 We're turning to the, to the trade and economic portion of the alliance. I'm, my name's Ernie Bauer, I'm the chair for, Smetro chair for Southeast Asian Studies and the co-director of the Pacific Partners Initiative here at CSIS and this is the, this is the panel that I asked to, to chair because I think nothing connects countries and people like business opportunities, jobs and innovation and certainly that's got to be considered one of the strengths of the US-Australia relationship. A country, two countries who share a free trade agreement, two countries who are at the very heart of driving a new, a new trade, a new level of trade agreement around the Pacific and within the embodiment of the TPP or the Trans-Pacific Partnership, which we'll talk about a lot today. We've got four fantastic panelists, two Americans and two eminent Australians, I'd like to introduce them. I'll ask them each to make some remarks and then we'll open the floor to questions. We'll start with Wendy Cutler, who's the acting deputy US trade representative. Many of you in Australia and the United States know Wendy well. She has, she has led the United States on its most effective trade negotiations with Asia. She leads those discussions now across Asia and Africa. I don't know when she would have time to sleep given, given the areas of her responsibilities, but she is leading the TPP negotiations, the US-China Joint Commission on Commerce and Trade, the APEC Forum, US India Trade Policy Forum and a handful of other engagements across Southeast Asia, as well as the African Growth and Opportunity Agoa Act efforts and overseeing GSP. So if you think Wendy is busy, you are right, she is. Next to her is Andrew Stoller. For those of you who are sort of inside trade, Andrew is one of the gurus. He is now a consultant on international trade issues and negotiations. You probably know him well from his time as deputy director general in Geneva of the WTO. He's had a long career, including working with Wendy at USTR in Washington and Geneva. He's very active now in dealing with China, Europe, and is a member of the advisory board of the U of our partner here, the US United States Study Center at Sydney. Next to him is Mark Johnson, who is our real private sector guru. He's been in corporate finance and the corporate sector for four very successful decades. Leadership positions in Macquarie. A member since 2002 from Australia of the APEC Business Advisory Council. He's chairman of the US Study Center Foundation at Sydney University, the real treat to have Mark with us today. And finally, a man who knows our two countries very well and ran that relationship as ambassador, one of the most active and proactive ambassadors we've had from Australia here in Washington from 2000 to 2005, Michael Thawley. He is now in the private sector and is vice president of capital research and management company and senior vice president and advisor, international advisor at Capital Strategy Research. So we've got a real fantastic panel for you here. I'm going to ask Wendy to kick us off. Wendy? Well, thank you very much, Ernie, for the kind introduction. I'm really thrilled to be here today and very honored to be on this panel with three such prominent officials. I can just, if I can just make a few remarks, I joined USTR when Andy Stoller was already at USTR. He taught me a lot about how to negotiate, but he also taught me how to make the job fun. And I've stayed at USTR for a long time and once in a while I look back and I remember jokes that Andy told or cartoons that he drew during boring negotiations and they keep me smiling. Ambassador Thawley, it's a real pleasure to be with you on this panel and I know you work very hard not only to negotiate, but also to work to get the US Australia FTA through Congress and that was no small feat. And finally, Mark Johnson, I've had the pleasure of working with him through my APEC affiliate job and Mark has been a prominent official of APEC, kind of pushing the governments to really think out of the box and to come up with big initiatives that would mean something practical for the business communities of the Asia Pacific region. It's a pleasure to be here today to discuss US Australia economic and trade relations. We are pleased that Australia is chairing the G20 this year, which really shows the leadership role that Australia plays on economic issues in the region. And we also look forward to continuing to work closely with Australia in the WTO and APEC. Our trade and investment relations are strong and we look forward to deepening them in the months and years ahead, particularly as we look to what's transpiring in the dynamic economies of the Asia Pacific region. Bilaterally, we have strong ties on the economic front with the FTA, which came into effect in 2005, being the cornerstone of our trade and investment relationship. Our FTA has been a success by any measure. I understand that it was being negotiated and implemented. There were some in Australia that really felt that it was an agreement that would just produce benefits for one side and that side was in Australia. I think that the statistics and time has proven this wrong. The deal is clearly delivering benefits for both sides, both with respect to exports of goods, exports of services, and as a result, our two-way bilateral goods and services trade reached $65 billion in 2012. The FTA has also seen large creases in investments flows between both countries, but aside from these numbers and statistics, there is a less tangible improvement in the quality of the relationship, which sometimes gets less attention and much of our trade and investment is now driven by high value added goods and services that rely on the complementarity of our intellectual capital in sectors such as aircraft, ICT, or the medical sector. There is a growing interconnectedness of value chains between our countries supported by the exchange of financial and human capital, technology, and the free flow of goods and services. Turning briefly to the multilateral front, the U.S. and Australia have been close partners in the multilateral trade arena, particularly in the WTO. My first interaction with Australian trade officials was in the WTO at that time, the GAP during the Uruguay round, when Australia was just a really active and constructive partner pressing for trade liberalization, mainly in agriculture, but in other sectors as well. Most recently, we worked very closely together at the Bali ministerial conference where we were able to conclude a trade facilitation agreement, the first multilateral agreement in the WTO's 20-year history. And that brings me to the area I want to focus on today in my remaining probably three minutes. And that is our joint efforts in the Asia-Pacific region. This dynamic region holds exciting prospects for both countries as we look ahead. I know it's been a longstanding theme in Australian foreign policy about whether Australia will need to choose between its historic alliance with the United States and relations with Asia. But from my perspective, I can say that's a false choice, not one Australia has to make. Maybe 30 or 40 years ago, that logic seemed to make sense. But nowadays, the situation is entirely different. The U.S. is deeply engaged and committed to the Asia-Pacific region, with the President having said America's future lies in deepening ties with the Asia-Pacific. The U.S., like Australia, is a Pacific power. We have shared goals for the Asia-Pacific region, certainly in the economic area, such as sustained growth, job creation, trade and investment liberalization, and shared prosperity and stability. We are working in tandem as we try to pursue these economic objectives through such venues as APEC and TPP. Australia was one of the driving forces behind the creation of APEC, where we have cooperated with our partners around the region to promote sustainable growth and prosperity, and to advance trade and investment liberalization and facilitation. I recall fondly Australia's host year in 2007, which put the important issue of regional economic integration squarely on APEC's agenda, which has remained on that agenda, and interestingly enough is a theme of China's host year. Regarding TPP, the United States and Australia are working together closely to advance the high standard comprehensive and state-of-the-art regional agreement since the first round of negotiations which were held in March 2010 in Melbourne. A successful TPP negotiation will result in significant economic and strategic benefits for the U.S., for Australia, and for the 10 other partners in terms of increased exports, job creation, and economic growth. With respect to Australia, a recent study by the Peterson Institute foresees annual Australian export gains of $11.3 billion to its 11 current TPP countries by 2020. Much of these gains would come from securing access to those TPP member markets where Australia currently does not have an FTA, Japan, Canada, Mexico, and Peru. We are now in the endgame of the TPP negotiations, and momentum is building to close the remaining gaps and achieve agreement. Ministers held a very successful meeting in December in Singapore where they identified landing zones for the vast majority of outstanding issues. TPP countries also worked intensively on advancing their market access negotiation for goods, agriculture, and services. The TPP countries are now in the process of scheduling the next meeting of the TPP ministers, which is likely to take place next month. As you can imagine, trying to get 12 very busy officials in one venue for a few days is not easy to schedule. In the meantime, we are very, very busy engaging with our TPP counterparts at all levels. We have negotiating teams in Southeast Asia as we speak. Ambassador Froman is leaving for Davos tonight and will be meeting with a number of TPP ministers there. He has been on the phone with a number of TPP ministers this week, earlier this week with Minister Omari from Japan, and he plans to meet and communicate with other TPP ministers all in the lead-up to the next ministerial meeting. And we are also very busy engaging with Congress and our stakeholders on TPP but also on trade promotion authority. This is all in the lead-up to our next ministerial meeting where we look forward to working through the remaining outstanding issues with our TPP partners so we can conclude the TPP agreement as soon as possible. Once we reach agreement among the 12 members, the work of TPP will not be finished. The 12 countries will need to go through their domestic procedures and to get the agreement approved through their procedures at home. But looking ahead, and just back to the theme of this conference, I think that Australia and the US can work together to expand membership to the TPP and to encourage other countries like Korea, which recently expressed its interest in November to join and joining the TPP, to take the necessary steps. And for other countries in the region for whom TPP may not be a near-term prospect, we can also work together to bring them up to speed on what would be required to join this high-standard agreement. Looking ahead further, we have always viewed the TPP as a quote-unquote living agreement, and we believe we can work together to update the agreement as appropriate to address new issues that emerge in the future that are impacting trade and investment in the region. Let me conclude by suggesting that our two countries should give more thought to how we can deepen our bilateral cooperation and step up our engagement with respect to economic and trade issues affecting the dynamic Asia Pacific region, going beyond our APEC and TPP work. Our shared goals for the region and our work together on APEC and TPP and our bilateral FTA could give us a strong foundation for such increased collaboration. Thank you. Thank you very much, Wendy. Andrew. Thank you, Ernie, and good afternoon, everybody. It's a real pleasure to be on this panel. As the theme leader of the Alliance 21 Projects Trade and Investment work, I've been collaborating with Australian and American experts over the past couple of years, reviewing the bilateral and regional relationship, and we've got an overall sort of policy paper in preparation. It's really a work in progress, which hopefully will be finished by the time we get to the June meeting in Canberra. It's clear that to prosper in a 21st century Asia Pacific region, it's important for the U.S. and Australia to work together both to improve on the existing bilateral relationship and to improve our relations with our trading partners in the region. Much of the effort in the past decade has either been focused on APEC or on FTAs that both countries have been negotiating, either bilaterally or bilaterally with other partners. Now, in Australia, we're a very high percentage of foreign trade these days is with China, far more than in the case of the United States. I have to say, I think that the bilateral agreement with the United States tends to be undervalued by Australians. And there's also a perception in Australia that the U.S. got a better deal in the bilateral negotiation because of what happened in areas like intellectual property and what didn't happen in areas like sugar. Now, I think this negative perception is unfortunate for two reasons. First, because I think it might be contributing to some differences of view in the negotiations on the TPP between the U.S. and Australia where there should be a better cooperation, but more on that later. But secondly, I think that perception is very unjustified and you heard from Wendy just now how the bilateral trading relationship has grown since the auspice entered into effect. It's also important to realize that not only has the trade grown in gross terms, but these days it's important to look at the quality of the trade. And if you look at the quality of Australia's exports to the United States, for example, you'll see that about 16.2% of all of Australia's exports measured in value added terms went to the United States compared to only about 10% for Australia's exports to China. So in other words, Australia is sending rocks to China but high value products to the United States. That's a quality trade argument which I think is important to realize. Investment is also an important part of the picture. The stock of USFDI in Australia is about $136 billion now which is more than twice as much as US firms have invested in China. An American energy company investments like the $70 billion investment of Chevron and LNG projects have created the basis for Australia becoming a leading exporter of energy in Asia. Australian investment in the United States is also important. The stock is about $56 billion, which if you look at it on a per capita basis is more significant than American investment in Australia. So it's a very important relationship. Now in the future, I think that both countries need to build on what I think is a successful bilateral agreement in the wider region, which brings me to the Trans-Pacific Partnership negotiations that Wendy was just talking about. Everybody who's been involved in the Alliance 21 work on trade and investment agrees that the TPP negotiations are a key test for the United States and its allies at a central intersection of trade policy, diplomatic and security policy. It's more than a trade agreement. TPP failure would not only seriously undermine the American pivot to Asia, but it would leave Australia worse off in the future. And failure to conclude TPP or a TPP agreement that does not meet the test of a 21st century agreement could default to Asia-centric initiatives like the Regional Comprehensive Economic Partnership and that wouldn't be good for either Australia or the US. Now as Wendy just alluded to, I think a TPP concluded among the existing 12 participants would be an impressive accomplishment, but it will also necessarily be an incomplete agreement until the 12 are joined by countries like China, Taiwan and Korea. And here I think it's good news that the Chinese seem to have laid off the line that the TPP is somehow an attempt to contain China. Chinese officials apparently a bit expressing an interest in getting closer to the negotiations. A little bit about the economic importance of the TPP. We heard Minister Turnbull and Senator Brock both talk about the point that we're in a knowledge-based economy today. And I think that to be a 21st century agreement, we have to make sure that the TPP is geared to address the upcoming challenges and creates the basis for Australia and the US to benefit from the opportunities that we can take in that future. In Australia, the writing's on the wall. In a couple of years, we won't have an automotive sector. People wanna know where the jobs of the future will be. Here in America, the GFC seems to have had a lasting impact on manufacturing jobs and while the economy's growing again, unemployment remains high. So we can imagine in the Alliance 21 group, we can imagine how the TPP could respond to these concerns and personally I'm optimistic that the TPP can deliver on its promises. But we also see that there are a number of potential threats to that. Some of these threats are internal to the TPP to the extent we understand the negotiations and some are external. We're a little bit worried that the lack of transparency in the negotiations might possibly lead to a repeat of something like the unfortunate experience we had with the OECD MAI talks that blew up because the approach was too secretive. We also think that to make the TPP work, Washington and Canberra need to be on the same page and here we're a little bit concerned by reported disagreements on some of the 21st century issues like investor state dispute settlement, enhanced IP protection and rules for trans-border data flows. The political balance needed for this regional agreement also looks threatened by some old fashioned at the border protectionism affecting trade in some sectors that might be very important for some of the participants. And because of the greater economic, the greatest economic and political value of the TPP might come from a country like China, China's eventual participation we'd be interested in knowing how that would be managed if the 12 current parties have wrapped up the agreement this year. Before I close, I just want to mention two external threats. I can't help remarking that one of the external threats we see to completing the TPP might be the possibility that if the TPP is not wrapped up soon, Washington might be distracted by the nascent negotiations with the EU on the TTIP. The TTIP should be a critical element of U.S. trade policy but it certainly needs to take a back seat to the TPP for a number of reasons. And secondly, and perhaps more serious, external threat to the TPP is the possibility that Congress will either not provide the authorizing legislation the administration needs or that the legislation could be something that the TPP partners would find it hard to live with. I'll leave it there for now. Thank you. Thank you very much, Andrew. Mark, can we turn to you? Thank you very much, Ernie. Andy's put trade right at the center of the big plates that affect strategy, economic and security issues. I want to talk much more at the level of, I suppose, battlefield tactics almost from the viewpoint of the private sector but I think we may be evolving a little structure which is useful from the viewpoint of both our economies. I'm going to argue that it's consistent with our joint interests and it's also consistent with our mutual aspirations for the development and evolution of the region. And this is something that we have called the Asia-Pacific Financial Forum or APFF for short. This concept and our plans for an Asia-Pacific Financial Forum were endorsed by the APEC finance ministers in September last year at their meeting in Bali and it's a structure to be managed and coordinated by APEC, the APEC Business Advisory Council and to report back annually to the finance ministers with progress reports. It's a structure that is driven by the private sector but it includes government participation, the IFIs, regulators, academics and industry groups. And let me try and explain a little bit more about what it's doing by telling you about the six work streams that are now in existence post-Bali. There is one work stream working on insurance issues and retirement issues, the aggregation of long-term savings. There's another working group working on trade and supply chain finance. There's a group working on credit structures for small and medium sized enterprises. There is a group working on the development of capital markets. There is a group working on the market infrastructure. If you like the plumbing that just connects all the region's financial transactions and there is a group looking at larger market linkages. So how has this come about? It's been business driven because I would certainly argue that the financial crisis, the global financial crisis eroded, destroyed or set back many hard earned years of trade and investment liberalization. The kind of things that these people worked for decades on got blown up and set back very, very rapidly. So it became quite obvious to regional business that a sound and predictable and efficient and well-regulated financial system was a cornerstone to the benefits of closer economic integration. It's also obvious that there are serious shortcomings and structural deficiencies in financial systems across the region. There's multitudinous studies by the ADB, by the World Bank, by all the others. The Fung Global Institute a few months ago summarized that are saying that the region is dominated by short-term bank lending. It's got shallow capital markets. It's got a paucity of long-term investors and there's a lack of financial data and credit expertise. Many of you will know of Barry Eichengreen who is probably the guru for the financial structures in the region based in Berkeley and he said the question is not banks or markets, the region needs both. It may also not be quite as obvious but there is a strong regional view that the GFC was essentially a North Atlantic crisis. And the North Atlantic solutions that are being proposed and modified as they evolve may have unintended consequences for the underdeveloped financial systems in the region and the possibility of appropriate development within the global rules is something that is of concern to policy makers across the region. So what might come of this? It's very early days. We've only just got going and we're just taking the first steps. But there are now perhaps 100 people in those work streams that I referred to earlier. Think tanks and industry associations are deeply involved and there is very strong corporate support and participation in those working groups. If you're an optimist, it could over time become part of the regional architecture and perhaps broaden APEC into more of a trade and finance structure as its informal security agenda is probably subsumed into the East Asia Summit. I think that the US and Australia are uniquely placed to support this initiative. The US financial system is obviously the broadest and deepest in the world and is now recapitalized and can support growth. The Australian financial system is totally open, highly competitive, innovative, but its scale is often highly relevant to the requirements of the developing Asian markets. So I argue that there's a very important development priority. Developing the financial markets of the region is consistent with our objectives for growth in trade and for closer economic integration. It's a soft power opportunity for both of us and therefore something that I think fits very much within the possible priorities for the alliance that we're really discussing here. Thank you. Thank you very much, Mark. Michael. Thanks, Ernie. It's great to be on a panel with my colleagues here. I'd like to mention particularly Wendy Cutler and USTR because many Australians seeing USTR mentioned so often probably don't know just what a small organization it is. It appears everywhere. It's unbelievably busy. It has extremely high quality people. It's the most extraordinary outfit and small as it is it's a terror to negotiate with as I know from my own experience. It's also great to be at a CSIS event. I've always thought CSIS the best of the think tanks and particularly I always used to appreciate its non-partisan approach and John Hamre who was deputy secretary of defense when I arrived has been a fantastic leader. And we, and US study center, I'd like to mention the great work that Bates Gill has done since he arrived not so long ago but it's great also to have Jeff Garrett here who was the US study center first CEO and who really put it on the map in Australia. And I'm very glad that we were able to hijack him back from the United States. On the, to talk on the FTA and it's so long ago now that I'm not sure I can remember that much about it. But so I thought what I'd try and do is mention some of the things which I thought were important and mention some of its context. And I think there's some implicit lessons perhaps for the bilateral relationship and for trade negotiations generally which I'll just leave implicit. But I think it's worth recalling when the Howard government first proposed the FTA in 2000 that was looking ahead to the 50th anniversary of ANZUS the next year. And the FTA was one element in what was a comprehensive strategy to strengthen the structures of the Alliance for future decades, thinking that here we were at the end of the coming up to the 50th anniversary. And the components of that framework were first to build closer strategic and operational relationships between the defense forces of the United States and Australia. Second to integrate our defense industries and ensure that there was mutual access to the technology on both sides although obviously Australia would benefit more than the US in that regard. To tighten the intelligence relationship which was already strong but needed to be if you'd like reconfigured for a new period. And the FTA was I'd say the fourth part of that program. What was the aim of the FTA? I would describe it sort of and I did at the time rather more broadly. It was I said to extend Australia's economic space. Looking at it from an Australian point of view I thought what it was really about was giving Australia's entrepreneurs access to the world's largest market the US and a sense of confidence in looking for opportunity there. And of course the separate visa legislation which we had to negotiate with the United States was very important because there's no point in having free movement of capital and free movement of goods if you don't have some at least movement of people. At that time people were not especially in Australia were not aware just how much Australian investment there was in the United States. And so the notion was that we would build on those investment flows to consolidate the competitiveness, the international competitiveness of the companies in both countries by encouraging effective partnerships. And in particular we had in mind energy sector and the agriculture sector. Of course extending access for exporters was very important. Although industrial tariffs were very low another four or five percent of most of them actually meant some money straight to the bottom line and encouragement to export. This was especially important for farmers where there'd been restrictions. Of course the key sector was the service sector which in both countries is about 80% of our economies. So harmonizing regulations and standards to make it easier for our companies to operate was also very important. And these are the things that all the two governments emphasized and what all governments emphasize when they talk about FTAs and trade negotiations. This is the rationale. And of course we've had some good experiences as Andy said and Wendy said the FTA actually has done, produced the goods and we haven't had the bad experiences that we used to have. I remember from my very early days the first problems Mr. Howard asked me to fix were leather car seats, restrictions on Australia's lamb exports and then overturning a tariff decision on steel. We haven't had those. But I would suggest that important though those things are the central value of an FTA is somewhat different, closely related but slightly different. The important thing for Australia from the FTA was the exposure of Australia's economy and our businesses to the forces of the most competitive economy in the world. What that meant was that it was encouragement to us to lift our game and perform at our best. Now of course governments are less keen to argue this and tend to emphasize access, better access to other markets rather than the benefits of competition for economic growth and I don't downplay access, it's very important but it's not actually the main story. The second great value I think of FTAs is that the obstacles that they create to any government which might want to take steps backwards from economic reform that it has introduced or steps towards protectionism and these are very important elements of locking in continuing progress to reform. So I might conclude by saying it may be helpful for governments to do more to explain to their public how this works and especially important in the present era when what's very important for growth, for most Western economies and emerging market economies that are dealing, negotiating in the TPP as structural reforms and difficult and productivity has been slowing down. So I'll conclude there. Thank you very much, I appreciate the great presentations. I want to open the floor to questions, first I'll pose one and that is I sort of want to reach in and connect the trade and economic discussion with the earlier discussion about this security relationship. If we look across Asia and our treaty allies, we have FTAs with only two of our allies. All right, Asian allies right now, Korea and Australia. Is there a linkage, I'd like to ask the panel, is there a linkage between where Australia and the United States are going with the broader relationship and trade? And it seems like there's some, you've all sort of connected that, but I'd like to hash it out a little bit because it appears from an observer of the US engagement in Asia that it's difficult, right? The president wasn't able to make his trip to the APEC and the EAS summits this November because of partisanship on the hill. Is Congress in the mood to pass TPA? Do the Americans have sort of the political alignment to hold up their piece of the, or their part of the alliance? And do you think that we'll be able to get our act together collectively, both the Australians and the Americans, to be able to invest in this alliance and get the TPP ratified? And I want to ask that question because we started this conference with an audience participation quiz where we asked the audience the question, when do you think the TPP would be ratified? And the overwhelming majority believed it would be 2015 or 2016 or beyond. I think the latter was the top vote getter, but most votes were in those two areas. So I'd appreciate your comments on that sort of reflections on practical capabilities. Where are we right now? I'll try first. I'm not writing on that. It's interesting that people who know the history of USTR know that President Kennedy created USTR because the Congress at the time thought that leaving the trade negotiations in the hands of the State Department would lead to them being more of a political exercise than an economic exercise. And he wanted to make sure that the economic interests of the United States were taken into account. Now, having said that, I think I would say that today the initial motivation for a large number of FTAs, certainly the US, Australian one and some of the others that we've negotiated is often political. And although that motivation may be the political motivation there's a trade aspect that then comes along with it which is also very important. And if you talk to people about their experience with concluded trade agreements you'll find that they are, Wendy referred to, living agreements. They are living agreements that bring people together in their implementation. You try to build on them for other things and it's all part of developing a system of rules and a framework on architecture. And I think that's why I think that the TPP is so centrally important because it's really about the overall architecture that we wanna be operating in the Asia Pacific at the 21st century. Okay, we'll open the floor. Jeff. Could I just ask the in-politic question that I presume is lurking behind a lot of these averings to geopolitics and trade. TPP, was Henry Kissinger right that this is a stalking horse of economic containment of China or is the vision for TPP something like WTO? That is, you create TPP and five years later, China joins because it's then in there they have a external reason to do some internal changes like market access and intellectual property that they probably wanna do but would otherwise find very difficult to do. You know, it's interesting when you, if you look back at TPP before TPP was TPP it was the P4 and the US was not part of the P4 and we like Australia had to talk to the other countries and to get their buy-in for us to join and so what brought these countries together was not, you know, a motivation towards economic containment of any country. It was more towards working with countries that had a similar vision of the region that wanted to conclude a high standard agreement that took on new trade issues which to date really hadn't been dealt with in our trade agreements. That's how we view TPP. We've always viewed it as an open platform agreement one where new members would join over time. Once again, the US and Australia joined, Vietnam then joined, Malaysia just last year we had Japan, Canada and Mexico joining and now on Thanksgiving Eve Korea put up their hand and announced that it is now possibly interested in joining and there are other countries that aren't as far along in terms of expressing that interest but are asking a lot of questions and seem very interested and part of it I think they recognize that this agreement is going somewhere and it's going to be completed and it's going to set the architecture in the economic sphere for the region. So we are very, very encouraged by that and we do see APEC as not only a living agreement to include new issues over time but definitely one that will include new members as long as the members are really committed to living up to these high standards of the agreement that all of their TPP countries agreed to when they joined. I'd just like to pass on a piece of low level late at night gossip from Bali at the APEC meeting when this was obviously an issue that was discussed and where the Chinese delegations were informally expressing the possibility that they might want to become much more deeply involved and one of the explanations advanced and I can't tell you whether this is true or not was that the fact that Japan had become deeply engaged in the negotiations was seen as a positive by China because the negotiation would then not be a head-to-head US-China negotiation. There are now potentially two big guys at the table and they'd be joined by a third big guy and it becomes therefore a negotiation amongst people who have all got appropriate stakes in the game. I wondered if I could add a sort of economic dimension to the trade discussion we've been having and in particular I wanted to draw a distinction between mechanisms that ultimately increase free trade of goods and services which on any view of the world are welfare enhancing for everyone and intellectual property restrictions which are much more ambiguous. So if I look at the innovation and education stream that we've been running as part of this one of the things that came through it very strongly was that there's an increasing belief amongst US economists that the US intellectual property regime is in fact more protective than is optimal for the US economy, i.e. it's welfare destroying. How can that be? Because intellectual property is justified from an economic perspective only if it encourages the additional innovation that it encourages is greater than the amount of reproduction that it discourages because you're providing a monopoly rent. So there's a real economic argument that says that the US system has gone too far, perhaps not in pharmaceuticals but definitely in copyright. It's tough to believe that you need to protect copyright for 70 years after the death of the author in order to promote anyone to write anything or produce a film. It's also, there's also a growing concern that in the IT space, what it's the intellectual property regime particularly the way it's been interpreted by the US courts has started to restrain or delay people from innovation on innovation. So I don't take your idea and build on it, which after all is what's been kind of cornerstone of Western development for the last 2000 years, I get restrained from doing that. So there's a real distinction between those two things and I wondered if there is a danger that the characterization of those intellectual property rights as a 21st century agreement may endanger the very genuine welfare benefits that come from increasing free trade on any economic view of the world and also the strategic benefits that I think were alluded to in terms of an IT, of an agreement. And I guess that impression is reinforced by, we read the US papers about the domestic politics of the TPP and the conditions that are being put on it by various particularly Republican parties which are clearly not about enhancing welfare. They are clearly about enhancing the rent that certain US companies can extract. And for those of us who are allowed every so often to peek at the things that came out with Snowden, we might find that that impression was a little reinforced. Sorry, do you want to go first? Look, you always have to be very careful when you're talking about the balance between intellectual property, which is actually giving somebody a monopoly over something for some period of time and the value of free trade or the welfare effects of making it available publicly. And of course, the trade off is the one that you see in an area like patents, especially where after 20 years, that information gets distributed to anybody who wants to use it. One reason why the intellectual property issue comes up in FTA negotiations is because the WTO agreement on trade related aspects of intellectual property rights was negotiated in 1993. And we didn't have the internet really in 1993 and a lot of things have changed in terms of the digital world since 1993. So a lot of the countries, for example, in the TPP, probably only have TRIPS obligations now. And the TRIPS obligations aren't good enough for the 21st century. I would not back extending copyright by another 20 years or something like that because then I think you'd be right, it would be too much to take. But there are reasons why we need to build on the existing intellectual property rights regimes because the one that was done 21 years ago is not up to date. But could I just do a two finger on that, which is if you talk to the people who are innovating in the digital field right now, they think that the language in the TPP right now in the current TPP negotiation is sort of stuck at 2003 and actually isn't updated into this decade. I mean, I don't know if anyone knows enough about it to comment on that. Wendy? Or wants to comment on that. I think the only person who's seen the text is Wendy. All right, she's not biting on that folks, but digital mavens, that's a shout out to you. Michael. Andy made a point that I would have started with, but there's another, and I don't know what's going on in TPP negotiations on this issue. And I think John makes a good point that there's a trade-off here and the balance has to be drawn very carefully. But one of the things that bothered me going back, whatever it is, 10 or 12 years, was this assumption that intellectual property was only something that the United States had and that the United States wanted to protect. And the fact is that most countries, and notably Australia, has quite a lot of intellectual property and it wants to get value for that property as well. So it's not, that's not the main issue, but I think it's just worth keeping in mind, especially when you're descending into the media for an argument over intellectual property that we certainly had plenty which we wanted to get full value for and protect. If I can just add that IPR is one of those issues that's being under intense negotiation still in the TPP. It's one of the remaining areas where ministers are working hard to find landing zones and in trying to find those landing zones, they're trying to balance a lot of the issues that people have raised here. The other comment I would make, just based on my experience at USTR and I think Ambassador Dolly kind of reminded me of this, when I first started at USTR, I mean Japan was one of the worst offenders with respect to IPR and now they're one of our closest allies. Korea, in the Korea Free Trade Agreement, we were able to really agree to landmark provisions with respect to IPR, not because we were forcing Korea, because Korea saw the benefit of strong IPR provisions. So I would just underscore what Ambassador Dolly said with respect to Australia's interest in protecting its intellectual property. This is not just a US issue, it's an issue that a lot of TPP and other countries around the world share. Right here. Thank you. Hi, it's John Keough from the Australian Financial Review here. We've heard a lot about the TPP being a 21st century agreement, which presumably would include the free flow of trade, goods and services across borders. Now our trade minister, Andrew Robb, has made it very clear that Australia will only sign on to the TPP if there's genuine market access, particularly for agriculture in Japan and also for sugar in the United States. Miss Cutler, could you envisage a scenario where the United States would be willing to give genuine market access for Australian sugar if there were reciprocal trade offs that Australia and other parties in the TPP were willing to share? I think Andy wants to answer that question. Let me respond by saying that all countries have sensitivities in the TPP and they're bringing these sensitivities to the table, whether it's Japan with respect to its five, sensitive agriculture products, the US, Vietnam and others. We are negotiating on these products in our market access and negotiations, mainly for the US on a bilateral basis. Those negotiations are continuing and it's very typical in any trade negotiation. I think Andy will back me up here and so will Ambassador Brock, that the most sensitive and difficult issues are the ones that are really worked out in the end game of the negotiation. Chris? You're not. Thanks very much, Chris Nelson, Nelson Report. Wendy, thanks so much. Great to see you over there. The landing zone, we're all really glad to hear about the landing zones on TPP but we're worried that we don't see landing zones on TPA, fast track. And those of us who do worry about this last week had a hell of a bad week because we had the Senate Majority Leader say, you know, I look around the Democratic Party and all I see is chaos, a mess. I can't even guarantee I'm gonna bring a bill to the floor if anybody presents me with one. That may explain why Ambassador Froman decided not to attend the finance hearing. Certainly that's how both Republicans and some Democrats interpreted that they had invited him. We still kind of need to know that. Is it fair to say that Ambassador Froman looked at the chaos that Reed sees and worried that maybe it's a bit premature to appear at a hearing and try to balance off issues but then that leads to my question. We have sort of a chicken and egg problem if you're looking for landing zones. What is the role of the USTR? What is the role of the president in developing the consensus? Are we getting to the point where we do need TPA sooner rather than later and are we at the point or getting to the point where the president and your boss, Ambassador Froman has to start saying, okay, here's what we need. We need the administration needs to see in TPA or are we just not near that point which means we're not near landing zones. Thanks. Always great to see you, Chris. TPA is a high priority for the administration. When the bill was introduced in Congress, both the White House and USTR came out. We welcomed the introduction of the bill. We made it clear that we wanna work with Congress to get TPA through Congress. We are now working intensively with Congress. Ambassador Froman is up on the hill night and day already working on this. And so we are, TPA is important and particularly as we enter the end game of TPP, our trading partners are asking about TPA. And so we are putting priority on both as well as with TTIP and we look forward to working with Congress to get this bill through and get the trade promotion authority which gives Congress the ability to help shape our trade agreements. In the spirit of the focus on the alliance, I might ask Ambassador Thaly to comment on whether, rather than Wendy's on a hot seat here with that set of questions, Chris, as you know. But is there anything Australia can do based on your experience here as ambassador to help us get in harness on these issues that we're obviously grappling with? Well, I don't think there's anything that's particularly novel that Australia can do. Basically it means actually helping explain what the benefits are to the public and to companies and associations and then helping pound the halls of Congress and the Senate. And I think, and I'm sure this is being done because everyone knows it, really it's explaining to every politician what the actual practical benefits are from these agreements and how they won't happen unless there's TPA because we're all countries are very wary of coming to a negotiated agreement with the United States when it's not going to be able to put the deal to the Congress for a straight up and down vote. And even if there is TPA, by the way, that's not the end of the story because Congress is intimately involved in the negotiations right up until the final stage of the signing of an agreement, that is before it's ratified because congressional committees are kept informed, they express their views vigorously and frequently. So the TPA is really only the final part of congressional involvement in trade agreements. It's an important one, but it's not the only one. Let me ask just a quick follow-up then. Let me ask Mark and Andy scenario. We fail to pass TPA. A TPA agreement is either negotiated and the U.S. can't ratify it or there's no TPA negotiated because we just can't get there. What does Asia look like? What does that mean to the alliance? Because that's what we're here to talk about. What does that mean to the U.S.-Australia alliance if we don't get the TPA done? I think that you saw in this morning's discussion that the TPP is seen as very central. It's really the next touchstone for deeper engagement with the region. And you saw a certain cynicism about the execution of the first stage. I think the failure of the TPP would be very serious and would encourage the ASEAN related on mainland Asia efforts. On the other hand, it may be some years before this actually plays out. And in that time, we'll see potentially the success or otherwise of the new financial and economic reforms proposed by the new Chinese administration, which will probably be the big dynamic in the region. Not really just to say that I agree with everything Mark just said. And I think that there would be very grave consequences if that's what we found ourselves. Hi, thanks. Well, to take it back to Ambassador Huller, a couple of questions for you. My name is Matt Schwul. I'm a reporter from Inside U.S. Trade. I wanted to follow up on a couple of points that you made on the TPP. You mentioned that TPP countries are in the process of scheduling the next ministerial meeting for February. And for a long time, TPP countries have had kind of an aspirational deadline of when they wanted to conclude the talks, which the most recent one was at the end of last year. And as Ambassador Froman has said, towards the end of last year, that was kind of a good sort of target that brought urgency to the negotiators. So I guess I was wondering, is this February meeting sort of a new aspirational target or could it be maybe the trip, President Obama's trip to Asia in April, because I think some, even some CSIS, Matt Goodman has suggested that that might be a deadline. And secondly, if you could give any more clarity, you mentioned that U.S. teams are in Southeast Asia this week to talk about the TPP. Is that the chief negotiator level or technical groups, and if so, which ones? Thank you. Okay, with respect to your latter question, our chief negotiator, Barbara Lisell, is in the region and so are a number of our negotiators leading various issue groups in our market access negotiations. Second, with respect to the upcoming TPP ministerial meeting, once again, I did not say it would happen in February. I said it's likely to happen next month. And I also said that we are very encouraged with the momentum coming out of the Singapore meetings. We're working hard now in the lead up to the next TPP ministerial meeting. And let me leave it at that. Okay. John, last question. Ernie, as a follow-up to your point, on the other hand, what if TPA does get passed, that the president is able to rally the Democrats? I saw a report that there are 145 negotiating objectives already in the bill, and we haven't heard yet from Sandy Levin. I think it was you and Andy Stoller who said the TPA may be something that the others may have a little trouble living with at some point. I wonder if you or the other panelists could elaborate on that. Assuming TPA does get passed, will there be too many restrictions? Well, I haven't actually seen the draft legislation or anything, and I'm not really up to speed on it, but what I meant when I, in my comments, was I could imagine that the legislation might put some very onerous requirements on the U.S. negotiators to achieve things that maybe some of the other partners weren't willing to give. On the other hand, it kind of depends how the legislation is framed. I can remember operating under past trade promotion authority bills that always directed us to get rid of the European border tax adjustments. And there's absolutely nothing wrong with a border tax adjustment for a value-added tax, but there were people in the Congress who hated the VAT and the border tax adjustments that went with it. And we just had to come back at the end of the day and say, look, that just wasn't a reasonable objective. We couldn't meet that, but look at all the good stuff we got on the other side. Well, I want to thank all of you and thank our panelists in particular for their comments. Obviously, there's a lot at stake in this negotiation. I think one finding we can certainly take away from this discussion is that the TPA is a core important, or the TPP is core importance to the Alliance. And so, Wendy, we wish you and your team the best, as well as our Australian negotiators. And thank you all for speaking with us today. Thank you. Thank you. If you could stick around. Our next panel is with Minister Malcolm Turnbull and looking at the...