for Australia. And one of the reasons why we have been able to avoid the worse ravages of the Asian economic downturn was that we were able to divert a lot of the exports that might otherwise have gone to Asia and indeed some new ones that wouldn't have gone to Asia anyway, to North America and to Europe. And part of the success that we have had in avoiding the worst of that downturn is precisely because we have been able to find new markets and new opportunities in the United States. But, of course, that doesn't in any way absolve the administration from the criticism it has received from the decision has taken in relation to lamb but, of course, that will not be the only issue but it will be certainly an issue at the top of the agenda when I see the President tomorrow. Any questions?

JOURNALIST:

Prime Minister, will you be putting on the table our security relationship in light of the lamb decision as Agricultural Minister Vaile believes you will?

PRIME MINISTER:

Well, I didn't read his comments to mean that but let me make it perfectly clear as the head of the Government there's no way that our security relationship is on the table. They're two quite separate things. And the thing that dominates my attitude to all of these things is the Australian national interest as I have said before. The Australian national interest is well served by the security relationship. It always has been and it will in the future and there's absolutely no way that you put one on the table with the other; they are two quite separate issues. And there is a separate, discrete, clear Australian national interest involved in a close security relationship with the United States. It has always been my view. I don't think you will find at any time in the comments I have made on this issue as Prime Minister, as Leader of the Opposition, as Treasurer or indeed as anything else, I have ever suggested that you should put the security relationship on the line. And I don't believe Mark Vaile said that. Anyway, our position is abundantly clear from the comment I have made now and what I made a couple of days ago.

JOURNALIST:

Prime Minister, you announced some assistance for the lamb industry when objecting to the American decision. In terms of the nine per cent tariff, is there anything further you can do in terms of helping with marketing that would be able to offset that nine per cent so that we can at least obtain market share?

PRIME MINISTER:

Well, we will in the course of our discussions, and I expect to have a full report on some of the discussions that are taking place between our Agriculture Department and the industry, we will do whatever we can, consistent, of course, with World Trade Organisation rules to assist with marketing. I mean, our point all along has been that these blokes have won a market share without any kind of government assistance and what we have sought to do with the levy is to offset the cost of the tariff that's been imposed on. I mean, if there are other ways consistent with what I announced last week to help in relation to marketing we will but obviously there are limitations to that.

JOURNALIST:

Prime Minister, when you've talked about lamb here or in other press conferences you used very strong language. How strong will your language beà.

PRIME MINISTER:

Well, my language will be appropriately strong. I don't, as you know, I don't script things. And I'll put my view and I can't tell you precisely in advance what precise words I use because as you know I don't script things, I just say what I think at the particular time.

JOURNALIST:

Will you formally ask the President to reverse the decision even though you know that's a remoteà.

PRIME MINISTER:

Well, look, I don't think there's any prospect that the Americans are going to reverse the decision. We willàlook, I will make all the requests that are appropriate, I will enter all of the protests that are appropriate. I think to be realistic the Americans are not going to change the decision but they should not be left in any doubt both as a result of things that I have said publicly. They would now be in no doubt as to how we feel but clearly tomorrow is an opportunity for me to convey in a personal forum to the President the concern that Australians feel and the sense of being let down that they feel about this particular decision. Now, I don't expect the President to say to me tomorrow: well John, we are going to change it. I don't expect that. But that won't stop me asking but I don't expect that is going to happen. I mean, we have to be realistic about that.

JOURNALIST:

Mr Howard, will you be asking for a commitment from President Clinton on APEC and on free trade, you know, in light of the lamb decision?

PRIME MINISTER:

Well, I would expect that I will receive from him tomorrow a commitment, a reaffirmation of his view rather than a bilateral commitment, a reaffirmation of his view that the APEC process should go on. I would expect that the American response will be that lamb should be seen in the context of particular circumstances and that the American commitment to freer trade remains undiminished. I mean, we obviously have said some things about that and I think you'll be aware of those. But I would expect that I will certainly nonetheless emphasize our commitment to a good APEC outcome. We would like a leaders' declaration coming out of the APEC meeting about a new trade round and it does remain the case that although we are bitterly disappointed about what's happened on lamb it does remain the case that we have had some real success in a number of other areas in winning market access not only in relation to agriculture but in a number of other areas but particularly in relation to agriculture. But there are some, you know, outstanding caveats on the American, very big caveats, on the American commitment for free trade. I mean, we still remain very angry about a thing called the Jones Act which denies market opportunities to burgeoning ship building industry in Australia. We'd like to see the Americans sign the OECD understanding that's been negotiated in relation to ship building.

JOURNALIST:

Prime Minister, in the context of American caveats Mark Vaile also says that Australia should now pause in its trade liberalisation and let the rest of the world catch up. Is that your view with the context of APEC?

PRIME MINISTER:

Well, I think it's certainly the case that Australia has compared with most other countries Australia has done extremely well. I think what has to happen is that we need a commitment from all of the APEC members towards the original Bogor goals and we also need a commitment from the APEC leaders towards a successful World Trade Organisation outcome. I think that is what he has in mind, it's certainly what the Government has in mind.

JOURNALIST:

But is there anything in it for us to go any further and, in fact, to do something like winding back a little bità.

PRIME MINISTER:

Well, my view has always been that you look at the national interest rather than who's fair or more open in their trading practices than the next person. You look at the national interests. Now, what I believe should be said is that we have gained a lot from a more open trading system. And the reality is that Australia is a more prosperous country now than it was 10 or 15 years ago. And the people who turn around, and people who say that more open trade has hurt Australia are ignoring the fact that we have in fact as a result of the efforts of the Cairns Group we have won market access. I mean, we do have 30 per cent of the import market for beef into Japan. Now, that's something that we didn't have 10 years ago and that didn't come about other than as a result of our pushing through the Cairns Group and through other avenues to secure greater market access. So I think you have got to keep this thing in perspective. The only reason that I argue for a more open trading system is that I happen to think it's in Australia's national interests. I am not doing it either for my political health nor am I doing it for some kind of ideological commitment. I just happen to think that when you are a nation of 18.5 million people you still have a very strong and efficient agricultural industry. You clearly need access to world markets for your manufacturers and your service outputs. It's clearly in our interests to have a more open trading system.

JOURNALIST:

Have you told Mark Vaile that?

PRIME MINISTER:

Mark Vaile is very well aware of that and I don't think anything he has said is inconsistent with it.

JOURNALIST:

Prime Minister, do you agree with him that Australia has got far enough, at least for now?

PRIME MINISTER:

I believe that Australia has done very well. But it's not really the point as to who has gone far enough. It's a question of what is in our interests and it is in our interests to export more to the rest of the world. And that's my total guide on this - what is the national interest; not whether we have gone further than somebody else. I always argue that we should do something out of the national interest. Now, in relation to something like the motor vehicle industry I thought the national interest was served by us having a further reduction in assistance and then having a pause for five years. And that's why we did it. And clearly in relation to agriculture it is in our national interest to continue to argue for a more open system.

JOURNALIST:

Prime Minister, on Kakadu where there is going to be a decision on that made tomorrow, previously in these kinds of matters the Italian Government has tended to decide with the environmentalists. This time they are quite enthusiastically in favour of the Australian Government and they have also offered $300,000 to set up a World Heritage Austral-Asian unit within Australiaà

PRIME MINISTER:

They have?

JOURNALIST:

Yes. What have you done to make them so enthusiastic?

PRIME MINISTER:

Well, I haven't done anything.

JOURNALIST:

What's the Australian Government done?

PRIME MINISTER:

I am not aware that the Australian Government has done anything other than to argue very persuasively and very eloquently a very strong case.

JOURNALIST:

And what's your reading of the likely outcome?

PRIME MINISTER:

I don't know. I am always very cautious about sort of, you know, the early returns.

JOURNALIST:

Prime Minister, in terms of Pratt and Wallace what will you be asking specifically the US President to do?

PRIME MINISTER:

Well, I'll be reminding him, as I did when I spoke to him on the phone a few weeks ago, that we would naturally want to see these men released. I'll be asking him to and his administration to use whatever opportunities arise to plead the case for their release. I think one of the strongest arguments of course is that until this matter is resolved the future level of aid activity from organisations like CARE in Yugoslavia is going to be under a cloud.

JOURNALIST:

The United Sates has been fairly preoccupied with Yugoslavia. Do you think they should be paying more attention now, or putting more attention on Timor? What sorts of things will you be discussing about that?

PRIME MINISTER:

Well, I'll be giving our assessment and our assessment of the state of play in Indonesia and Timor is always of interest to the United States because we have special knowledge and a special understanding of the area that probably no other country has. The question of whether they should devote more or less, well that's a matter for them. I haven't come here to sort of give lectures publicly or privately to the United States administration about the weighting of their foreign policy focus. I think quite plainly they're perfectly capable as the only true world power of walking and chewing gum at the same time and they have a great capacity to do that. We are naturally very committed to a good outcome in East Timor. We've played a significantly role in getting a commitment from the Indonesian Government. We remain very much of the view that the Indonesia Government deserves a great deal of credit for two things. Firstly for the steps it's taken to embrace democracy in Indonesia as a whole which is quite a historical development and also the commitment to hold an open ballot. Now we had worries about many of the activities in East Timor and they remain, and Indonesia will suffer in the eyes of the world and the esteem Indonesia has gained will be diminished if it's thought that an open ballot is not allowed in East Timor. And I hope that every country that expresses a view to Indonesia will convey that in the views that it expresses.

JOURNALIST:

Prime Minister, just two aspects, one arising out of that and one not. One is that you said at the beginning in your opening remarks that you wanted to discuss the certain aspects of US policy vis a vis East Timor and Indonesia [inaudible]à And secondly, looking further down the week to the business tax question, will you be able to tell [inaudible] American audiences that the centrepiece of reform will be a 30 per cent rate which some of your colleagues believe is the key to marketing this tax change internationallyà.

PRIME MINISTER:

Well Jim, I won't be able, nor will I even attempt to announce the outcome of the Government's response to the Ralph recommendation, we haven't got those recommendations yet, we won't have them until the end of the month. I will be indicating areas of reform that I think are needed to make Australia more attractive to the rest of the world. I can't be as specific as to say what we're going to do about rates, I don't know, I haven't got the report, I've got to hear all the arguments. There are all sorts of options and combinations. Clearly the debate about a 30 per cent rate and plus or minus things like accelerated deprecation that's clearly going to be an essential element of our consideration. But until I've got it all in and everybody knows what Ralph is going to recommend, it's premature of me to say well we're going to do this and this, but it's not premature of me to indicate that there are a number of things that need to be done in order to make Australia a more attractive country in which to invest and therefore probably to give an indication that all things being equal we'll try and do some of those things.

Now you're first question was, well perhaps it was just an infelicity of language I really meant that I wanted to talk about Indonesia and East Timor. I wanted to get American views on it; I want to express our views I wasn't meaning that there was some particular aspect of American policy that I wanted to focus on.

JOURNALIST:

How concerned are you that the political atmosphere here, particularly the rising tide of protectionism and the way that that might play out in the coming election campaign, could prevent the US playing the leadership role they should on trade?

PRIME MINISTER:

Well I think all of our societies have a constant debate. We had quite a debate about protectionism broadly defined in the last federal election in Australia. I thought One Nation was very much about the rising tide of protectionism. I expressed a view frequently that One Nation was more a function of economic alienation and dislocation particularly in regional Australia then it was of racism and that's true of all our societies. I don't think America in that sense is any different. But of course being the strongest power in the world and being the power who's views on how far you go down a particular path, carry more wait than anybody else's; it does matter a lot. I mean the reality is that if you can sign up America and Japan within the forum of APEC to a particular outcome, a particular point of view, you get that outcome. If you can't sign both of them up it's very hard to get the outcome I mean that is the reality of it and we all know that. That is why their view carries America's view in particular, carries more weight. And they just, in the end they've got more votes than anybody else and therefore they're going to have a very significant influence on the outcome.

JOURNALIST:

Prime Minister, can I just askà.

PRIME MINISTER:

This is the last one otherwise Mr O'Leary will be angry with me.

JOURNALIST:

When you say that there's a number of things that you'll be suggesting need to be done to position Sydney as the financial globalàglobal financial centre. What sort of things will you be discussing?

PRIME MINISTER:

Well, I think there are a number of enormous advantages we already have.

JOURNALIST:

Apart from those thoughà

PRIME MINISTER:

Well, clearly some of the changes already announced in taxation will help the abolition of stamp duty on share transactions on stock exchange will help enormously. The abolition of Financial Institutions Duty will help. If there are further changes to the business tax system that make it more of a neutral choice between an investment in Australia and the United States, that will be something that enhances the attractiveness of Sydney.

JOURNALIST:

That's the bit I am interested in.

PRIME MINISTER:

Well, come along on Wednesday.

JOURNALIST:

Prime Minister, you have got a situation here where the United States is now moving to the next range of tax reform and we are, in a sense, catching up with, in some way or other, with the Reagan tax changes, they're moving on to the next phase. To be competitive in achieving that neutrality as far as that's concerned, we are going to have to take a big jump aren't we and rates are very important there.

PRIME MINISTER:

Oh yes, they are, they are important. But anyway, we'll just see what comes out of it.

JOURNALIST:

I mean, Americans are going to be less concerned in terms of investment and things like accelerated depreciation aren't they?

PRIME MINISTER:

Well, it'sàthere areàyou are not talking aboutàwe are not deluding ourselves that we can rival New York. We are not quite in that league, we are not arguing that. But what we are arguing is that certainly in our own region and more generally in the world because of the advantages that we already have, and they include not only a strong economy but they include a very highly respected corporate governance system, a very well-regulated banking system, one of the best regulated in the world, an enviable lifestyle, a growing cost advantage compared with many of the cities of Asia and so if you add to that some enhancements in the taxation area, it is becoming, and the fortuitous time zone placement of the eastern seaboard of Australia, you have got quite a series of very, very attractive characteristics. Now, I can't for reasons I explained earlier get into the minutiae of tax changes in the business area. I don't yet know what they are going to be because I haven't got Ralph and until I have got Ralph I am not going to say, well, I am going to do this and I am going to do that. But it is obvious that there are some things that if addressed would make Australia and Sydney in particular more attractive.

[ends]

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