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?
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?
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.
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?
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.
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.
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.
Will you formally ask the President to reverse the decision even though you know that's a remoteà.
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.
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?
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.
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?
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.
But is there anything in it for us to go any further and, in fact, to do something like winding back a little bità.
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.
Have you told Mark Vaile that?
Mark Vaile is very well aware of that and I don't think anything he has said is inconsistent with it.
Prime Minister, do you agree with him that Australia has got far enough, at least for now?
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.
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
Yes. What have you done to make them so enthusiastic?
Well, I haven't done anything.
What's the Australian Government done?
I am not aware that the Australian Government has done anything other than to argue very persuasively and very
eloquently a very strong case.
And what's your reading of the likely outcome?
I don't know. I am always very cautious about sort of, you know, the early returns.
Prime Minister, in terms of Pratt and Wallace what will you be asking specifically the US President to do?
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.
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?
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.
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.
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.
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
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
Prime Minister, can I just askà.
This is the last one otherwise Mr O'Leary will be angry with me.
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?
Well, I think there are a number of enormous advantages we already have.
Apart from those thoughà
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.
That's the bit I am interested in.
Well, come along on Wednesday.
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.
Oh yes, they are, they are important. But anyway, we'll just see what comes out of it.
I mean, Americans are going to be less concerned in terms of investment and things like accelerated depreciation aren't
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.