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Joint Standing Committee on Foreign Affairs, Defence and Trade
02/07/2020
Implications of the COVID-19 pandemic for Australia’s foreign affairs, defence and trade

DUPONT, Dr Alan, CEO, Cognoscenti Group

Evidence was taken via teleconference—

Committee met at 15 :01

CHAIR ( Senator Fawcett ): Welcome. I declare open meeting No. 30 of the Joint Standing Committee on Foreign Affairs, Defence and Trade's inquiry into the implications of COVID-19 pandemic for Australia's foreign affairs, defence and trade.

These are public proceedings; although the committee may agree to a request to have evidence heard in camera or may determine that certain evidence should be heard in camera. I remind witnesses that in giving evidence to the committee they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee or to give false or misleading evidence to a committee. Witnesses are reminded that recording is permitted during the hearing. This hearing will be audio broadcast live on the parliament's website. The proof and official transcript of proceedings will be published on the parliament's website.

Thank you for your submission, which we have identified a submission No. 6, and for your time to participate in the hearing today. I invite you to make a brief opening statement and then we will proceed to some questions.

Dr Dupont : Thank you. It's a great pleasure to be here this afternoon. What I thought I would do is just very briefly summarise a couple of key points from my submission by way of an opening statement, if I may. The first point I would like to make is a pretty obvious one: the coronavirus pandemic has exposed the fragility of just-in-time supply chains and, I think, the folly of relying upon a single country for critical goods and infrastructure. The virus and the pandemic itself has really shifted sentiment, particularly in the United States, in favour of a more severe decoupling of the US and Chinese economies than previously contemplated, which of course will have major implications for us, as a trade-dependent country and also for the world more generally. Global supply chains and the broader world economy are unlikely to completely decouple, in my view, even in a divorce scenario, given today's much higher levels of economic, financial and trade interdependence. But COVID-19 is accelerating the momentum towards separate tech standards and systems. My point here is that a Balkanised internet is clearly not in Australia's interest, because a fractured digital world would vastly complicate trade, restrict the free flow of information and reduce the prospects for international collaboration.

On trade: I think the international trading system is likely to be further weakened by rising protectionism and a renewed emphasis on self-reliance as pandemic-afflicted companies reshore and ring-fence the production of goods deemed vital for national security and economic resilience. There is, in my view, a real possibility that the world could divide into two competing trading and geopolitical blocs much as occurred during the Cold War except that the bifurcation would be more fluid and diverse. In my view, our dependence on China for a range of critical technologies and goods has become a major security liability and must be reversed.

On the positive side, I think the aftermath of the coronavirus pandemic will present new opportunities for meaningful and effective middle-power diplomacy. Improved national resilience and sovereign capabilities are essential to futureproof Australia from external shocks, and I think strengthening our telecommunications infrastructure should be a strategic priority. Finally, I would say that the pandemic also provides a once-in-a generation opportunity to unite the country around a new fit-for-purpose defence, foreign policy, trade and national security agenda that will reshape how we live and what we do in a post COVID-19 world. That concludes my opening statement. Thank you.

CHAIR: Thank you very much. I will start off with a few questions and then I will go to colleagues. You talk about the possibility of the world dividing into two trading and geopolitical blocs. What do you think would be the practical impact of the bilateral free trade agreements Australia has with, for example, China and Japan as well as the multilateral agreements, such as the PPP, in the event that that decoupling you've discussed, particularly between the US and China, occurred? Do you think those agreements would hold to any practical level?

Dr Dupont : The short answer is that I don't think those agreements would hold to any practical level if there was a serious division or bifurcation of the world as I've suggested. I don't think we'll come to that, and I certainly hope we won't, but that is certainly a risk we have to consider. I think it's more likely that the decoupling that does occur will be targeted; it will be partial; it will be some degree of separation rather than a full divorce. I am hopeful that we won't get into a situation where our free trade agreements are under threat, but it is a possibility we need to think about.

CHAIR: You also mention in your submission the need to re-empower the national security adviser—and I think you and Jim Molan must be working together looking at the call to develop an effective national resilience and security framework. Can you talk a little more about how you envisage that would look and where that would sit in terms of its governance?

Dr Dupont : I think it's probably fair to say that the vast majority of my colleagues in the broader national security community are of a similar view. So it's not just my own personal view. I think it is a broad feeling among us that, to some degree, we need to go back to the past a bit and resurrect the good things that we had perhaps 10 or 15 years ago in terms of the structure of our national security community and the platforms that we have, and that would include a really empowered national security adviser. Obviously the agenda has changed significantly since 2013, when our first and only national security statement was made. The agenda would have to be substantially rewritten to take account of all the quite dramatic changes that have occurred in the last two years. So you've got issues around what would be in a new national security strategy—that is, the content.

How would you structure government to respond to these new challenges? I believe that we need to be a lot more joined up than we are now. We've come a long way in the last decade or so, but we need to go a lot further. I'm thinking beyond whole of government to whole of society. I think there's real scope for bringing in other communities—for example, the business community, the trade union movement and others that haven't traditionally been part of the broader national security community. I think there are ways of doing that.

So there needs to be a lot of thinking about this, but my core point is, as others have stated before, that it is definitely time to review our whole national security structure and agenda. I note that this government has, just in the last 24 or 48 hours, come out with quite a big rethink on defence strategy, and I think that's great. But, in the absence of a comparable review of our national security strategy, it's going to be very difficult to implement a defence strategy effectively. So they would be my key points.

CHAIR: Okay. I have two questions before I go to Mr Wallace and then Mr Gorman. You talk about your view that Australia should help reduce tensions in the South China Sea. I'd be interested to get your views on specific measures that could do that. You also talk about the fight against China's new internet protocol. Whilst most people are familiar with the argument around Huawei, 5G and the insecurities that that would lead to, could you give us some more of your insights into their push for a new internet protocol.

Dr Dupont : Sure. On the South China Sea, I think that in the past countries like Australia—essentially, the countries that are not directly involved in the sovereignty claims in the South China Sea—have tended to sit on the sidelines, apart from making noises from time to time about the importance of defending the international waterways. I think we need to go beyond that, because China's challenge in the South China Sea is not just to the other claimant states but actually to the stability and security of the whole of the maritime space, which, of course, is critically important for Australia for trade and all sorts of economic and geopolitical reasons, as it is for other countries too. So what I am potentially arguing for here is to multilateralise responses to the South China Sea imbroglio, which is clearly not going to be resolved if there isn't more pressure brought to bear on China. That can only come from the larger states that are not involved in the dispute process, because the other claimant states are relatively small to medium-sized South-East Asian countries that do not have the geopolitical clout to do that individually or even collectively. I can elaborate further, but that's the key point.

The other thing I would say about the South-China Sea is that, when President Xi spoke to President Obama several years ago, he promised not to militarise the South China Sea. It's pretty clear just objectively, looking at the evidence, that it has been heavily militarised. So I think that we in Australia would be within our rights—preferably in collaboration with other interested states—to put on the agenda of an international forum, such as the United Nations, the G7 et cetera, some confidence-building measures and ways of demilitarising the conflict in the South China Sea. That would include, as I've said in my submission, things like banning military equipment—ships and aircraft—on those islands—in other words, demilitarising all the islands, not just the ones that China occupies. That's the only way it would work.

I will move very quickly to your question about the internet protocol. The key point is that there is a growing divide between countries which favour the retention of the characteristics of the internet as it exists today—that is, it should be relatively free and open but safe and secure—and China and other authoritarian states, which want to change the internet and make it much more subject to their sovereign control. The problem that I and, I think, a lot of other people have with that is that, as I've argued, that would bake authoritarianism into the new protocol that they're suggesting. So it's not just about the infrastructure—that is, the hardware, the architecture and the software—but it's also about the rules that govern the internet. If you look closely at the Chinese proposal, it would, in my opinion, give them granular control over their citizens and other potential users of the internet. That is not in our interest, and I think we need to be alert to what China wants to do with that. We need to come up with an alternative proposal, which we haven't done.

The key issue is that we all understand that the current internet doesn't work that well. It has a lot of technical flaws and is subject to hacking. So those need to be fixed, but in a way that's consistent with our values and retention of the openness of the internet, not going down the road that China wants to take us.

CHAIR: Thank you for that. I have a number of colleagues with questions.

Mr CHAMPION: In your submission about the internet you talk about the US versus China. I was just wondering where the European states line up. I suspect they'll be more on the free internet side. I just wondered if they had issued any statements to that effect.

Dr Dupont : Good question. There is no European position, unfortunately. There are a number of reasons for that, which I won't go into here. The European countries are a little bit ambivalent about this. In general, however, they would be supportive of the approach that I've outlined—that is, to retain the key features of the internet as it is but to make it more efficient and bring it into the 21st century. I think pretty much all the European states would live with that. But there are some difficult choices to make to maintain the balance between, for example, privacy and security. That's the eternal tension in the internet, as it is for many other tech systems. So the Europeans haven't really come up with a unified position or a vision for what they would see for the new internet. Neither has the United States. To my knowledge, we haven't either. So I think there is a prima facie case now for those invested in the features that I think are desirable. They need to get together very quickly to come up with an alternative to the Chinese proposal, which is going to the ITU, from memory, in November, so there's not much time to actually take action on this. That's what's been absent so far.

Mr WALLACE: Thanks, Dr Dupont, for your evidence today and your submission. You talk about the possibility of the world dividing into two trading geopolitical blocks. My first question is: does it necessarily follow, if a country is in a trading block with, say, the US or China, that it would necessarily be in the military block? The second question is: would you like to posit a view on who would end up being in a China block, whether it's trading or something broader in terms of the military?

Dr Dupont : It's a very good question. I suppose: is it possible to have a foot in both camps? It doesn't mean to say that if you were predominantly in one—let's assume this bifurcation occurred. If you were in primarily one trading block, it wouldn't necessarily follow that you would be in the same geopolitical block. However, it's pretty likely that you would be, because one tends to follow the other. I can imagine some circumstances where it would be possible to straddle both and maintain some degree of flexibility. But my point would be that the harder decoupling is and the more entrenched and rigid these divisions become, the more difficult it will be for countries to have choices and to remain in both camps. You will get to a point at some stage where you do have to make a strategic decision about which one you're going to go with. I think most countries don't want to be in that position, and I think that would include Australia too. We don't want to go down that track, but the risk is that we will.

As to your question about who might be in these different blocks, I think I might have touched on it in my statement, but, if you look at it as it is now, pretty obviously most of the authoritarian states would be in the China block. That would be Russia; a lot of the Middle Eastern countries, like Iran and those sorts of countries; and North Korea. That's fairly predictable. A lot of African and South American countries would be there too. Some of that would be contested by the United States and democracies. A lot of the tension and competition for influence would take place in the less developed part of the world. And countries would probably switch sides from time to time. This happened, of course, during the first Cold War, but I think it could happen even more so in the future because the divisions between the two blocks would be more fluid than those during the Cold War. You have to remember during the Cold War there was very little trade between the blocks. It was essentially a geopolitical contest and division, but in what I'm calling essentially the second cold war, the one we're going into now, those lines will be more fluid and therefore we'll get people changing positions where they can, so we'll get a lot of movement across the divisions up to a point. I know that's not a definitive answer, but that's the way I see it at the moment.

Mr GORMAN: Thank you, Dr Dupont, for your contribution and your time today. One of the parts of this inquiry is looking at what policy changes need to happen for Australia to meet our strategic objectives and build a more resilient country. I was really interested in some of the things you wrote in your op-ed and your submission around education. In your op-ed you mentioned something about introducing a form of non-military national service, which is something that concerns me without elaboration, so I'm going to ask you to elaborate on what sort of model you see that potentially being. Secondly, in terms of our university system, you basically highlighted that our current university model isn't providing the analysts that we need going forward in terms of cross-disciplinary knowledge and understanding. I'd be interested in hearing your thoughts on how we fix our education systems to make sure we provide the sorts of skills and talents that we need going forward.

Dr Dupont : For your first question on non-military national service, I should just clarify that I don't actually have a position on that and it's not my argument. In my opinion piece I mention that as one of the ideas floating around. I'm not welshing on answering your question here, but it's not my own position that we should have non-military national service; although, if I were looking at these things, I'd have that on the table and would want to talk about it.

Mr GORMAN: You did say, 'All these ideas have merits and bringing the best of them together in a revamped strategy won't be as difficult as people think.' Is obviously something you've thought about, and you must have a view on what it would look like.

Dr Dupont : Okay. Very quickly, my approach has always been to be very open-minded and put all good ideas onto the table and deconstruct them and put them under the microscope to look at the detail. That's the critical thing here: how would it work in practice? In principle, the idea of non-military national service is a good one. It's been around for a long time in different shapes and forms, but it often flounders on the practicalities and the details—How would you make the work? How would you incentivise it? In what areas? So I think there is a lot of potential to do something there, but I don't have a coherent, thought-through view on that. That's all I'd like to say on that at the moment, if I may.

But I would like to say a little bit more on education. As some of you know, I was in the education sector for 20 years before I left, so I know quite a lot about university business model and structure, and I want to say a couple of things on that. First of all, it always struck me, when I was working in different faculties in three sandstone universities, how siloed all the faculties were. It's obvious to me now—it was even obvious to me then—that we can't have an education system which is stuck in 20th-century silos. All those silos were set up essentially at the end of the Second World War for the way the world was then. That's a long time ago. That doesn't encourage cross-disciplinary thinking or interaction. I think that's got to change, and it needs to change very quickly.

Just to give you one quick example of the issues we're talking about here: with an infectious disease pandemic, we're looking at the impact on trade, foreign affairs and defence. We're talking about decoupling. You need to have people who can think across those silos in an integrated way to come up with policy solutions, because the experts in each of those fields can only really talk about their silos. It's not often you get people who can talk across them, and we need to have more people who can do that. The only way we're going to get it is if we recalibrate our higher-education system to provide people who can think in that way. That's really the point I want to make there.

Mr SHARMA: Thanks, Dr Dupont, for your submission. It's good to have Wentworth well represented in this hearing; Alan's a neighbour of mine, for those on the call!

I think you make a couple of good points in your submission, Dr Dupont. The risk of a hard decoupling for a country like Australia, and the consequences of that, is one point you highlight quite effectively. It wouldn't be in our interests and it would represent, in some respects, a failure of policy if that's what resulted from this period of heightened tension.

I want to turn to two of your recommendations in particular that you mentioned in your opening statement and are in your submission. One is this idea of re-establishing the National Security Adviser position, and the other one is to expand the idea of a national security community to include other actors like trade unions and NGOs. I'm a bit of a sceptic about both of those. I think we already have national security structures that bring all these things together; we've got the Secretaries Committee on National Security and the National Security Committee of Cabinet. Having seen the National Security Adviser position close up when it was established and having worked for it, I don't think it ever worked particularly well. In our political system, it is elected representatives in the form of ministers that take the decision-making power—not appointed officials. I just think that, structurally, it doesn't work within our system, but I'd be keen to hear your thoughts on that.

My other concern is: if we put national security across all aspects of society or broaden the concept too much, we end up doing everything but also nothing. If we've got unions, NGOs and all these other actors sitting around the table, we end up with a national security agenda that includes things like bushfires, minimum wage and ocean acidification, and we end up having an overly ambitious national security agenda, which means we don't do the core things we need to do well. I just want to test you out on both those points and get your response.

Dr Dupont : Good questions, coming from an insider; I'm sure you got your views on this! On the question of a national security adviser: this is a bit of a chestnut. We've been around this for 20 years now. I respect the fact that people have quite different views. You make a good point that we probably haven't been able to make it work in the past. The reason is, as some people would argue, the Westminster system that we have is not well suited to a national security adviser. I have a different view about that; I think we could make it work.

Before I spell out how we can make it work, the question is: why do I want to see it? The reason I want to see it is simply that every other position in the national security community represents a specific portfolio. If you accept my argument that the real policy challenges for governments in the future are going to be cross-siloed and cross-sectoral, there is a case to have a person or a small group of people whose job it is to think right across policy, particularly in the national security space. Now, you could argue that that's a job for the Secretary of the Department of the Prime Minister and Cabinet; I take that point. But the secretary to the Prime Minister already has so many things in the in-tray. We are talking about national security, which is not all of government. So the focus would be on national security, not only coordinating the much bigger and more diverse national security community we have today and that has grown enormously, as you know; the need to coordinate that and to advise on policy, I think, has become more pressing rather than less. The key thing is: to empower that national security adviser, they would clearly have to work directly with the Prime Minister and would have to be at a level comparable with that of the secretaries of the departments. Of course, that sometimes introduces interjurisdictional tensions into the equation—I understand all that—but it can be made to work, and I think it should be made to work and I think it is worth having a go at.

On the second point you make: yes, I understand the argument that if you put everything in a national security box and everybody in it, you get a dilution of the focus you need to give good responses. I'm not arguing that. What I'm saying is: let's take the idea of the Prime Minister's national cabinet and apply the principle to national security. I'm not talking about having 50 trade unionists and businesspeople sitting around National Security Committee of Cabinet discussions; I'm saying that you draw out their specialised knowledge, their expertise and their willingness to engage on a case-by-case basis, but you do it in a structured systemic way—not on an occasional basis or just because somebody knows somebody, which is the way we've done it in the past—because governments and the Public Service are not the repositories of all knowledge on this. I worked in the Public Service, as you know, for 25 years, and I've been out of the Public Service for almost as long, and I'm more and more convinced that we don't capitalise on the expertise that we have in the broader community in a structured, systemic way. I would be more than happy to talk about this in more detail later on, but I think there are ways of doing that.

CHAIR: We'll leave you guys to talk about that over the fence at home! You are very formal with your neighbours, Mr Sharma!

Senator O'NEILL: I'd like to go to the issue of access to medicines during the course of the COVID-19 crisis. As an exemplar for the nature of the supply chains, we've got assertions that, during the pandemic, critical weaknesses in Australia's supply chains have been identified. I'd like to know: is there any coordinated place in which those audits and assessments have been undertaken or are being held? Is there any work being done on a strategic response to that real and raw data? Do you have any particular views about where Australia might be exposed in ways that we might not be aware of currently? And are there any countries of international best practice that deal with issues of holding sufficient capacity across critical sectors to make sure that the economy is not at risk and that sovereignty is not at risk? I do confess to having read one short article about Finland. So there are a few questions there for you.

Dr Dupont : Some of the questions you ask are probably better directed to government, because these days I am not privy to who's doing what in government in terms of doing inventories or audits of what deficiencies we have, what we need to fix and so on. So let me respond more generally to your questions there.

In fairness to governments, all governments have had deficiencies in this space because we have become so dependent on global supply chains as we know them. Efficiency has driven decision-making commercially as well as in government, and we haven't factored in the security premium that I think needs to be there. There have been attempts to do some audits. I recall Andrew Hastie drew this to the attention of people a few months ago: the Henry Jackson Society came out with a report about Britain's vulnerability and dependence on a whole range of so-called critical materials.

So my argument would be: whatever we have or haven't done, we definitely need to do a comprehensive evaluation of our vulnerabilities across the board in light of COVID and the deterioration in our security environment. That is a role, in my opinion, for government to lead; in fact, the government would provide a lot of the information. But this is where you would need to bring in other sectors, which goes back to my earlier point about having a whole-of-society approach to things. You would have to go to business and manufacturing and ask them to what extent they are reliant on particular things, whether it's pharmaceuticals or semiconductors or manufacturing machinery. Nobody, as far as I'm aware, has done this in a comprehensive way, including overseas. Some countries have done it to some degree better than others, but I don't know of any country that I can hold up as an exemplar.

Everybody's been caught a bit short here, and COVID-19 has really brought to the fore the dawning realisation that we have all these vulnerabilities. In looking at the shortfalls in medical supplies and pharmaceuticals, and the dependence we have on China for pharmaceuticals, for example, it's opened people's eyes to the vulnerabilities that we have in other sectors too. So that's very long answer to your question. Basically, we really need as a matter of priority to do a comprehensive audit led by government to come up with the data that we need to inform our policy changes in the future.

Senator O'NEILL: To date, you're not aware of any such project underway?

Dr Dupont : I note that the United States are starting to do this in selected areas, but I'm not aware of how comprehensively they are approaching it or what stage they're at. I'm aware of what the US have done, for example, in the defence supply chain; there has been quite a lot of work done on this. But in other areas of their economy, I don't think much more has been done than in Australia.

Senator O'NEILL: Thank you.

Senator FIERRAVANTI-WELLS: Thanks, Dr Dupont, for all your work. I have two questions. In your submission, at page 5, you say:

China has practised a form of decoupling for many years … Its success has been due, in no small part, to our neglect of national capabilities and a reluctance to confront China's dirigiste impulses.

That has obviously led to our overreliance. Can I take you to your suggestions to improve resilience, which are at the end of your submission. You make certain suggestions. In light of our policy of appeasement and having seen businesses willing to do business with China because of the financial gains, et cetera, and most especially because of much more recent evidence of China's infiltration, how can we build this national resilience given the challenges that we face and the infiltration that we have of China in Australia? That's my first question.

My second question is more technical—and if you want to take either of these on notice, please feel free. In relation to the ITU point that you make, to the protocol at the meeting in November: given that China has been building up its stocks in the ITU and that the director general is of Chinese background and has been there for a long time, previously as the deputy director general—they've played the long game in the ITU; they've got a lot of other countries in their pocket already—what possible success could we have in view of that, and are we just going to see a repetition of a watered-down notion which China will eventually agree with because it means nothing, as we saw with the World Health Assembly?

Dr Dupont : I will answer your second question first. You could ask your question about the ITU of virtually all international organisations that China is playing the long game with. I am suggesting that we need to become more aware of the strategic game China is playing—and, look, it's quite entitled to play that game. One of the reasons China has been so successful in capturing international organisations is it's had a long-term strategy, and we have been negligent in understanding what China is doing in coming up with our own responses. So I think my argument is that, in the ITU, the WTO and all these other organisations where the same thing is happening, we need to work with like-minded countries to come up with alternatives to what China is offering other countries in terms of leadership and technology, because that's the source of their political power. We haven't done that strategically, and that's allowed China to basically entrench itself in so many international organisations.

The only other point I will make is that of course it hasn't been helpful with the Trump administration's position, which is: 'We no longer want to be global cop. We're not playing the multilateral game anymore. It's all about making the US great.' That's made it very difficult for countries like Australia, which has a different view on a lot of these matters. We just don't have the clout on our own to make a difference. That's why middle power diplomacy, with or without the Americans, is really critically important to take on China in some of these multilateral agencies and make a case, which I don't think we've really done. So that's the short answer to your second question.

On the question of national resilience, I don't have all the answers here, and it would take us hours to brainstorm all this, but I guess my key point on resilience is that now we've got a better understanding of what resilience really means. We've thrown this word around for several years, but no-one's really understood fully what it means. In order to actually build resilience, you have to do some of the things I've already touched on. First of all, we've got to have hard data. Where are the vulnerabilities in our system and our country, and what can we do to rectify them quickly in the short term and then in the medium to long term? It's going to require significant investment. It means that we will lose certain efficiencies, and we're going to have to trade off loss of efficiency for the resilience that we're going to get. You can argue about whether it's more cost-effective. I think it is in the long term, and in the short term it's probably not. So there's the question of how much it's going to cost and where the resources are going to come from. Most importantly, we need to have a strategy for achieving national resilience.

That comes back to my earlier point—I'm sorry to keep hammering this—about having a whole-of-society approach to this. National resilience, if you think about it—by the way, this is borrowed from the South-East Asians, because I looked at this 30 years ago—is all about increasing the resilience of every single citizen in the country. Some of this is quite intangible stuff. Some of it's attitudinal. So you have to have a different approach to building national resilience from the one we've had to date.

CHAIR: We'll go to Julian Hill for the final question. Tony Sheldon's withdrawn.

Mr HILL: Thank you for the presentation and the really intelligent and thoughtful discussion. I think a lot of the stuff about resilience has been well covered. But, in the context of your message on a few issues around the need for a measured, thoughtful, effective strategic response to Chinese strategy, I'm hearing also—I'm not trying to put words in your mouth, but I invite you to comment—about the risk at times of just playing to a domestic audience or playing domestic politics. I'm curious about this comment in your submission:

A narrative war over the origin of the coronavirus and responsibility for its destructive effects will only serve to fuel tensions, weaken the nascent global recovery and intensify the decoupling momentum in both the trade and tech arenas.

Could you just expand on that and tell us a little more about that, because it's been a pretty ferocious debate which many commentators, including former military leaders, have said has not been in the national interest, although it might have served domestic political interests.

Dr Dupont : Sure. The first point I'd make is that we have to play the long game, like China. I just want to make clear that I'm not a China basher in the sense that I want to push back against China and continue on in this ever-escalating conflict. We've got to have a circuit-breaker. What we've got to do is bring enough pressure on China to make it realise it cannot do what it wants at no cost. Up until now, it's incurred very little cost, so it's continued to do what it's done very successfully. That's largely our fault; it's not China's fault. So we need to look at ourselves and, first of all, come to an understanding of what China wants and what its strategy is, and I think we're starting to get there.

The next thing we need to do is to think through our strategy, and there's got to be two dimensions to the strategy. One is the defensive one—that is, we need to protect our interests and values, and I think the government has gone down the path of doing that. But we also need to have a better understanding of China—what it wants and where its pressure points are—because the end result of our policy must be to have some kind of strategic accommodation with China so that we do get genuine win-win situations, which the Chinese love using, but their win-win situations are win-loss situations for everybody else. A real win-win situation is: China is not able to do some of the quite egregious things it's doing now, but we live with China and we benefit from each other's trade, as we have done, but we have clear lines that they adhere to. They must understand that, in the world of the 21st century 'might is right' cannot work and is actually counterproductive to China's own interests. But at the moment they haven't had enough pushback to make the accommodations necessary for us to protect our values and our interests, so we need to crank up a little bit on that side as well. They are the elements of the strategy that I've been arguing for for a couple of years now.

CHAIR: Okay. We'll need to pull up the questions there, but thank you, Dr Dupont, for making yourself available and for your evidence. If you have been asked to provide any additional material or if there's any further information you'd like to provide, please forward it to the secretariat. You will be sent a copy of the transcript of your evidence. If you think there are any errors in it then please feel free to make suggested corrections. Thank you very much.

Dr Dupont : My pleasure. Thank you very much.