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Australian Mission to the United Nations, New York City

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Media Conference with The Australian Minister for Foreign Affairs, the Hon. Alexander Downer

Australian Mission to the United Nations, New York City Monday, June 8 1998

Minister. First, can I say, ladies and gentlemen o f the media, welcome to the new premises o f the Australian Permanent Mission to the United Nations and the Australian Consulate-General here in New York. This is a very good illustration o f the slogan, more for less, that we have colocated our

Consulate-General and our Permanent Mission to the United Nations in these magnificent new offices. And it will cost the Australian taxpayers lees than the arrangement we had before.

I am here in New York for three reasons. First of all to participate in and address the United Nations Special Session on Drugs, to meet with senior officials here, including Madeleine Albright, who I have met with already; to meet the United Nations Secretary-General, Kofi Annan, and others; to talk

about both nuclear testing, following the nuclear testing in South Asia, and also the situation in Indonesia.

Let me just say something about each o f those things. First o f all, as far as the United Nations Special Session on Drugs in concerned, the Australian government is very strongly committed to the Special Session’s initiatives. The United Nations approach complements Australia’s vigorous approach to

combating drugs recently announced by the Prime Minister in his “ tough on drugs’* initiative. The UN approach is a watershed in international cooperation against drugs, with its focus on both supply and demand aspects

o f the problem. It includes an ambitious commitment to alternative development crops by 2008, international cooperation in money laundering and demand reduction programs.

Tomorrow, when I address the Special Session, I will be announcing an important Australian initiative on enhancing our security through greater Asia Pacific D rag Control cooperation. But obviously as I have said, I will announce the details o f that tomorrow.

As far as nuclear testing is concerned, I met with M adeleine Albright tins morning. I reaffirmed Australia’s commitment to cooperating with the five


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perm anent m em ber· o f the United Nations Security Council to bring an immediate end to this grotesque outburst o f testing that we have seen recently in South Asia. Australia was instrumental in bringing about a special session o f the conference on disarmament in Geneva cm the tests, and an open debate in the Security Council this weekend in New York at which Ambassador

Weneley, our Ambassador to the United Nations, spoke. I will also be discussing this issue with the Secretary-General and also the Under Secretary General for Disarmament, Mr. Dhanapala.

Australia in particular, and this is a point I made to Madeleine Albright today, Australia is very committed to ensuring that India and Pakistan not just stop their testing, but sign the comprehensive test ban treaty. And we would also like to see the treaty on banning the production of fissile material taken

forward in the Conference on Disarmament in Geneva as soon as possible. W e will be working very hard to achieve that objective.

O n Indonesia, I had a discussion with Madeleine Albright this morning about the situation in Indonesia, just to say that Indonesia is clearly going through a period o f significant reform. There has been a constitutional transition of power, a commitment by the new President to Parliamentary elections. There has also been progress on the release o f prisoners held for political reasons.

The international community needs to be encouraging the process o f both economic and political reform in Indonesia. It is critical that the IMF remain engaged with Indonesia and helps Indonesia re-build its economy. Let me say that I am very pleased that tee IMF has shown a more flexible approach than w as originally the case, and we have obviously had substantial discussion with the IMF now over quite some tim e to encourage that

flexibility. Australia will continue to be a helpful neighbour, to ensure that the international community assists reform in a w ay that both advances Indonesia, but is sensitive to its difficult situation. So I am very happy to answer any questions, if you have any.

Question: In your speech at the Harvard Club earlier there was a lot on the Australian economy. Y ou'd be aware o f w hat's happening with the Australian dollar, at present. H ow much o f your mission here is also to talk up the dollar and tee economy.

Minister: W ell I think it is not my mission as the Foreign Minister to talk up or talk down currencies. I have no comment to make on the Australian dollar and you, Craig, would expect me to say that. It clearly is important that in New Y ork there is an understanding of the strengths of the Australian economy,

and I diink there is. I think people understand that Australia has one o f the highest rates of growth in the OECD; that our inflation rate is very low - at historically low levels. We have seen declines in unemployment, interest rates are at the lowest levels they have been for many years, and Australia stands as


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one o f the truly strong economies o f the Asia Pacific Region. That is. I think well recognised around the international community. But it is a message that the government continues to promote, not just domestically in Australia, but importantly internationally. I used my Speech as an opportunity to reiterate

those points to the American business community as well as to make a number o f other points about our region.

Question: Have you seen any evidence that the message is getting through?

Minister: 1 do not think there is any doubt that in the United States there is a positive view about the Australian economy. I think that the Australian economy is well recognised as one o f the truly strong economics of the world. There is no doubt about that.

Question: But there was concern today about the Australian dollar?

M inister I am not commenting on the exchange rate as you can imagine, except to say that movements in exchange rates affect different people in different ways. Some people arc pleased when the exchange rate moves up and some are disappointed. Some are pleased when it moves down and others are

disappointed. If you are sn exporter and the exchange rate moves down, then that is a good day at the office. I f you are an importer, when the exchange rate moves down, it is not such a good day at the office. So, you know, it depend* on your situation.

Question: But it’s been down around 59 cents...

Minister: Well, I do not have any comment on what the exchange rate should be. I think it is very important that in Australia, we understand the importance o f the commitment w e have to markets, and market liberalisation, and w e remain o f that view. It is an important component of Australia’s international

economic policy. We have always been committed to those things. But obviously no government gets into the game of commenting on the exchange rate, where it should be, or should not be.

Question: Does it make it harder for you? Does it make your job harder when you come over here talking about the economy, talking up the cconm y.,.

Minister: No, I think you make a fundamental mistake. You cannot help people drawing whatever conclusions they want because they will always do that. As I have said to you, when the exchange rate goes up, it is bad news for exporters and good news for importers. When the exchange rate goes down it

is good news for exporters and bad news for importers, so when there is a movement in the exchange rate, you look at it from where you sit. Also, you look at the exchange rate in terms o f a whole scries of exchange rates, your


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exchange rate against the US dollar, against the Pound Sterling, against the Yen, against the Singapore dollar, against the Indonesian Rupiah, that is why w e have a trade-weighted index as well as looking at the bilateral exchanges.

Question: Y ou said that one o f the dangers you pointed to in the region was the prospect o f the Japanese economy entering a deep recession, obviously its not m recession, but there is some concern about the currency there which has obviously pulled down the Australian currency. So isn't that addressing that problem?

Minister: W ell I am sorry, I am not sure what problem you are referring - our problem..

Question: Well, is there a problem with the dollar in that respect? Are we entering into an era with the Japanese economy...

Minister: No, I think as I said in my speech, look very carefully at what I have said, not at what you wish I have said, i f I may say so with the greatest o f respect W hat I said to you was that there were some risks, and I identified some other than the IM F packages, risks associated with the Japanese economy, die

Chinese one and renewed protectionism. I then went on to point out that I thought that those risks were fairly small - that the 190 billion dollar stimulatory package by the Japanese government would help the Japanese

economy and that Japan was also committed to deregulation and opening o f its economy. And it is important that those things happen. So that I think on balance, the Japanese economy will start to pick up during the course o f this year. Obviously it has gone through a fairly, well it has gone through what is pretty close to a technical recession in the first part o f this year, but I think in the second part o f this year, we will see some pick-up in die Japanese

economy. So, I point to the fact that there are risks, but I also point out that they are small risks, that the balance is on the up side, not the down side.

Question: You said in your speech that, you were talking about exports you ware saying they have been hit somewhat by the Asian crisis, and I’m just wondering what other areas around the world have helped to offset that crisis?

Minister: Well, the interesting thing about Australian exports has been the versatility that has been shown by Australian businesses through this Asian economic crisis. We have seen very significant improvements in A ustralia's export performance here in the United State·. Last year, our exports to the United

States grew by I think I am right in saying, around 25 percent, somewhere in that vicinity. Our exports to some o f the key European markets have grown very strongly, for example to Italy. So, we are seeing a variation to the pattern o f our exports. But clearly in markets like Indonesia, Thailand and

Korea some o f our exports have fallen off substantially. I have made the point all along that in terms of those markets, they will work their way, those


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economies will w ork their way out o f their difficulties. Pertly, though exports and the pattern o f Australia's exports into those economies is o f essential raw materials which are key business inputs. So as those economics start to pick up, in particular, as their exports pick up, then that should help with a lot o f Australia's exports. Not all o f them, but a lot o f Australia’s exports to those particular economies. So, I think that, obviously, Australia is going to be

affected by the Asian economic crisis, but it is also true to say that we have become much more competitive in markets like the United States and the European Union and that we have lost some markets in East Asia, because o f the economic crisis. But I would be confident in time that those markets will pick up.

Question: There has been some criticism about the UN drugs policy. Just across the road various scientists and experts had a press conference saying that governments shouldn't slavishly follow the UN line, or shouldn’t follow the UN line at all. They said that it was the same old rhetoric, a foiled process. It was a flawed

approach. That using law enforcement to wage some war on drugs didn't work and shouldn't work. I’m interested in your response?

Minister: Well, I have seen that criticism. There was an ad today in the New York Times, which I noticed had been signed by several Australians. Seven or eight o f the signatories to that ad were Australians. I would say to this, look, the important thing is to have a balanced approach to the drugs issue. That is, to o f course place emphasis on the supply side, but also that to ensure that there is appropriate emphasis on the demand side. And that is. in the a id , what the argument boils down to. There arc some who say that there ha* been disproportionate focus by the UN, by the United States end so on, on the supply side, and not enough focused on the demand side. I think that the criticism o f the UN at the moment, coming from those who have mounted this criticism today, is a little bit anachronistic. That is, it may have been fair criticism o f the UN some time ago, but what is interesting about this Special Session on Drugs is that there is quite a lot o f emphasis also on the demand side. President Clinton in his speech this morning, had a little to say about that issue I noticed. When you look at the resolutions which are likely to be

adopted by the Special Session, then one component o f those is the demand side.

From Australia's perspective, we do not take a view that just one side o f the equation is right. That the supply - just addressing the issue o f the supply side - is either right or sufficient, because wc have supply side measures, but

we also have considerable demand-side measures. In the Prime M inister’s statement o f last year, "Tough on Drugs” , he made a commitment to something like S250 million dollars o f additional expenditure over the next four years. That expenditure is divided almost equally, between supply-side measures, and demand-side measures. So, I think that the criticism that there


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has been is anachronistic, really. I think there is, at this Special Session, pushed by counties like ours, much more o f a balanced view, much more o f a focus on both the supply and the demand side. So, I think that that is going to be one o f the important things that comes out of this session. So, there is,

nobody denies, a great deal to do. Maybe not all that could have been done, has been done. B ut I think in the years ahead, this Special Session will have been seen as an important catalyst in getting the international community to take a more balanced view of the issue,

Question: Are you concerned with the IMF, and its ability to do the job in places like Indonesia, could be constrained by delays in the US in getting fondling approved, and therefore it could signal an increase in protection, protectionism, that you were talking about earlier?

Minister: Well, I would not make all o f those connections. I would clearly hope that the Congress will eventually agree to the request for supplementation for the IMF which the Administration has put forward to the Congress, As far as protectionism is concerned, the expectation is that because o f the Asian economic crisis, there may be some substantial appreciation o f the United States dollar. There may be a deterioration in foe United States current account balance o f payments deficit. That is certainly what the expectation around town is. That may be, but I would only make foe point that it is important in that environment that the forces o f protectionism here in the United States arc not unleashed. The United States, since the foundation o f what was called the GATT, now the WTO, fifty years ago, has really led the world down the path o f trade liberalisation. It is crucially important that foe United States retain its commitment to trade liberalisation. So I would only say that the Administration is clearly very committed to maintaining the commitment to trade liberalisation. There are forces in Congress which are opposed to trade liberalisation. I think they arc just appealing to populism. They are not focused on the intellectual arguments for economic management, So, I very much hope that as time goes on, that foe populist

view does not gain more momentum here in the United States. Whether it will or not remains to he seen.

Question: How influential do you think they are?

Minister: Who?

Question: The protectionist forces...

Minister: The protectionists? W ell they are clearly quite influential. Where they have some strength is in the Congress. For example, we saw the fast track initiative disappear at the end o f last year. It has not come back, because the Administration does not think it can get it through foe Congress. We have


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seen the opposition to the IMF replenishment package m the Congress. There is quite a lot o f protectionist sentiment in the Congress, and it is very important that those in the Congress who arc committed to trade liberalisation, as well as the Administration, which is strongly committed to trade liberalisation, retain the upper hand. Both in the political environment here, hut also importantly, in the broader American community. America has been the world’» biggest winner from trade liberalisation, although everyone has been a winner. But the American economy has been the biggest winner.

And the American people should not throw away the tremendous gains that have been achieved in the last 50 years by reverting to a sort o f 1930s style protectionism.

Question: How is it that you as Foreign Minister have come to be addressing this drugs issue? Is it purely because it is a United Nations forum? Is it because you were going to be here anyway? I mean, why is it you and not the Health M inister looking at this particular thing?

M inister W ell, it is for a variety o f reasons. Importantly because it is a United Nations Special Session, and as the Foreign Minister I have primary responsibility for United Nations matters. I have been able to use this opportunity o f being here to pursue some o f my other objectives, particularly in relation to nuclear testing and Indonesia. It has been an opportunity for me to meet with Madeleine Albright, my American counterpart, but also to see the Secretary

General and others on the ground here. But I am the Foreign Minister, I am responsible - 1 have overall responsibility for Australia’s international relations.

OK, well thank you very much.


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