-4,, AUSTRALIA~
E 0 E -PROOF ONLY
TRANSCRIPT OF PRESS CONFERENCE AT DIAOYUTAI STATE GUEST HOUSE
BEIJING 19 MAY 1986
PM: I have just completed a little over three hours discussion
with Premier Zhao. As you would appreciate they have covered
a wide range of international issues in the political area
the economic area and of course a number of bilateral matters
of importance to us. I think it is important to indicate at
the outset that Premier Zhao in his opening statement indicated
the very great significance with the Government of China attaches
to building the relationship with Australia and as he put
it to working in a way to realising the full potential of
that relationship. He referred with pleasure the fact that
since we last met there have been 20 ministerial visits between
our two countries. There has been six completed technical
co-operatio projects here, another 14 underway. He said that
there have been notable developments in other fields. He mentioned
in that context the development of the sister province relationship
with the States, the developments in the area of civil aviation,
the establishment of the operations of the Bank of China in
Australia, the consular agreements whereby we have opened
up in Shanghai and there is agreement now for the development
of consular relations by China in Melbourne and Perth. He
referred particularly with pleasure to the development of
our consultation between China and Australia in a number of
international forums in the way in which Australia had been
able to be of assistance to China's interests in many of those
areas. He referred to the developments in the four sectors
iron, steel, wool and textile, non-ferrous metals and transport
as well as coal. So in total there was a firm expression by
Premier Zhao firstly of the fundamental importance attached
to the relationship, the pleasure that they derived from the
way in which there had been the significant developments to
which* I refer. Now without going to all the details of the
matters that were covered, let me say this, in the area of
international political issues I referred to the importance
that Australia attaches to disarmament issues and in that
area expressed our satisfaction with the decision of the Chinese
Government announced earlier this year to end atmospheric
nuclear testing and also their decision to participate in
any negotiations towards a comprehensive test ban treaty in
the Committee on Disarmament. I also expressed on behalf of
the Government of Australia our appreciation of the very positive
response from China to the South Pacific Nuclear Free Zone
concept and welcomed the indication from Premier Zhao that
China would become a signatory to the protocols of-the treaty.
I gave the Premier a run down on developments in the South
Pacific area and included in that run down referred to the
state of play, if you like, in regard to ANZUS between Australia
and the United States of which you are aware and indicated
that in the event that New Zealand proceeded to legislate
in that area that the relationship and the commitment between
Australian and the United States would continue as would the
defence co-operative relations between Australia and New Zealand.
There was, of course, a fairly lengthy exchange of views-between
us on the position in Indo-China and as you know we have a
co-incidence of view about the necessity for the withdrawal
of Vietnamese troops from Kampuchea so that there can be the
emergence of an independent, mutual and non-aligned Kampuchea.
The Premier gave me a quite a detailed exposition of their
perception of the state of Sino-Soviet relations and essentially
what the Premier conveyed was that while there had been a
development in the area of economic relations there was no
question of the normalisation of political relations between
China and the SoviEt Union until the three obstacles had been
removed. The three obstacles the Soviet divisions on the
border, Afghanistan and Soviet involvement in Vietnam. And
he saw no move at this point to the removal of those obstacles
and in that sense hie did not see any move towards the normalisation
of relations. In the international economic area we found
full agreement on the view that I had been expressing as you
know in America, Europe and Japan the need for an early start
to the new multilateral trade negotiations round and he expressed
his gratification of the assistance that Australia was providing
by way of technical assistance to the preparation by China
for its application of GATT membership. We are providing a
consultant experienced in these matters to train Chinese trade
policy officials in this area. There was agreement not merely
for the need for an early start to the new round but the importance
within that round of including on the agenda items of importance
to developing countries including of course the issue of agriculture.
We discussed then a number of issues of bilateral importance
without being exhaustive about that, we covered the area of
iron and steel. We expressed mutual satisfaction with the
very significant developments in the areas which have been
identified two years ago. Those areas of trade in steel making
raw materials, trade in semi finished steel, Chinese investment
in the Australian iron and steel industry; * Australian investment
in the Chinese iron and steel industry and technical co-operation
in.-iron mining and steel. We re-affirmed the importance of
the work of the joint study group in those areas. On the question
of the negotiations in regard to Kwinana and Channar, we recognised
that these were negotiations to be finalised between the enterprises
concerned, that neither my Government nor the Government of
China had the capacity to direct the enterprises in the area
of commercial negotiations. We recognised that in regard to
Channar in particular, the gap between the enterprises was
narrow and we agre-ed as governments that we would by our actions
as governments try and provide the appropriate framework within
which those negotiations could hopefully be concluded. 3;.
raised the question of possible Australian association with
a number of particular projects Shanghai liquid waste project
in which Australia has been involved in the earlier feasibility
stages and in regard to which we have put forward a proposal
for assistance with the co-financing of the implementation
of an aspect of that project. In the area of transport, also
we made the same point in regard to the Dongdu Port where
there has been a funding by Australia in the early feasibility
stage of that project and we welcomed the assurance that depending
upon the results of further feasibility studies that China'
would be willing on the basis-of mutual benefit and equality
to co-operate with Australia as a joint venture partner on
the design and the financing, construction, management and
operation of stage two of the Dongdu Port at Xiamen. I also
raised the question in the context of the desire by China
to reduce the imbalance in our trading relationship to the
possibility of some of our resource companies perhaps contemplating
the purchase of ships constructed in China for the purpose
of carriage of goods in that trade if China were prepared
in that context to contemplate some change in the exsting
position where there is an insistence on the carriage of such
goods in Chinese ships. And it was agreed that that was something
which could be examined I also raised with the Premier the
concern I have that there could be and should be a further
development of exchanges between us in the educational field
and he agreed with this and so we have undertaken that work
will proceed at the officials level on this matter as a basis
of leading up to the business here in September by our Minister
for Education, Susan Ryan, as I do believe that there is more
that can be done in that area. I also raised with Premier
Zhao the desirability of including a double tax agreement
and indicated that wo~ rk was going on at the official level
He agreed that that work should be expedited and it was desirable
to have an early agreement. Finally I thanked Premier Zhao
for the extension of involvement of China in our Bicentennial
celebrations in 1988, participation in Expo ' 88 and a number
of other ways in which they intend to be associated with us
including particularlIy the intended loan by China of two pandas
to an Australian zoo which will be obviously a matter of great
interest and attraction to people in Australia at periods.
Colleagues, without being exhaustive, that I hope will give
you an indication of the wide variety of subjects that were
traversed, some in more detail than others in that three hour
discussion. I simply conclude by saying that the discussions
that I have had with Premier Zhao are a further indication
of the closeness of the relationship between our two countries,
our two governments and the commitment of both governments
to intensify broadening and deepening that relationship. We
will continue our discussions on the informal occasions that
we will now have tonight and tomorrow when we will be together.*
We will also continue further discussions in some of these
areas with Chairman Deng and Secretary-General Hu Yaobang
and Secretary Hu Chi. Li.
JOURNALIST: Prime Minister is this the first time the Chinese
have been involved....... iron and steel......
PM: No, I think in the discussions that have taken place
at the officials level and when the representatives of the
forum countries visited the nuclear powers earlier China was
the most positive and indicated their approval of the course
of action that had been taken and I think this is merely,
if you like, a confirmation of the indications that have been
earlier given. It was the first direction confirmation at
the Premier to Prime Minister level. The second question Michelle,
it is the case that as I said the Government doesn't control
BHP and as I indicated parenthetically, I wasn't quite sure
at the moment who does. But we certainly don't and the Premier
indicated the same position as far as they were concerned
that under the reform program that has been established the
Government doesn't direct its commercial enterprises in matters
of these kind. Now we can't therefore on either side say look
this is what must happen. All we can do and will do is to
indicate the fundamental importance that both governments
attach to these developments and we will provide at our level
all the official assistance that we can to, if you like, lubricate
the negotiations so there is extremely positive attitudes
on the part of both governments and I am optimistic about
the due course and we can reach agreements in this area.
JOURNALIST: Was there any discussion on time on either Kwinana
or Ohannar?
PM: No, simply the view that we hope that they could be achieved
as soon as possible. I think it is fair to say that probably
the gap that exists between the two enterprises in regard
to Channar is the narrower and it would be more appropriate
to expect an earlier positive outcome in regard to Channar.
JOURNALIST:... PM: It is realist ic to have that hope but I emphasise that
this is not a matter that we as governments can determine.
It must be negotiated as a commercial matter between the enterprises
concerned. But there is a recognition, let me say this, that
we both re-affirm the importance of the long term inter-relationship
of the development of our two industries.
JOURNALIST: Did you go into Australia's competitiveness in
relation to Brazil?
PM: Yes. The point was made by Premier Zhao that....... Brazil
we were much closer than Brazil. Therefore the shipping of
the product should be cheaper. IT* made., the point in regard
to the comparison with Brazil-that it.% is of course difficult
if not impossible to intrude into the, economic calculous that
one makes in these comparative matters the question of what
weight you attach to relative political stability. But I made
the point that nevertheless that was significant and asserted
as I have in a number of discussions here and with other countries
that there is when contemplating sources of supply, there
is no country which is more politically stable than is. Australia.
And it is appropriate that those considerations should be
taken into account.
JOURNALIST: Did the Premier bring up industrial relations?
PM: No. They are fully aware of the magnificence of the improvement
in industrial relations in Australia.
JOURNALIST: Did Premier Zhao as or indicate in anyway that
he would like to change Australia's position in Kampuchea?
PM: No. There was a recognition of the role that Australia
has played and of the shared interest we have in the outcome
of this matter and what needs to occur. I think it is fair
to say that the Premier expressed his belief that there had
been a strengthening of the position of the CGDK forces and
he believed that that would lead to the sorts of result that
we are talking about. Now that association that China has
with elements of the CGDK forces leads them to that position.
Perhaps they are better placed to be able to make an assessment
as to the outcome of the pressure of the CGDK forces. But
no there was no suggestion of wanting any change of view or
role on the part of Australia.
JOURNALIST: Just on iron and steel. What is your perspective
of how serious the Chinese are in these discussions with Brazil.
You mentioned that distance......
PM: I think clearly and there has never been any suggestion
at any stage of our discussions that China was going to say
our focus is going to be exclusively on Australia. We have
to be competitive and while China sees some obvious benefitsin
development the relationship with us and that has been
proved in the two years the sorts of things that have been
happening to substantial developments. Nevertheless, they
are going to look at relative advantages. Let me say this,
this was not something that I went to in the discussion with
Premier Zhao although it may well be that we will develop
this point in some subsequent discussions. Let me say this,
that it is well known that some of the developing sources
of supply of raw materials have in the pricing policies which
they undertake have not been strictly commercial in their
assessments. They have a pressing need for foreign exchange
to meet their debt servicing requirements. Now that is going
to be a changing sort of situation and as for instance in
Brazil you get increasing levels of activity within Brazil
and demands for their products internally then you are going
to see some changes I believe in pricing policies. Now what
I am saying as far as Australia is concerned that w e are increasingly
a competitive and reliable supplier and we do have the capacity
which very few other countries have to provide a range of
input and involvement in the whole area of the iron and steel
industry both in terms of investment in this country and th..
-provision of technical assistance. So it is our view that
taking all these aspects into account it will lead to a continuing
integration of our industries..
JOURNALIST: When do you believe an agreement on Channar will
be reached?
PM: I can't answer that with precision. All I can say is
that there is a recognition on both sides that the gap is
small. It is a question of what should be the service charge
for the facilities to be provided by Hamersley. There is a
very narrow gap in that. One area of previous disputation
and that is how the charges are indexed. I think that has
basically been resolved and now it is a reasonably narrow
gap. I hope that it won't be long but I haven't got a basis
for giving you a date.
JOURNALIST: On your previous trip here this initiative was
presented very much in terms of an integration of the iron
and steel industries of Australia and China. Do you think
that when that was put forward that the Government underestimated
some of the commercial factors relating to prices and competition
and in any way do you withdraw from that sort of concept you
were putting forward last time? Do you still think
be realised despite the lack of progress.
PM: Well, I don't accept that there has been a lack of progress.
Neither side says there has been a lack of progress......
which is completely unsustainable. I mean if you look at the
areas that I have referred to. Let me remind you of them again.
That is the trade in steel making raw materials, the trade
in semi-finished steel, the mutual investment in the industrial
and technical co-operation. In all of those areas very specific
progress has been made. So I just repudiate that part of the
premise of your questions. However, having said that Paul
I acknowledge that in regard to the specific projects at Kwinana
and Channar the process of finalising the commercial details
has been longer. But I think both sides expected that1 t2i
I have no reason having acknowledged that to change my belief
that there is a recognition on both sides of the very considerable
benefits there will be for both countries in an increased
degree of integration of our two industries.
JOURNALIST: The fact that those........ steel question?
PM: No. I think the approach has been very sensible. And
it is recognised by Premier Zhao and myself that the framework
that has been established has worked. This is the joint consultative
group has worked consistently, there has been a consistent
interchange of missions between Australia and China. They
have developed and there has been out of that consistent interchange
of missions progress in integrating our industries in a number
of ways provision of training facilities, the development
of investment opportunities here in China. That work is going
on and I think we have been very sensible therefore in the
framework that has been established. Within that framework
we have come to see that in regard to these two particular
projects that both sides are going to try and ensure that
they get the best commercial outcome that they possibly can,
Now that is natural and as I say I repeat the hope that that
can lead to a finalisation of those actual two projects.
But the 1way in which we have gone about-it seems to me to
be sensible.
JOURNALIST:........ optimism about the eventual finalisation
of Kwinana......
PM: Well, on these two basic considerations, firstly that
there is recognition on both sides of the very distinct possible
advantages that can come from the finalisation agreement.
And secondly that the movement in international factors in
prospect can operate in a way to reduce the gap that currently
r i 4i , r
7T
JOURNALIST: Mr Hawke, your talks this morning with your
Cabinet colleagues........ Can you briefly tell us how
they went and what were the results?
PM: Very well. I indicated to my colleagues what should
be the course of events. That has, of course, been accepted.
Let me make these points, firstly as to the timing of
the meeting. It is now being suggested that perhaps the
meeting might be on Thursday, 5 June and I think that
now subject to a cheque with the other participants of
ACPI that is when the meeting would be. I have indicated
as has Mr Bowen confirmed after the meeting that all
matters that are important to the determination of the
interests of this country are decided by Cabinet. That
is where the decision will be made. Any minister that
may have some desire to have an input in the process
will do that via Mr Bowen. The actual preparation for
the meeting, of course, will be for Mr Willis who is
the Chairman of ACPI and with Mr Keating, the two ministers
who represent the Government in that meeting. I will
be kept informed to the extent necessary by Mr Bowen
while I am away of any developments that I need to be informed
of and of course I will pick the matter up directly on my
return in a weeks time. The position I put to my colleagues
was, of course, accepted.
JOURNALIST:..........( inaudible)
PM: I wouldn't think that that is in any sense necessary
or likely. I have kept open that option. But essentially it
has got to be understood, as I have said, this is another
meeting of ACPI. Mr Willis is the normal chairman of that
meeting. At this stage I don't, in the light of what I have
said in discussions I have had with my colleagues, I don't
see any reason t~ o be saying that I will.
How much discussion was there on
PM: Not an extensive discussion. The position that I think
was put at the last meeting was that those who are the
participants in ACPI will be able to raise any questions that
they regarded as relevant and nothing has changed on that
so we didn't need to have any detailed discussion about that
Mike. JOURNALIST: What about in terms of Government proposals?
PM:* Well, as far as the Government is concerned it will be
largely a listing process. I think what we would do would
be as is normally done with these meetings is to put a statement._
on analysis of the economic position as it seen. That is what
has been done in the past and it would be appropriate to do
it again. Within that context some proposals may emerge from
the parties. If they do then the Cabinet will consider them.
JOURNALIST: Will there be any....... consultation......
PM: There may well be and certainly if either the employers
or the ACTU want to have discussions it would be appropriate
for them to raise matters with us. I don't know how far they
would want to but consistent with what we have said in the
past and we are open to what people may have to say to us.
It is up to them if they really want to raise some matters
in advance with us.
JOURNALIST: Mr Hawke, can you tell us anything of what the
ministers said in response to your statements?
PM: Yes, I can say that there was, as far as I could tell,
a complete acceptance of the course of action I proposed.
JOURNALIST: Did any of the ministers complain about reports
in this morning's papers?
PM: There was one raising of that issue but very briefly.
JOURNALIST : Who was that Prime Minister?
PM: Mr Keating went to that issue but it was very, very brief.
JOURNALIST: What was the import of his comment?
PM: I am not going into that issue.
JOURNALIST: There has been reports that there is a rift between
you and Mr Keating......
PM: Well, I think that the media has fairly assiduously for
some time been reporting on this proposition. All I can say
is this that as far as I am concerned I have made it clear
both on Friday night during my discussion with Mr Bowen and
then this-morning in my discussion with my colleages that
this meeting has to be seen in its right perspective and that
has been accepted by all ministers including Mr Keating. Now
you can spend as much time as you like on trying to develop
a proposition about rift. I don't think it would be very
productive. As far as I am concerned I repeat now what I said
to you before that I have complete confidence in Mr Keating
as Treasurer. He has done an excellent job. I believe he will
continue to do it.
. JOURNALIST: Mr Hawke, would you like to see some positive
outcome from this meeting particularly in terms of policy,
particularly given the extent of the trade problems?
PM: Well, at any time when there is a meeting between Government
and representatives of employers and the trade unions of course
one likes to se. e agreement emerge. And that's why I have said
that if out of this meeting some agreement can emerge on
particular elements of policy then we Would want to consider
that in the Cabinet. That's consistent with the way we have
approached economic policy making since we have been in Government.
But I repeat and it is important that it be understood that
as far as the actual decisions about economic policy are concerned
they will be made in the Cabinet. And I can't see anything
that will come out of this which will involve a radical redirection
of policy. We have got the elements of policy there and in
the implementation of that policy we may get some useful assistance
as to developments of that out of the meeting, I don't know.
But we certainly, as I said, think it appropriate that when
there is an indication at that meeting as there was on Friday
that they would like to have further discussion. then of
course we will facilitate that.
JOURNALIST: Prime Minister, did you ask for or did any minister
volunteer an explanation about how things could have got out
of PM: No.
JOURNALIST: PM: I have been around politics for so long that if I got
carried away by a headline you would know where you would
finish up. You may think headlines determine politics, I don't.
JOURNALIST: gut your deputy is blaming
PM: OK my deputy may be-doing that. If you have got a question
that you want to ask him as to why he is doing that you direct
the question to him. But you asked me about headlines. Let
me make it quite clear, I have been around in public life
now for a generation and if I had allowed what I see as a
headline to upset me, to make me think that that is how policies
are determined then I wouldn't be where I am now.
JOURNALIST: Do you see it as a problem of media perception?
PM: I think that the media or parts of it got somewhat carried
away with what developed on Friday and I have tried gently
in Tokyo and here to make the point that what happened on
Friday is not terribly complex that a suggestion spontanesously
arose about an extensionlof the meepting with employers being
more involved in the discussion about economic policy that
they thought they had been in the past. There was a positive
response to ministers to that. That is what is going to happen,
nothing more, nothing less.
JOURNALIST:......... in saying yourself last night in a background
briefing........ PM: I didn't hear what you said then.
JOURNALIST: Mr Hawke, Mr Keating said that this meeting will
be the most important held since the 1983 economic summit.
PM: I am not in a position to make that judgement. It is
a very large statement to say it would be the most important.
I think that it is useful that there is going to be that meeting
and if agreement comes out of it then it can be significant.
And I certainly don't want to create false expectations nor
in any sense, as you can appreciate from anything I have said,
want down grade the importance that people might attach to
it who are going to be involved in the meeting. I hope that
they will go into it with a view that they are going to be
discussing what sort of things may be most appropriate for
the economic health of Australia. And I congratulate those
involved wanting to do that. How important it is going to
be will depend on the meeting itself not what is said about
it before. It is the meeting itself that will determine how
important it is.
JOURNALIST: Mr Hawke, what was Mr Keating's reaction to what
PM: Well, I think it is fair if you want to get Mr Keating's
reaction you should ask him. I don't think you have ever in
the past had difficulty about talking to people that you want
to Michelle.
JOURNALIST: Mr Hawke, you have criticised the media
PM: Hey, I haven't gone a media cri ticising thing. That is
not my caper. I just think that there was a little bit of
perhaps exaggeration about what had happened on Friday. But
that is fair enough.
JOURNALIST: But don't you think that Mr Keating has to bear
some of the responsibility for that in the way that he handled
the remarks......
PM: You ought to know by now that I don't get into this exercise
of trying portion blame when it comes to my ministers. All
you will find me doing is giving credit to my ministers. And
that is what I have done consistently since I have been in
office. And that is what I am about. now.
JOURNALIST: The panda initiative any more details on that?
PM: No I haven't. It may be that our Excellency here, Ambassador
Garnaut, may be a fuller bottle on the panda issue than I
am.-All I know is that there is an enormous enthusiasm and
excitement in Australia for the proposal as part of the
Bicentennial celebrations. I think the negotiations are fairly
well advanced, Ross.
GARNAUT: You might even see them before the week is out.
Yes, you are going to see them.
JOURNALIST: Who will make the decision on what zoo they go
to? PM: Well, I think if a Prime Minister can' t have a say in
which zoo the pandas are going to. There is not much use in
being in the job.