PM RUDD: The President and I have spent a long time discussing the upcoming G20 Summit in London. Korea and Australia are middle powers in the world. We are significant powers together in the Asia-Pacific region. Our economies are fall within the top 15 economies worldwide. And therefore because we are together in the G20, we have common interests and common responsibilities in acting on the global economic recession.
Korea is affected by the global economic recession. In the December quarter there was a significant fall in Korean growth. Similarly in Australia, we're also affected by the global recession as well.
That's why our two countries and our two governments working closely together on the G20 summit is so important.
Specifically, the President and I discussed the very big problem of toxic assets on globally significant banks. We benefited in our conversations from the President's description of Korea's own experience of dealing with toxic assets in its banks 10 years ago, and the mechanisms embraced by Korea in doing that.
We intend to work closely together between now and London to seek to work on a common global solution to this problem affecting private credit markets around the world.
The second point I would emphasise from our discussions today is that I would like to announce today that Australia and the Republic of Korea have agreed to commence formal negotiations on a free trade agreement between our two countries and our two economies.
This is a significant day. Korea and Australia are major trading partners with each other. From Australia's point of view, Korea is our fourth largest export market in the world. And our two ministers, our trade ministers will commence these negotiations in May.
We take what is already a very good economic relationship between the two of us, and we intend to make it even closer, even bigger, even better. And I thank the President for agreeing to a suggestion I put to him when I visited the Blue House in Seoul only last year.
Thirdly, I would also welcome the fact that today we've agreed to develop a closer defence and security relationship with each other. And we believe that this important through a joint statement between us on this for our military to work more closely together, for our defence planners and specialists to work more closely together, and to deal with some of the common challenges of security together in the Asia-Pacific region.
To conclude, many Australians lay down their lives in defence of the Republic of Korea in the early 1950s. And for that reason, so many of our veterans in Australia have a special place in their heart for the people of Korea. We understand the continued security challenges which the people of the Republic of Korea face on the Korean Peninsula. And I've said to the President today, Australia remains a strong friend and partner of Korea, not just in our history but also in our future.
I conclude my remarks there and invite the President to speak and to make some remarks about the discussions just now.
PRESIDENT LEE (THROUGH INTERPRETER): So ladies and gentlemen. During today's talk, Prime Minister Rudd was kind enough to share with me his specific thoughts on how to manage the toxic assets.
And upon hearing his explanation, I also shared with him our experience, Korea's experience during the 1997-98 financial crisis in Asia, the historical experience that we went through in order to manage toxic assets.
I explained to Prime Minister Rudd about the creation and the establishment of Korea Asset Management Company and how that, KAMCO, was able to manage and reassess and manage the toxic assets. And I also explained to him what we are doing now in terms of fighting the global economic and financial crisis. And we vowed that we would work together and cooperate very closely in order to manage the issue of toxic assets.
So Prime Minister Rudd and I, we exchanged and shared our respective views regarding the issue of toxic assets and we agreed that we will be attending the G20 London Summit with specific plans for action. And we will also in the meantime do our very best in order to encourage and convince other global leaders of the necessity of such measures as we prepare for the G20.
And also ladies and gentlemen, we all know that Korea and Australia has enjoyed a very close economic relationship, and now we believe it is time for us to upgrade this economic partnership up a notch. And that is why Prime Minister Rudd and I agreed to begin official negotiations on a Korea-Australia free trade agreement.
Now we all know that Doha negotiations currently is going through some difficulties, and in the meantime, while not diminishing the importance of multilateral trade regimes and its negotiations, Prime Minister Rudd and I agree that it is important to pursue bilateral free trade agreements at the same time. And of course that is the background behind why we believe now is the time for us to pursue this endeavour.
Prime Minister Rudd gave us some very useful and constructive recommendations in terms of security cooperation in the region. And also as you know ladies and gentlemen, the Korean Peninsula is still divided between South and North Korea and we have our North Korea policy which Prime Minister Rudd strongly supported and which I expressed my gratitude to, to him. And of course we agreed that he and I will continue to cooperate in terms of regional security but also matters of global concern.
So ladies and gentlemen, I believe that today's meeting with Prime Minister Rudd will first of all be an opportunity for him and I to renew our common resolve to work together to overcome the current global economic crisis.
And secondly, I hope that it will be an opportunity for us to really strengthen what is already a very close partnership into that of a genuine partnership and friendship for the future.
So once again Prime Minister Rudd, thank you. Thank you for this very constructive and productive meeting that we had today, and also once again thank you for the very warm welcome extended to me.
PM RUDD: Now, ladies and gentlemen. We are going to have some questions from the ladies and gentlemen of the press. Two from Korea and two from Australia. And I'll ask the President Lee to invite questions from the Korean travelling media party.
JOURNALIST: Mr President and Prime Minister. The question goes out to President Lee of Korea. First of all, Mr President you have agreed today to begin official negotiations for a Korea-Australia free trade agreement. However we know that the trade balance between Korea and Australia in terms of that, that Korea has been posting roughly $13 billion in trade deficit in n terms of its trade relationship with Australia. And how do you envisage the Korea-Australia FTA when we take this into consideration? And number two is, you also agreed on a joint statement for enhanced cooperation on global and security matters with Australia today. What is the reason behind signing, issuing such a joint statement when Australia is rather geographically far apart?
PRESIDENT LEE: First of all, as for the Korea-Australia free trade agreement, once we have that finalised and implementing it, I believe that bilateral trade volume will increase dramatically, and I think with that we will have the natural adjustment so to speak of the discrepancy that you just mentioned.
And I believe, apart from that, the significance of having a free trade agreement with Australia that in itself is also very important. And also it is because we have a mutual and complementary economic structure that will in the long term benefit both the interest of Korea and Australia as we sign the free trade agreement.
Second question you asked, why did I sign a joint statement with regards to security with a country that is far away from Korea? Well if you look back 50 years ago as I mentioned, during the Korean War it was people from a country that was very far away that contributed its soldiers, its men and women to fight and defend a country that was very far away.
And also Australians suffered tremendous losses and sacrifices where hundreds were killed. And as Prime Minister Rudd mentioned, the remains of the veterans of the Korean War are still very much honoured and in place in the UN cemetery that is in a city called Pusan in South Korea.
And so you can say that the geographic distance, it is very far away but compared to 50 years ago, the distance between Korea and Australia, it really is not a matter that will keep us away from each other. And I believe that when we have a future-oriented relationship, security issues must also be discussed and due to such cooperation in the security area, that we can ensure peace and stability of the region.
PM RUDD: From the Australian side.
JOURNALIST: Can I ask you both, yesterday the world's been focused on recession and dare I say shrinking budgets. But yesterday China announced a near 15 per cent increase in defence spending. Can I ask you both, do you think that, that perhaps should be better explained as to what the reasons for that were? And President Lee can I ask you, with the current aggression and threats of a long range missile launch from North Korea, what are the reasons do you see for this at the moment. Is this to put pressure on your government and the US, or do you see genuine aggression in that?
PM RUDD: On the question of Chinese military expenditure which you referred to, I've not seen that report and so I can't comment on those figures or the accuracy of those figures.
What I would say is this, what we need across the Asia-Pacific region more generally for the long term is a body which is capable of enhancing transparency on military matters, military operations, for all countries in the region.
And it is for that reason that Australia has proposed the establishment of an Asia-Pacific Community and I'm pleased that the Republic of Korea has expressed some support for that proposal. This is a long term idea.
But the reason for it is that we don't yet have an organisation across the Asia-Pacific region which can bring together a common dialogue on security including a dialogue on transparency of military budgets and military activities across the wider region, for all countries.
On the second point, you referred to recent threats by the North in terms of other activity. Can I say that the regime in Pyongyang needs to be very mindful of the relevant UN Security Council resolutions when it comes to such threatening language.
Secondly, I think it would be very wise for the regime in Pyongyang to get back properly to the negotiating table through the six party talks, and to adopt a reasonable posture to bring about a long-term peaceful solution to the Korean Peninsula.
As the President indicated before, Australia fully supports the policies of the Government of the Republic of Korea in dealing with these threats from the North. And we will continue to do so into the future.
PRESIDENT LEE: To answer your question, first of all with regards to Chinese military spending increasing 15 per cent, like Prime Minister Rudd I haven't seen the exact reports so I would be rather reticent to comment on it.
But I think one important point would be how much did the Chinese Government spend last year and how much of an increase was that in terms of the actual money spent in military spending? I do not have those exact figures with me so, but what I can say is that in North East Asia, it is not desirable to have countries engaging in a race for military build up or increasing their military spending.
Of course the North-East Asian region in particular is a very, very dynamic and volatile region with North and South Korea still remaining, and also we have the issue of China building their military spending and I think we have to be mindful of how that can affect other countries as well in the region.
And second with regards to North Korea, North Korea is a very exceptional regime I consider, or a country, for because of the last 60 years, generation after generation, it has maintained its grip in power. So naturally one of the things that they're very good at is negotiating with others.
And so now we have a new US administration under President Obama, and now we are trying to figure out a way for the future of the six party talks, and so there are many things happening at the moment which would give the North Koreans a reason for them to try and seek a more, how can I say, more positive position for their, on the negotiating table so that perhaps could be a reason why they decided to threaten, continue to threaten, to test fire a missile.
PM RUDD: Thank you. One more question from the Korean side. The gentleman here.
JOURNALIST: First question is, when is the first negotiating session for the Korea-Australia FTA set to take place, and when do you expect the FTA to be ratified and signed? And secondly, with regards to the joint statement on enhanced global and security cooperation between Korea and Australia announced today, in it there is a clause saying the two countries will work together and cooperate in order to stop the proliferation of weapons of mass destruction. And some people are seeing that this leaves room for the possibility of South Korea taking part in the US-led initiative called the Proliferation Security Initiative or the PSI, and I was wondering if Prime Minister Rudd would like to make a comment on that.
PM RUDD: Firstly on the question of the free trade negotiations between Australia and the Republic of Korea, I'm confident that they will start on the 17th of May of 2.30pm in the afternoon - I don't know exactly. Alls I know is that it's May and so, and as to when they will conclude, add a bit of time after that and a bit of goodwill, and a bit of a few drinks and a bit of kim chi between our two trade ministers and I'm sure it will work out in the end.
On the question of the PSI, the Proliferation Security Initiative, Australia has been a longstanding participant in that initiative. We have worked with a range of countries. Here of course is from our point of view a useful initiative in relation to non-proliferation measures concerning a number of possible problem states.
The decision by the Republic of Korea on this question is entirely a matter for the Government in Seoul. Every country's strategic and security and defence circumstances are different. I'm confident that our good friends in Seoul will make wise and proper decisions on their best response to the proliferation challenge that we face.
Finally, on the broader question of non-proliferation, together with the Government of Japan Australia is co-chairing an international commission on nuclear non-proliferation and disarmament, headed by the former Australian Foreign Minister, Mr Gareth Evans and his former Japanese Foreign Minister counterpart, Madame Kawaguchi. That work is underway at present, it's important work, they will reach their recommendations later this year in preparation for the NPT review conference in 2010. This is practical set of measures which Australia is also supporting.
And I think we have a final question from the Australian side.
JOURNALIST: A question for the Prime Minister and one for President Lee. Prime Minister, on emissions trading was it a mistake this morning when you said it might not, the emissions trading scheme would not start until the end of next year? Can you just clarify the start date of emissions trading?
PM RUDD: Today the President and I have talked about emissions trading and Korea's recent decision in relation to a carbon trade system for itself. Our position hasn't changed one bit. And we're talking about introduction from the end of the '09-10 financial year, beginning at '10-11 financial year. That's our position. It's been constant all along and we don't propose to change.
JOURNALIST: President Lee, I have a question for you on the issue of wheat shipments. How serious are the concerns in South Korea about delays in wheat shipment from Australia? Are South Korean flour mills looking elsewhere to source their wheat and have you used your visit here to urge Australia to sort out the capacity constraints that are causing those delays?
PRESIDENT LEE: Well thank you for the question because I up to this point did not realise that we had any significant problems in terms of importing wheat from Australia. But once I go back I will make sure and promise you that I will look into the matter and get back to you if needed.
But let me just make it clear that Korea whenever it imports or exports or otherwise, we are a very open economy, we believe in the principle of free trade and I do not envisage any problems or there shouldn't be any problems of wheat import from Australia to Korea.
PM RUDD: And on that happy note, why don't we conclude our conversation with ladies and gentlemen of the press and again I thank our Korean friends, and you as members of the Korean press for your visit to Australia as well.
Thank you very much.
PRESIDENT LEE: Thank you.
[ends]