Tagged: OHIM

Speeches: U.S. Economic Policy in East Asia and the Pacific

(As delivered)

Thank you very much. Good afternoon ladies and gentlemen. Chairman Hasegawa, thank you so much for your generous introduction and for inviting me here today. It’s an honor to be with all of the membership of the Keizai Doyukai. I understand you’ve been early and strong supporters of the TPP – something I look forward to talking about in a little while.

I also want to recognize my colleagues from the United States administration, especially from the Embassy – our deputy chief of mission and also Ambassador Caroline Kennedy. Ambassador Kennedy, as I think all of you know, is a public servant cut from the same cloth as her father. His legacy of friendship with Japan lives on through her.

I have to tell you also it’s a pleasure to be back in Tokyo. I first came here – I believe it was in 1980 with my family, and I wanted to come here on my first trip as Deputy Secretary of State – and not just to have a drink at the Okura’s Orchid Bar before it’s too late. I wanted to come here to Japan because our alliance is the cornerstone of President Obama’s Asia-Pacific policy.

In fact, when I was moving from the White House to the State Department just a few weeks ago, and I was sitting with President Obama to ask him what he wanted me to focus on, he said Asia. And Secretary Kerry, when I got over to the State Department, I asked him the same question, and he gave me the same answer, and it’s simply a reflection of the importance that both the President and the Secretary attach to the region and to the Alliance with Japan.

There is a reason that President Obama made the strategic decision to rebalance America’s engagement and resources toward the region, and it’s very simple: Nowhere in the world are economic and strategic opportunities clearer or more compelling than in the Asia-Pacific. As Prime Minister Abe said last year, “Asia is a synonym for growth and another name for achievement.”

And that’s because of what the Asia-Pacific has done over the past 70 years, and what it has done is nothing short of a miracle, a miracle that stretches from the base of Mount Fuji to the emerald waters of the Coral Sea – millions out of poverty, some of the fastest growing economies on the planet, home to more than one-third of the world’s population, a growing percentage of whom are middle-class, and of course many dictatorships having given way to democracies.

That’s why the President has made seven visits to the Asia-Pacific including three separate visits to Japan. It’s why Secretary Kerry has traveled to the region nine times in just two years. It’s why Vice President Biden and almost every member of the President’s cabinet have traveled here as well – most of them more than once.

So what exactly is the United States doing to support and share in the growth, in the achievement, and the stability, prosperity, and peace that we see spreading throughout the Asia-Pacific?

We have this policy that we call the rebalance, and it has several pillars, each of which contributes in substantial ways to facilitating and supporting this region’s growth and economic dynamism. To start with, we’re redoubling our commitment to the region’s security, which is essential to its economic future. Because the plain fact is that conflict and trade do not mix. So we’ve enhanced and we’re modernizing our alliances, especially with Japan. Over the past few years, our two nations began revising our bilateral Defense Guidelines for the first time in more than two decades. This is part of a larger, transparent discussion about our collective self-defense. This review – along with Japan’s decision to relax some restrictions on defense equipment exports – will help make sure that the Alliance evolves to reflect both the shifting security environment and the growing capabilities of Japan’s Self-Defense Forces.

Elsewhere in the region, we strengthened our security alliances with South Korea, with the Philippines, with Australia, and we’ve reinforced partnerships with India, Indonesia, Malaysia, Singapore, Vietnam, and others. We’ve begun to conduct more joint training exercises – like the Keen Edge exercises we hold with Japan biannually. And we’ve sent more assets to the region, both diplomatic and military. And we’ve bolstered our trilateral cooperation with Japan and Australia, and with Japan and South Korea.

Strengthening our relationship with China is also part and parcel of the rebalance. We seek a relationship with China defined by practical and tangible cooperation on challenges that face both of our nations. The more we can work together, and be seen as working together, the more we can avoid the trap of inevitable rivalry.

I just came from Beijing where I met with a range of senior Chinese officials. And just in the last year – it’s been quite extraordinary – our cooperation has grown deeper and wider, from combating climate change, to facilitating travel between our people; from confidence-building measures between our militaries to working together to bring peace to South Sudan and to pursue a comprehensive agreement with Iran to ensure that its nuclear program is for exclusively peaceful purposes.

This year, we intend to build on this momentum of last year through ongoing, day-to-day bilateral discussions, our Strategic and Economic Dialogue, and the state visit of President Xi that he will make to Washington coming up in September.

But even as we deepen cooperation, we also deal forthrightly with our differences – and we will continue to do so. For example, we are firm in our stance on maritime security. Free commerce requires free waterways for ships to pass. It requires that the needs of business take precedence over squabbles over rocks and shoals.

We have made clear that the U.S. military would not abide by China’s unilateral declaration of an Air Defense Identification Zone in the East China Sea, including over the Senkaku Islands. And President Obama has clearly stated that the Senkaku Islands fall under Japan’s administration and under the mutual defense treaty with Japan and the United States. We don’t take a position on the various territorial claims of others, but we do take a strong position on how those claims are pursued. Any disagreement must be dealt with in accordance with international law, peacefully, with restraint, and avoid actions that unilaterally change the status quo. We have urged China and ASEAN to reach a code of conduct that will reduce the potential for conflict in the years to come.

The true question at the heart of these conflicts is who controls access to Asia’s abundant energy resources. The region depends, as you know, on sustainable, affordable, and reliable access to diverse energy supplies – which in turn rely upon the safe and reliable transport of oil and gas in maritime channels. Almost a third of global crude oil and over half of global LNG passes through the South China Sea, making it one of the most important trade routes in the world.

Uncertainty fueled by competing South China Sea claims affects energy security; it affects trade and commerce; it creates a more unpredictable investment environment. If we can peacefully end ongoing conflicts over rocks and reefs, then the Asia-Pacific region will be better able to attract investment. Cooperation is needed to fully prove and develop the billions of barrels of oil and hundreds of trillions of cubic feet of LNG that are estimated to reside under the sea. Developing these resources will bring jobs; it will bring growth and a more secure energy future to the region.

So enhancing security is one pillar of the President’s rebalance. Supporting regional institutions is another.

We know that strong regional institutions are essential to helping to lower tariffs, encourage cooperation, maintain stability, and resolve disputes. So that’s why we’ve remained a very strong supporter of ASEAN and its mission to promote smart energy, trade, and investment. It’s why we’ve taken an active role in APEC, an organization working to promote trade and investment liberalization, cut global carbon emissions, and expand economic opportunities for women. And it’s why we’ve worked hard to elevate the East Asia Summit to the premier forum for dealing with political and security issues throughout region.

Today, though, it is my honor to have the attention of so many of Japan’s business leaders, and so I’d like to focus the balance of my time on the third pillar of our rebalance strategy, and that of course is the economic pillar.

U.S. businesses, workers, farmers, and consumers have been a dependable foundation for growth in the Asia-Pacific for decades. I see it everywhere I travel. Trade with the United States fills bank accounts, store shelves, and ocean freighters – from the Port of Yokohama, to the Stock Exchange of Hong Kong, to the markets of Kuala Lumpur. We remain the single largest source of foreign direct investment in the region – U.S. investment stock here reached $622 billion a couple of years ago in 2012. We are also the most important market for Asian goods, exchanging well over $1 trillion dollars in trade with the continent each year.

But we’re not the only driver of growth in the Asia – far from it. Japan is fueling billions of dollars in trade with Thailand, South Korea and Hong Kong. Australia, which signed free-trade agreements with China, South Korea and Japan last year, is importing from Singapore and Japan. And of course China is exporting to Malaysia and Vietnam. Overall, trade among APEC nations reached $1.4 trillion this year and is outpacing world trade growth by a 40 percent margin.

As we look forward and deeper into 2015, the single most important step we can take together for our economic relationships is completing the Trans-Pacific Partnership.

The state-of-the-art Trans-Pacific Partnership Agreement – or as we call it, TPP – establishes high standards on labor, intellectual property, the environment, and it levels the playing field for businesses in all of our nations. It will unlock vast new markets. It will curb the role of state-owned enterprises as they compete with private companies. It will expand trade in a region that already represents one-third of all global exchange. And it will bring economic growth and jobs to all our shores. For example, economists predict it will add $100 billion to Japan’s GDP over the next decade.

Working together to create a rules-based regional trade architecture built on transparency and competition – this is an ambitious undertaking. But it is an achievable one. And it will change how we trade for decades to come.

This agreement is about more than the economic opportunities it unleashes, because the fact is, TPP is not just a technical trade agreement, it’s a strategic opportunity for the entire region.

The TPP serves both the United States and Japan’s strategic interests for three principal reasons:

First, it will cement the strong alliance framework and partnerships that ensure the Asia-Pacific’s security and prosperity. We’ve long had a security presence in the region, as I just discussed. The TPP is the vital next step. It will assure our allies and partners that our long-term commitment to the region reaches beyond security and into the economic realm. It will add another dimension to our strong and enduring presence in the Asia-Pacific.

Second, concluding the TPP, with over 40 percent of global GDP, will build a magnetic effect attracting non-members across the region to the benefits that it offers. It will spur them to make the necessary reforms like lowering tariff and non-tariff barriers to trade and investment. And in the end, it will lead them to enter the fold as liberal and open economies. Indeed, what we’re seeing is that a number of non-TPP countries like South Korea are expressing strong interest in joining. Even China is showing interest. We welcome new members – so long as they can meet the high standards that will be front-and-center in this agreement.

And there is a very important point there that I want to emphasize, and I want to be very clear with all of you about it. The TPP is not an attempt to isolate or contain China. Any nation that is willing to rise to the occasion and meet the high standards we have set for ourselves is welcome – China included. In fact, the world would be a better place if China made the changes and embraced the reforms that would make it an eligible candidate for TPP.

Finally, concluding the TPP is about defining the values that we want to see prevail in the Asia-Pacific – values like fair labor standards, environmental protection, and laws updating intellectual property rights. The standards enshrined within this agreement reflect our values and interests as nations committed to dynamic, just, and rules-based economic practices. The TPP offers economic stability in a turbulent world.

Ultimately, this agreement establishes a framework that enables countries throughout the region to grow together – in a way that will benefit us for generations to come. It will ensure that we focus not just on whether our economies grow, but how they grow.

So where does TPP stand today? We made lots of progress during the most recent negotiations in New York, and I was just discussing that with the chairman before we came out here. The contours of a final agreement are coming into focus. But the closer you get to the end of something as complicated and meaningful as TPP, you get to the toughest issues and the hardest choices. So we need all stakeholders in all sectors – including those of you in this room – to help make those choices and push TPP over the finish line. We need you to make the calls, convene the meetings, and remind officials of the economic and strategic benefits that this agreement will bring. With your help, we can complete this agreement and continue to bend the arc of the region in the direction of progress and prosperity.

There are enormous opportunities in the years ahead – that you know better than most anyone – to make headway on trade. And we have to seize them. But TPP alone is not a cure all. It’s not the only answer. Broad-based economic growth requires a thriving society. It requires that people have access to training and education. It requires the free flow of ideas and information. It requires the rule of law, the protection of intellectual property. And it requires that governments protect the universal human rights of their citizens.

This too is a pillar of our policy in the region, and it helps to uphold all the others. Promoting these values serves some very practical goals. When all people in society are unshackled – when they are free to think and act creatively and for themselves to question and criticize, to challenge conventional wisdom – that’s how you get innovation. That’s how you get entrepreneurship and the building blocks of a growing, self-sustaining economy.

These values empower citizens to demand a cleaner environment and safer products, to ask for high labor standards, to make their governments more accountable and less corrupt – all of which makes trade more free and fair and helps our companies compete.

That’s why in Burma we’ve been working to keep the government accountable to its people as Burma opens to the world. It’s why in Vietnam – 20 years after normalizing relations – we continue to work encourage reforms that will strengthen the rule of law and freedom of expression. And it’s why in Cambodia, we are supporting civil society and pluralistic politics while strengthening our relationship at the same time.

In the United States, entrepreneurship is almost written into our DNA. But we believe that businesses and governments alike can’t just invest in profits; we have to invest in all the tools that create prosperity, especially our human resources.

Think about this: If you asked people 50 or 100 years ago to define the wealth of a nation, they might talk about the size of its population, the expanse of its land mass, the strength of its military, the abundance of its natural resources. And all of those things still matter. And in the United States, we’re blessed with all of them. But in the 21st century, the true wealth of a nation lies in its human resources and in the ability of countries to maximize their potential, to let them be free and creative and innovative. That is the true wealth of a nation.

On top of the list, then, are the investments we have to make in our young people – the men and women who will be making our economic decisions in 10, 15 or 20 years down the road. And that’s something I know that all of you are well aware of. We are grateful for your efforts to expand student exchange programs between Japan and the United States.

And programs like the Young Southeast Asian Leaders Initiative, or YSEALI, are also leading the way in these efforts. As we encourage students to come to the U.S. to learn about open markets and entrepreneurship, we send Americans to Asia as students, as Fulbright Scholars, as Peace Corps volunteers.

These programs empower young people to be the business leaders of the future. In Manila, I heard one YSAELI alumnus launched a program to help modernize the Philippines’ agricultural economy. In Cambodia, another graduate wrote a handbook to help students choose the right career path. And in Singapore, we brought graduates of our program together with American firms to help open markets, but also open minds.

I was in South Korea just a few days ago at the beginning of this trip. I met with college students and alumni from our International Visitor Leadership Program, and a few of them told me a little bit about their careers. Some of them were journalists. Some of them spoke passionately about their studies to become businesspeople, to become lawyers, to become engineers.

And then yesterday I sat with three remarkable young entrepreneurs on a train from Tientsin to Beijing, and they told me about the challenges and opportunities of launching start-up ventures in China.

Across the board, these young people are thinking big. They don’t just want an education; they want to be able to vote for their leaders. They don’t just want a big paycheck; they want to make sure everyone has the right to speak freely and that that right is respected at the same time.

I’ve had inspiring conversations with young people throughout the region, and every time I walk away with confidence that – if we can make the right choices today and take advantage of the economic opportunities that are staring us literally in the face – then the region’s future will be bright, and it will be in very good hands.

America’s engagement with the Asia-Pacific – economic and otherwise – is a testament to a simple fact: America too is a Pacific nation. Our commitment to this region has stood the test of time, the test of conflict, the test of Mother Nature. And one of the clearest indicators of this commitment is our long history of partnership and alliance with Japan, a partnership based not on a temporary alignment of interests, but on a permanent foundation of shared values, a partnership and alliance we look forward to reaffirming when Prime Minister Abe makes a state visit to the United States in April, a partnership that sets a powerful example for the rest of the world.

Seventy years after the end of a bloody war, our countries have never been closer. Your cities host the U.S. Navy’s 7th Fleet and 50,000 American troops – including the U.S. Marines on Okinawa. And across the Pacific, more than 1.3 million Japanese-Americans populate and energize cities from San Francisco to New York.

But these statistics tell only part of the story. Behind the numbers are businesses creating new technology, volunteers distributing emergency food aid in the Philippines after the typhoon, government agencies working hand-in-glove to combat climate change, battle violent extremism, and the scourge of Ebola.

The next chapter in this historic friendship will be about how we shape the Asia-Pacific economy for the 21st century and beyond. We have weathered the storms of war and conflict. We’ve transcended the differences that divided us. Now it’s up to us to take the next step and unite behind a shared economic vision.

I believe Japan, the United States, and the other economies in the Asia-Pacific region will continue to grow and prosper together. But it depends on wise leadership. And it depends on all of you, the business community, continuing to make and strengthen your connections with businesses and people across the Pacific. And it depends on our governments, seeing past short-term concerns to long-term opportunities.

Change is never easy, but we know what our shared future should look like. The task before us is to turn that vision into reality, to the benefit of this time and the benefit of generations to come. Thank you so very much.

QUESTION: Thank you for your inspiring speech. We have been very much encouraged by your confidence in TPP, especially I’ve been chairman of promoting TPP for the last four years, so I am really glad that this is going to be the time that we can probably celebrate by summertime. The next action, though, for us after TPP is the Japan-China-Korea trilateral, then going to the Rsep, so we really hope that the TPP will set the stage for the fundamental agreement going forward with China and East Asian countries. Having said all this, we, who just came back from Davos, a lot of discussion being talked about geo-political risk in East Asia, and the first thing you mentioned out of the three is also the regional security. So if you could mention a little bit about the geo-political risk in East Asia after you have visited Korea, China, and Japan – what will be the take-away after you visit, and also on a long-term basis, what we can do to keep peace over here.

QUESTION: I’d like to take the privilege of master of ceremonies and add one question related to the TPP. You said that TPP is nothing about isolating or excluding China, but on the other hand, how much do you think China is serious or ready to join TPP discussions?

DEPUTY SECRETARY BLINKEN: Thank you both and I want to thank you personally for your extraordinary leadership in working to advance TPP. It doesn’t happen without the kind of leadership that you, and indeed the members of this organization have made.

Let me start actually with the second question very quickly, because I just came from China. My sense is that there has been a real shift in China with regard to TPP from looking to reject and hoping in fact that it didn’t happen, to being quite curious and interested in it. And as I said a few minutes ago, we would welcome that. But like with any member, China would have to meet the high standards across the board that the TPP establishes. If that were to happen, it would be a very good thing for all of us, because those standards would continue to help China move in a positive and progressive direction. So ultimately, as with anything it’s going to be up to China more than anyone else. So we’ll see if it evolves in that direction, but once TPP gets done and you have 40 percent of the world’s GDP represented, I think that’s going to cause countries who are not in it to want to be in it. And then we have another agenda beyond TPP, and that of course is the so-called TTIP in Europe, and if you were to realize that and bring TPP and TTIP together, you would have about 75 percent of the world’s GDP represented, and again I think that will create a very powerful magnet for those countries not in either agreement to want to get in.

So geo-political risk: I’d actually start from the other way around. I see TPP as a fundamental way to lower geo-political risk, to create incentives for countries to trade together, to do business together, to work together, and to avoid conflict. That’s the power of it as a strategic proposition, not simply an economic one. But I also think that the work we’ve been doing in the region is designed precisely to lessen risk. Our presence in the region, our military presence in the region, has been a force for stability for decades. It’s allowed, I believe, some of the remarkable progress we’ve seen over the last 70 years. Similarly, the work we’re doing to try to build the institutions in the region – that too is a way to lower geo-political risk because it creates mechanisms and forums where countries can work through their differences and try and come to common solutions. That’s why we spend so much time on it.

And then the other element in this, of course, it the relationships between and among the different countries in the region, apart from the institutions, and there we’ve seen some positive developments in recent months. I think the progress that has been made in the relationship between Japan and China, including the meeting between Prime Minister Abe and President Xi at the end of last year, the commitment to work together on a number of issues – that’s encouraging. We’ve seen similarly a more positive relationship develop between South Korea and China. That’s also promising and important in terms of lowering risk. And as I said, our own relationship with China – we’re determined to build on the cooperation we’ve already established even as we address the differences. That too, I think, will lower geo-political risk.

So all of these things taken together, I think, can make a big difference. Now, there are clearly sources of significant instability. I believe the most significant source of instability in the region is North Korea and its reckless pursuit of a larger and larger nuclear program and the missiles to deliver those weapons around the world. And that’s why we’ve been trying to make common cause with Japan, with South Korea, with China, with Russia to convince North Korea that it needs to denuclearize. But I actually feel that the entire rebalance is starting to shift and lower geo-political risk, and that in turn is going to create an even more attractive place for investment and for trade.

QUESTION: My name is Hirano, MetLife Japan vice chairman. Can I ask one more TPP question? Or if it’s too much, I withdraw. OK. I heard lots of positive voices when I visited Washington last month, and I’m quite encouraged by your tone of speech – that’s quite encouraging. But we also know that there are many big impediments going forward. So my question is quite straightforward: What are the biggest remaining impediments for TPP to move forward? And to what extent can we be optimistic about the closing of negotiations? Thank you.

DEPUTY SECRETARY BLINKEN: Thank you very much. Well, since negotiations are ongoing at this very moment, the last thing I want to do is get in the middle of them. I trust our negotiators very much. In fact, when I first began in government 22 years ago in the Clinton administration, for about six months I shared an office with Ambassador Froman, our trade negotiator, so I’ve known him for a long time, and I know his dedication and commitment to getting this done. Let me just say this: In anything this complicated and this meaningful, the last mile or the last kilometer is the toughest. The hardest things remain at the end. But what I’m confident of is that with regard to the United States and Japan, both countries, both teams, are working through the remaining issues with determination, and I think in a very pragmatic way, and I’m convinced that there is a determination in particular from Prime Minister Abe and from President Obama to see this to conclusion in the coming weeks and months. So I never want to minimize the challenges of that last mile or last kilometer, but given the determination and good will on both sides, I’m feeling confident that we’ll get there.

QUESTION: (via interpreter) … About the Senkaku Islands and also about visiting Yasukuni Shrine where war criminals are enshrined.

DEPUTY SECRETARY BLINKEN: Again, with regard to the Senkakus, I think President Obama has been very clear. They are under Japanese administration and part of and covered by the U.S.-Japan security treaty. It’s as clear and simple as that. The only thing I would say with regard to the second part of the question is, I think that in many areas in many countries it’s important to be sensitive to history and to the sensitivities created by history, but what strikes me when I think about the countries in this region, and for example Japan and South Korea, to cite just one example, whatever the sensitivities of history, so much more unites countries than divides them. And those common interests and those shared values today, in the year 2015, are what we should focus on, what our leaders should focus on, and they are the foundation for the future that we are trying to build together. Thank you.

QUESTION: At the Keizai Doyukai, I am the chairman of the project team for empowerment of “Japan Hands.” Japan Hands means friends of Japan and experts on Japan. In your speech you mentioned about youth exchange and investment in the youth, which means the next generation is quite important, and I totally agree. And you referred to the high school exchange, but I would like to know if, under the implementation of TPP, how we can encourage the next generation of professional level or high-level exchange between Japan and the United States. Thank you.

DEPUTY SECRETARY BLINKEN: Thank you very much. To me, actually, nothing is more important than exchange – at every level. High school students, college students, professionals, science, technology, business – this is what knits our countries together more than anything else. This is the foundation that we are building the next generation of the relationship on. And I see this every day. As I mentioned, when I was in South Korea and then in China, I met with some of the people who had been involved in our exchange programs. And as an American, I have to tell you it’s profoundly powerful because young people will go to the United States on these programs and come back with a totally different picture of the United States, a totally different understanding than they had before. And usually it’s positive. And they share it with their families, with their friends. And this is how you build a relationship. And similarly, we have Americans coming to Japan, and they come home, and they’re able to explain Japan, to share it with their friends and with their families, and that builds the relationship. So I believe deeply in these programs, and even if I didn’t, I wouldn’t have a choice because my wife is responsible for these programs at the State Department. She’s the Assistant Secretary of State for Educational and Cultural Affairs. She runs the Fulbright program. She runs all of the exchange programs. So even if I didn’t believe it, she’d make me. But as it happens, I think nothing is more important. Ambassador Kennedy is very focused on strengthening, expanding, building these programs, and I have to tell you, maybe the No. 1 supporter and cheerleader for these programs is President Obama. He himself benefitted from exchange programs in his youth. He knows the power that they bring. I applaud you for all that you are doing and your support for these programs. Thank you.

QUESTION: I am Tabata, former board member of the International Monetary Fund representing the Japanese government. My question is the relation between the military rebalancing that you mentioned a couple of times and the security of East Asia. A couple of day ago, President Obama asked the U.S. Congress to approve the use of ground forces for the war against terrorism and so on, which means that the former original part of the rebalancing of military forces left from the Middle East and to be concentrated on Asia and so forth. But actually, if military force will be used for the war against terrorism in the Middle East or the Islamic State, then some emptiness will happen in East Asia. But as you know, last year China’s military expenditures exceeded $100 billion U.S. dollars, which is 8 percent of the world’s military expenditures. So taking account of this situation, you mentioned about practical and precise situations are important for the security of East Asia. So my question is for instance to restore Subic Base in the Philippines – you were thinking about that – at the same time, how do you think about restoring and utilizing Cam Ranh Bay in Vietnam? These are very practical strategies and so forth. I would like to ask your comment about this.

DEPUTY SECRETARY BLINKEN: Thank you. Let me be very clear, because I don’t want there to be any misunderstanding, and the President has been extremely clear about this – we will not be sending tens of thousands of troops back to Iraq or to Syria or anyplace else in the region for that matter. The President, as you know – and if you look at the National Security Strategy that we just published last week – we’re focused on moving away from having tens of thousands of American troops in one place locked in for years or even more. What we’re trying to do is to build the capacity of others to deal with the challenges that they face, and so in Iraq, the small number of forces that we have there are trying to help the Iraqis, to train them, to advise them so that they can deal in the first instance with the problems posed and the challenges posed by ISIL. So we are not going to be sending tens of thousands of troops back to Iraq. What the President asked for the other day was really a matter that’s very important – to demonstrate that the executive branch, the White House, and Congress are united in the way we’re going to deal with the threat posed by ISIL. And so he wanted to have Congress on record in this authorization supporting what we’re doing together to deal with this threat. And that’s what that’s about. It is not to authorize tens of thousands of ground forces in Iraq – that is not going to happen. What we’re looking at is a small number of trainers, some advisers, and indeed that’s what we have on the ground in Iraq now. So I just want to be very clear about that.

And then again, with regard to this region, I think what you’re seeing across the board is countries working together to develop their capacity. For example, the United States, Japan, South Korea, and others are working with countries from the Philippines, Vietnam, Malaysia, Indonesia for example to develop their maritime capacity. This is very beneficial in doing exactly what we discussed in response to the first question, which is lowering strategic risk, lowering tensions, creating an environment of stability. So we have a very active program working with countries throughout the region in those areas, and I think we’re already seeing the benefits of that. But the rebalance itself is balanced, with a security component, with an economic component, with an institutional component, with a bilateral component, and increasingly as well with people-to-people exchanges that are another foundation of what we’re doing. So you have to look at the balance within the rebalance to see its strength.

Thank you.

Press Briefing by Press Secretary Josh Earnest, Deputy National Security Advisor for Strategic Communications Ben Rhodes and U.S. Trade Representative Michael Froman

The White House

Office of the Press Secretary

For Immediate Release

November 11, 2014

Intercontinental Hotel
Beijing, China

10:56 A.M. CST

MR. EARNEST:  Good morning, everybody.  It’s nice to see you all.  You don’t look nearly as bleary-eyed as I expected.  I’m joined today by Ben Rhodes, the President’s Deputy National Security Advisor, and Ambassador Mike Froman, who is the United States Trade Representative.

Ambassador Froman has, as you would expect, primarily focused on the aspects of the President’s trip that’s focused on the economy and strengthening the American economy and expanding economic opportunity for Americans back home.  That is, as you would expect, a core component of the President’s agenda while he out here so Mike has got a couple of things to talk to you about.

Then we’ll turn it over to Ben, who will do a review of some of the other aspects of the agenda that the President has been discussing in the context of these APEC meetings but also what we’ll be focused on in the context of the President’s bilateral meetings with President Xi that will begin later on this evening.

And then after that, the three of us will be up here to take questions you have on any topic.  We’ll do this for 45 minutes or so.  All right, Ambassador Froman, would you like to start us off?

AMBASSADOR FROMAN:  Well, thanks, Josh, and I’d like to start with an announcement on an important breakthrough we had in our negotiations with China on the Information Technology Agreement, or ITA, and that’s news that the President just shared with his other APEC leaders at the leaders summit.

Last night, we reached a breakthrough in our ongoing efforts to expand the Information Technology Agreement.  This is a WTO agreement that eliminates tariffs on high-tech products among 54 economies, including the U.S. and China.  And to give you some idea of the importance of this agreement, the last time the WTO agreed to eliminate tariffs on IT products was in 1996 when most of the GPS technology, much of the medical equipment software, high-tech gadgetry that we rely on in our daily lives didn’t even exist.  In fact, since that time, global trade in these types of high-tech products have reached $4 trillion annually.  And despite the explosion of trade, the coverage of the ITA of products has never been expanded.

And so that’s why for the last two years, we’ve been working to –- very intensively –- with our global partners to expand the Information Technology Agreement.  But unfortunately, during the summer of 2013, those talks broke down due to disagreements over the scope of coverage -– what list of products would be covered by the agreement, with most countries, led by the U.S., working to achieve an ambitious outcome.

Since that time, the United States and China have been working to close our differences but without a breakthrough sufficient to resume the plurilateral negotiations in Geneva.  And that finally changed here last night with an agreement between the U.S. and China that we expect will pave the way for the resumption of ITA negotiations in Geneva and their swift conclusion.  And that will be the first major tariff-cutting agreement in the WTO in 17 years.  At a time when there have been a lot of FTAs and other regional arrangements, the WTO hasn’t actually cut tariffs in 17 years and the ITA presents the first opportunity to do that.

This is encouraging news for the U.S.-China relationship.  It shows how the U.S. and China work together to both advance our bilateral economic agenda but also to support the multilateral trading system.  And it also underscores the importance of institutions like APEC — regional organizations — APEC actually gave birth to the ITA back in 1996.  It’s always been a key part of the ITA –- APEC leaders have always called for swift conclusion of the ITA so this is another indication of the utility of forums like this.

Industry estimates have concluded that successfully concluding the ITA would eliminate tariffs on roughly $1 trillion of global sales of IT products.  It would contribute to global GDP $190 billion and would support up to 60,000 additional U.S. jobs in technology and manufacturing.  And by also boosting productivity around the world and particularly in developing countries.

So we’re going to take what’s been achieved here in Beijing back to the Geneva and work with our WTO partners.  And while we don’t take anything for granted, we’re hopeful that we’ll be able to work quickly to bring ITA to a successful conclusion, and that will help support good-paying jobs in the United States, where we lead the world in creating and selling made-in-America high-tech products that the world is hungry to buy.

Let me conclude just about — a word perhaps about TPP, which has obviously been another area of major focus while we’re here.  As you all know, President Obama convened the TPP leaders yesterday.  They had a very productive conversation.  It was a good opportunity to take stock of where we were in the negotiations, to provide political impetus and guidance in terms of resolving the remaining issues.  All the leaders made clear in that joint statement that we’ve narrowed many of the gaps.

There’s still work to be done, but the end of these important negotiations is coming into focus, and that’s awfully important to the United States from a number of perspectives — it’s with 40 percent of the global economy covered by TPP, some of the fastest-growing markets in the world successfully concluding TPP will help support jobs, promote growth, strengthen the middle class in the United States.  It’s a key part of our rebalancing strategy, it underscores how the U.S. is embedded in this region and how the economic wellbeing of this region is integrally related to the wellbeing of the economy in the United States.

And with that, I’ll turn it over to Ben.

MR. RHODES:  Great, I’ll just give a brief preview of the President’s upcoming meetings here in China, and then we can take your questions on Mike’s issues or any other issues in foreign or domestic policy.

With respect to the bilateral visit here to China, the two issues that we’ve highlighted over the course of the last two days I think are the key priorities that we were able to get down and closed out around this bilateral visit:  That is the visa announcement that was made yesterday, and then the bilateral understanding on ITA that was reached today.

I think what speaks to the significance and dynamism of the U.S. economic — U.S.-China economic relationship.  Today at APEC that is clearly going to be broadened out into a discussion in regional issues related to trade and economic cooperation, as well as a number of other areas.

But as you know, tonight the President will have a dinner with President Xi Jinping of China to kick off the state visit portion of our time here in Beijing.  And then tomorrow, the two leaders will have bilateral meetings, as well.

In addition to discussing and marking the progress that’s been made on these bilateral economic issues, they’ll also discuss a range of other bilateral and global issues that are of mutual interest to the United States and China.

Specifically I’d expect there to be a discussion around our cooperation on clean energy and climate change as our two countries prepare for the ongoing international climate negotiations heading into next year.

We’ll have a discussion of a number of regional security issues, among them our shared commitment to denuclearization on the Korean Peninsula, as well as the security environment in the broader Asia Pacific region, including our interest in maritime security and the situation in the South and East China Sea.  We’ll discuss our military-to-military relationship and what we can do to develop greater dialogue and cooperation and confidence-building measures working together.

There will certainly be a discussion of the ongoing talk in Iran with Iran over its nuclear program.  And Secretary Kerry will be joining the President from Oman, where he’s been in a trilateral dialogue with the Foreign Minister of Iran and Cathy Ashton from the European Union.

Cybersecurity, of course, will be an important focus for the President given some of our concerns related to cybersecurity and the theft of intellectual property.  Afghanistan is an area where we are looking to cooperate with China.  We very much welcomed President Ghani visit here to Beijing earlier in the year and believe that China can be a partner in promoting development and stability in Afghanistan going forward.

Global issues like Ebola and ISIL will certainly be a part of the discussion.  And we’ve worked with China to enlist them in the effort to fight the outbreak of Ebola in West Africa.  And then, of course, as is always the case when we meet with China we’ll have a discussion around areas where we have differences — not just cybersecurity, but issues related to human rights and universal values.

So there will be a very broad agenda.  I think we’ve already had very good progress on our leader economic priorities heading into the visit with the ITA and visa understandings that were reached.  I think that shows an ability to identify areas of practical cooperation with China even as we’re, of course, going to have differences on a range of other political, economic and security issues.

And so tomorrow we’ll have those believe meetings.  And then the President will be hosted at a lunch here.  He’ll have a chance to meet with a range of Chinese officials before leaving for the EAS and ASEAN summits in Naypyidaw.

So with that, we’ll move to questions.

MR. EARNEST:  Let’s get started.  Julie, do you want to take us up?

Q       I have one two for Mike and one for Ben also.  Mike, can you say exactly what the U.S. and China agreed to that led to the breakthrough?  And, Ben, with the Obama and Xi bilat starting, the President has invested a lot of personal time in trying to build a relationship with Xi.  At the same time, China continues to be provocative on cyber and maritime issues.  How do you see their personal relationship at this point?  And how does that affect their conversations over the next two days?

AMBASSADOR FROMAN:  Sure, so the ITA is basically a list of tariff lines that are to be covered by tariff elimination.  And we now have agreed to more than 200 tariff lines representing about a trillion dollars of trade to be covered by the ITA.  And some of the — for the last six months we’ve been focused not just on the quantity of the lines, but the quality of the lines.  And the lines that have the greatest potential, for example, for U.S. exports, where the U.S. plays a leading role, areas of expected future growth.  So things like high-end semiconductors where there are tariffs up to 25 percent currently.  We already export over $2 billion of high-tech, high-end semiconductors even with 25 percent tariffs.  Eliminating those tariffs will obviously expand that trade significantly.  It’s an area where we have a comparative advantage, and where we can support a lot of good well-paying American jobs.

Same thing on medical equipment, MRIs, CAT scans.  We export more than $2 billion of those products a year, and they face high tariffs around the region — 8 percent in some places, as well as tariffs elsewhere.  This will eliminate those tariffs and allow us to expand our exports.

Same is true on some of the high-tech instruments that have become components in advanced manufacturing that we’re very much involved in.  So those were some of the issues that we had a breakthrough on that will allow the negotiations now to move forward in Geneva.

MR. RHODES:  Sure, Julie, on your second question, the President has invested a good deal of time and energy in his relationship with President Xi.  I think if you look at the breadth of the agenda, it’s clearly, as Secretary Kerry said, the most consequential bilateral relationship in the world.  And what they were able to do at Sunnylands is cover this whole spectrum of issues.  And, in fact, actually the ITA came up at Sunnylands so this was an area of focus on our trade agenda.

And I think what the President was able to do is convey in that meeting his thinking on all these issues, both strategically and at a tactical level, and he was able to hear the same from President Xi.  Again, Xi Jinping has clearly established himself as a strong and assertive leader here in China.  And the way we look at the relationship is there, at any given time, are going to be areas where we can identify ways to make progress and then there are going to be areas where we’re going to have differences.

And I think we’ve been opportunistic in saying, okay, where do we have an agreement that we can drive the relationship forward on something like visas or ITA.  But on, frankly, the global security issues like Iran and North Korea, the Chinese have been constructive partners.  In the Iran negotiations, they have played a constructive role in being unified with the P5-plus-1, in pressing Iran to take this opportunity to demonstrate that their program is peaceful.  In North Korea, they’ve taken a very strong line to support the notion that denuclearization has to be the goal of any discussions with North Korea.

When we look at the global issues, we’ve encouraged China to play a more assertive role on things like Ebola.  We want them to be stepping up to the plate and kicking in more resources so we welcome the desire from China that is clearly on display here at this summit to play a role in the international community commensurate to its economic and political standing, and its standing as the world’s most populous nation.

At the same time, we’re going to be very clear when we believe that China’s actions are actually pushing outside the boundaries of what we believe to be the necessary international norms that govern the relations between nations and the ways in which we resolve disputes.  And so when we see things on cyber security where we have Chinese actions that disadvantage U.S. businesses or steal intellectual property, we’re going to be very candid about that.

On maritime security, what we’ve said is we’re not a claimant, but there cannot be a situation where a bigger nation is simply allowed to bully smaller nations.  There has to be a means of resolving disputes through international law and international cooperation through discussion between China, for instance, and ASEAN countries on the South China Sea, dialogue between China and Japan on issues related to the Senkakus.  And to that end, actually, we welcomed the meeting yesterday between President Xi and Prime Minister Abe as an opportunity to reduce the tensions between those two countries.

So I think the benefit of the personal relationship is that they know where they’re coming from.  There’s no mystery in our position on these issues, there’s no mystery on the Chinese position.  What we need to do is find when there’s an opening, we take it, and we run through that opening, we work together.  And when there’s a difference, we’re just going to keep raising it repeatedly with China, raising it in international forums like this and try to find ways to encourage China to work within an international system that ultimately is going to be the best way of delivering stability, prosperity, security to this part of the world and also dealing with global challenges.

Q       One for Ambassador Froman and one for Ben.  Ambassador, what are the remaining sticking points when it comes to TPP?  And you say the end of negotiations are coming into focus –- what specifically does that mean?  Do you have a timeline in your head for when there might be an actual deal?  And, Ben, can you talk a little bit about what, if any, specific asks President Obama will have on Ebola and ISIS when he meets with President XI?

MR. EARNEST:  Okay, so just to repeat –- I’ll try to repeat the questions just so everybody can hear them.  So the question about TPP –- final sticking points and timeline for completion, and then any requests that President Obama will make related to ISIS -– ISIL and Ebola.  So, Mike, do you want to go first?

AMBASSADOR FROMAN:  Well, with TPP, it’s a two-track negotiation.  There’s market access and then there are the rules.  In market access, we’ve made very significant progress with most countries, including Japan, on agriculture and on autos we’ve made progress.  We’re not done yet, there are still outstanding issues, but we have made quite good progress there in recent weeks.

On the rules issues, we’re working to close out issues and narrow differences on the remaining.  I’d say areas that there are still issues we need to work through include intellectual property rights, state-owned enterprises, the environment –- those are three examples of areas where we’re paying particular attention to, to try and further narrow the differences and find appropriate landing zones.

In terms of the end coming into focus, these negotiations are an ongoing reiterative process.  And at every stage, we close out issues, we narrow differences, we try and find landing zones, and then we try and build consensus around them.  And I think it’s becoming clearer and clearer what the final landing zones might look like, but we still have some work to do, both to define them and then build support for them.

Q       But can you put any type of timeline —

AMBASSADOR FROMAN:  We’re going to complete it as soon as we achieve the ambitious, comprehensive high standards we set out for ourselves and we’re all working very hard to do that.  There’s a lot of momentum, all the countries are very focused on doing that, but we want to make sure that we get it right.

MR. RHODES:  Kristen, I think on Ebola we’ve encouraged the Chinese and they have made commitments, both financial commitments in the provision of health care workers and support for health care infrastructure in West Africa.  So I think we’ve welcomed those commitments.  We are always encouraging nations to consider ways to do more, but also to galvanize international action — as we head into the G20, for instance.  So I think at the G20 this will be a topic among the countries in Brisbane.  And China obviously has a key role to play there.  So I don’t want to suggest that it’s kind of the lead item on the agenda but I think given the focus that we have on Ebola right now, we want to make sure we’re understanding what the Chinese contributions are, and then how we can work together on a collaborative basis heading into the G20 to get the international community to continue to step up and provide resources.

On ISIL, with respect to China, we obviously wouldn’t anticipate them playing a role in the military coalition.  I think all the countries here in the Asia Pacific region share the concern about foreign fighters going to and from Iraq and Syria, so we can have a discussion around those issues.  I think regionally, too, of course we’ve made clear that any lasting solution is going to have to deal with the political situation inside of Syria.  So it’s an opportunity to exchange views about how to bring about the type of transition that could ultimately end the civil war in Syria.

So I think more likely that they’re going to spend a lot of their time on some of the other issues that I mentioned –- Iran, North Korea, cyber, mil-mil relations, Asia Pacific –- but we want to make sure China is invested on the global agenda that we’re focused on and I think Ebola and ISIL clearly plays into that, particularly on the Ebola front where they can kick in significant resources.

And Ebola is an area where what we said to the Chinese is, there’s both the commitments you can kick in here on Ebola with respect to money and health care workers and infrastructure but also how we’re thinking about infectious disease going forward, and how we have the Global Health Security Initiative where nations are anticipating what’s going to be needed if there are additional outbreaks of different diseases.  And we’ve seen airborne diseases here in the Asia Pacific region.  So I think we want to make sure that when we talk about China playing a bigger role ono the world stage, it’s exactly those types of issues where they can bring resources and expertise to bear in fighting not just Ebola but future infectious disease.

Q       Ambassador Froman, please.  What about the TISA, the Trade in Services Agreement?  There was hope that maybe some steps ahead could have been done also on that subject within the WTO.  Also do you think that you could every close quickly the TPP without a TPA?  And thirdly, what about the development bank for investment in infrastructure that China is building up?  Is the U.S. now open to have it and maybe to participate in it?

MR. EARNEST:  I’ll just repeat the questions.  The Trade in Services Agreement in the context of the broader trade negotiations.  A question about TPA and — what was the last one?  The development bank.

AMBASSADOR FROMAN:  Well, we’ve had quite good progress over the course of this year on the Trade In Services Agreement negotiations.  Several rounds and countries putting on the table offers.  And we have a robust work program going into next year as well.  So there is a lot of work being done on that.  But I would just put in the context of today’s announcement.  I think that the ITA announcement is a significant step in terms of showing the vitality of these plurilateral agreements where countries – likeminded countries can come together and make progress in trade liberalization, whether it’s in Geneva, the WTO, or elsewhere.  So ITA, we took a major step forward today.  TISA is well on its way, the Trade In Services Agreement.  And we have a very good work program ahead.  And earlier this year, we launched the Environmental Goods Agreement negotiation, which also includes China and we hope to work well with China and the other parties in the Environmental Goods Agreement to make progress on that in the coming year or so as well.

On TPP and TPA, our view has always been that the President has made clear that of course he would like to get a Trade Promotion Authority, he’d like to finish TPP consistent with it being an ambitious, comprehensive, high-standard agreement as soon as possible.  And we are working in parallel tracks on that, that ultimately the only guarantee that a trade agreement earns the support of Congress is that we bring back a good agreement.  And our focus is on bringing back an agreement that meets those standards.

On the infrastructure front, obviously the U.S. is very active in the G20 and a variety of other forums, including here at APEC, in talking about the importance of infrastructure and financing for infrastructure.  We have been a strong supporter of the World Bank and the Asian Development Bank.  And we think it’s important that whatever mechanisms are put in place, they live up to the high standards of the multilateral development banks in terms of procurement practices, environmental practices; that they have the very highest standards that exist for international lending.

Q       For Ben.  Ben, before you left on the trip, I think you met with NGOs that were doing work on human rights and democracy in Burma.  What message were they giving to you?  And how do you respond to them when they say, as they maybe have to journalists, it’s not a bump in the road on the reforms when you have the violence going on in some parts of the country.  I think the violence — you have to do more to stand up to — how did you talk to them about that?  And also, how do you carry that message forward in Burma?  What notes will you strike so that the United States doesn’t look like they’re maybe lecturing but rather trying to encourage further —

MR. EARNEST:  Just to repeat the question for everybody else in the room.  Question about how you respond to concerns that have been raised by human rights advocates about the slow pace of progress in Burma, and how does that impact the message that you’ll deliver to Burmese officials when the President is there later this week.

Q       (Inaudible.)

MR. RHODES:  Well, David, I did meet with a number of NGOs, human rights advocates, a number of Burmese separately from that as well who are engaged in civil society there.  I also talked to a lot of the congressional staff that is focused on these issues, given Congress’s interest.  And I think our message is – let me just step back here.  On the one hand, what we’ve seen in the last five years in Burma is transformational.  The opening of a country that had been completely closed off for decades, the opening of some political space, the release of Aung San Suu Kyi, the release of political prisoners, and the initiation, really, of a kind of politics in Burma that just didn’t exist several years ago.  But it’s a country with enormous challenges and enormous needs.  It has a lot to do.

And you don’t complete those types of transitions quickly or easily.  This is going to take years to work through all the different issues that have to be addressed inside of Burma.  However, I think we need to be practical about the timelines associated with those transitions.  When we look at, for instance, Indonesia, the President met with the newly elected President of Indonesia yesterday.  It took many years for them to work through elections and constitutional reforms and dealing with different ethnic groups in the country.  So we’re taking a view here in Burma that this is enormous opportunity for the people inside the country, enormous opportunity for democratization.  However, I think that we are concerned about areas where we do not see progress and where we see significant challenges.  And I think there are really three broad categories that we’re going to be focused on heading into this visit.  One is the ongoing process of political reform in the country.

And, again, what I said to the people I met with is that we share the same objective here –- we share the objective of there being a credible election next year in the parliamentary elections in which the Burmese people can choose their leadership but we also share the objective of supporting the process of constitutional reform inside of Burma.  One election isn’t going to fix all the problems.  There needs to be constitutional reform that enables there to be a fuller transition from military to civilian rule, that enables Burma to choose their own leaders.  And the President will definitely be discussing the progress in planning for those elections but also the progress on, and the need for constitutional reform.  And that’s something that he’ll talk to Thein Sein and Aung San Suu Kyi about.

Secondly, there is the issue in Rakhine State.  And here I think is we’ve seen the most troubling difficulties with the humanitarian situation deteriorating in Rakhine State.  A very specific issue having to do with the treatment of the Rohingya population there.  And there, too, I think we share the same objective of the human rights community.  We want to see better humanitarian access to the Rohingya, to help alleviate the humanitarian situation.  We would like to see a long-term plan, an action plan that does not rely on camps but rather allows people to settle in communities and pursue development within the country.  And we would like to see a process where the Rohingya can become citizens of Burma without having to self-identify as something other than who they are, which is citizens of –- prospective citizens of Burma.

So We’ve been working very hard in the country, working with other countries to try to bring a focus on the situation in Rakhine State, and it will certainly be front and center in the President’s discussions.

Then the third area is the ethnic insurgencies and the ceasefires that have been reached.  Here, I think the government has made a good deal of progress.  They have reached individual ceasefires with many of the different ethnic group.  The Kachin is one that we’ve been particularly focused on of late.  But they’re working to translate that into a nationwide ceasefire that can lead into a process of reconciliation that addresses the underlying issues of ethnic political participation, of economic development in the ethnic areas, and the role of the military as well.

And we believe that there’s a real opportunity here for the government to move forward with this plan.  But again, it has to be one that doesn’t just put a lid on things, but addresses the underlying challenges and works towards the type of federal union that I think has been contemplated in many of the discussions with the ethnic groups.

So we’re coming at a time where a lot of these are in flux.  But the fact of the matter is they can be dealt with through politics — and that’s new in Burma.  That doesn’t mean it’s perfect, but it means that people are going to get around the table; there’s going to be a process for reviewing the constitutional amendments.  There’s going to be elections.  There are going to be talks ongoing with the ethnic groups.  And so we want this opening to continue to move forward.  We want the trajectory to continue to be one of progress.

And the United States can best — I think to sum up my message, the United States can best move that forward by engagement.  If we disengage, frankly I think that there’s a vacuum that could potentially be filled by bad actors.  But when we’re at the table, when we’re pressing these issues, we’re bringing more attention to the situation in Rakhine State.  We are working to bring the parties together in the political process.  We can help facilitate and support through development assistance the implementation of the nationwide ceasefire.

So I covered a lot of ground there, but the bottom line here is I think that we share the same objectives with the advocacy community here.  We are pursuing those objectives through engagement, and we’re clear-eyed about where there’s been progress and where there needs to be more.  And we believe we can best move that along by the President raising this with Thein Sein, with Aung San Suu Kyi.  But you’ll notice he’s also meeting with civil society, he’s meeting with young people.  We’re sending the message that we’re engaging very broadly in this country because we care deeply about its future and we see a real opportunity, but that opportunity can only be seized if they continue moving in the right direction and don’t let some of the recent very significant challenges through the reform off course.

MR. EARNEST:  Carol.

Q       I have one for each of you actually.  On the ITA, can you explain what the difference this one is going to make to the tech industry given that — and how it will impact consumers, and if China got any concessions in this breakthrough?  And then, Ben, you mentioned that Obama and Xi are going to talk about military-to-military cooperation.  Can you guys talk on those building measures?  And have you guys reached agreements on notifying each other about military activities and on a code of conduct for encounters in sea and air?

Josh, on the net neutrality announcement, can you talk about why you guys did that now and what you’re trying to accomplish, and what sort of pushback can you expect from the new Congress?  And whether or not the President has talked to Comcast about it?

MR. EARNEST:  Mike, I’ll let you go first.  Do you want to repeat the question for — I think I lost track by the end.

AMBASSADOR FROMAN:  The benefits of ITA.

Q       Right.  (Off mic) and how it’s going to affect consumers.

AMBASSADOR FROMAN:  Well, in these tariff reduction agreements, it obviously benefits both the producers who can now sell more of their product, but also the consumers — because they’ll see access to products more easily.  And when you’re talking about medical devices, for example — medical equipment, like MRIs and CAT scans, and a whole variety of implantable devices — that means better health care for people all over the world.

The tariffs range as high as 25 percent for some of the next generation semi-conductors; 30 percent for loud speakers; 30 percent for certain software media; 30 percent for video game consoles.  So some of the tariffs are in the 5 to 8 percent range, some are in the 25 to 30 percent range.  And right now the trade in these cover lines is about $1 trillion, and we’d expect it to grow significantly for the benefit of consumers and the benefits of producers, including a lot of products made in the United States.  We export over a billion dollars of these products right now, even with these barriers in place, and that will help support more jobs in the United States.

Q       (Inaudible)

AMBASSADOR FROMAN:  In trade negotiations there’s always issues of how the obligations are phased in over time, and that will be part of what’s discussed in Geneva.

MR. RHODES:  Sure, on the specific nature of the confidence-building measures with the Chinese and mil-mil ties.  I don’t want to get ahead of the discussions, but we’ve certainly been focused on both just simply the lines of communication with China, but also how to address some of the challenges we’ve seen recently, for instance, with respect to circumstances where we certainly came a little too close for comfort between the United States and Chinese military assets.  And so we’re looking at what practical things can be done to build confidence and have more transparency.  So we’ll keep you updated on that.  I don’t want to get ahead of the leaders.

But the bottom-line principle is, first of all, it’s incredibly important that we avoid inadvertent escalation and that we don’t find ourselves having an accidental circumstance lead into something that could precipitate conflict.  So there’s enormous value in that type of dialogue.

And the second point I think is it’s good for the region if the United States and China are able to have greater transparency between our militaries.  I think that will ultimately promote stability.  And we’ve encouraged that type of transparency across the region — whether it’s an ASEAN code of conduct or whether it’s the type of dialogue that President Xi and Prime Minister Abe had yesterday.  This is something that we’ve been encouraging all of our partners to do — to be more transparent, to build confidence, develop practical means to avoid an inadvertent escalation.

So it will be an important topic of their meeting, and we’ll keep you updated on it.

Q       So just the two things that —

MR. RHODES:  I mean, there are those and then there’s just the broader nature of our military-to-military relationship and how we interact, how we have exchanges.  So I think we’ll have more to say on this, but I don’t want to get ahead of the leaders.

MR. EARNEST:  And then before we move on to — just on the net neutrality question that you raised earlier, Carol — I know that there are members of Congress on both sides of this issue who have made their views known.  The White House has been in touch with the business community on a variety of issues, as we always are.  And I know that this is something that, again, on both sides of this issue they are very strongly held views.

The position that the President articulated in the statement that was released today is consistent with the President’s previously expressed strongly held views about the important of an open Internet; that the Internet has been the source of innovation, that it’s been good for the economy, in particular in the United States.  And putting in place a regulatory regime that does not allow some of those companies to sort of extend some preferential treatment to some content is an important way that we can protect the freedom and openness that’s associated with the Internet that will ensure that it continues to be a space that’s open to innovation and progress.

But again, this is something that has been — has engendered strongly held views on both sides, so I would anticipate this will continue to be a pretty robust debate in the political sphere back home in the United States.

I will say that in terms of the timing of this announcement, it is not related to this specific trip; that there are some regulatory decisions that are due.  And the President felt like this was an appropriate time to, again, reiterate his views about the important principle that’s at stake here.

Ed.

Q       Ben, I had a question about Putin in terms of — I know it was just a brief conversation so far.  But can you say anything that happened there?  But also more importantly moving forward what you hope to accomplish, what message you hope to send to Putin because we’ve heard again and again that sanctions are working against Russia.  And certainly we’ve seen the ruble in the last couple days — there’s been an economic impact.  But the administration put out a statement a day or two ago saying that heavy artillery and tanks are being sent to the front line basically by Russia.  And that’s your own assessment.  So doesn’t that suggest that the sanctions are not stopping them from this heavy influence inside Ukraine?

MR. EARNEST:  The question is about the exchange between the President — President Obama and President Putin yesterday and the impact of sanctions on influencing Russia’s actions in Ukraine.  Ben, you want to take that.

MR. RHODES:  Sure.  Well, first of all, their interaction, as I think we said last night, it was very brief.  The leaders greeted each other as the President greeted many leaders.  They did not have the substantive exchange that they do today on the margins of APEC, where I think there’s a lot more time.  We’ll certainly let you know.

But, Ed, I think — first on the message and then on the situation in Ukraine specifically, on Ukraine, we continue to be deeply troubled by Russia’s activities.  And I guess to take your question head-on, the sanctions are clearly succeeding and having an impact on the Russian economy.  There’s no question that if you look at every metric from the status of the ruble, to their projections for growth, that the Russian economic picture is grim and getting grimmer because of the sanctions.

The sanctions have yet to sufficiently affect Russia’s calculus as it relates to Ukraine.  That’s why we continue to impose them.  That’s why we continue to be very clear about where we need to see better Russian action, specifically, as you said, we’ve seen the continued provision of support to the separatists, including heavy weapons that are in complete violation of the spirit of the Minsk agreement.  And what our message is to Russia is there’s an agreement that you reached with the government in Kyiv, and you just abide by that agreement.  The separatists must abide by that agreement.  And escalating the situation by providing these types of weapons into Ukraine is clearly not in service of that process.

And what Russia will find is, if they continue to do that, it’s a recipe for isolation from a broad swath of the international community.  It’s a recipe for the type of economic disruption they’ve seen from the sanctions going forward.

So our message is one of resolve in insisting upon the sovereignty and territorial integrity of Ukraine.  It’s a message that there is a road map here through the Minsk agreement that should be followed.  And the President will certainly I think express that view publicly and privately in the coming days and weeks.

I think more broadly with Russia, I think at the same time we’ve had differences with them on Ukraine, we’re working to pursue an Iran agreement.  We’re working in a range of areas where we can make progress together.  But clearly what we’ve seen is a troubling focus from President Putin on the situation in Ukraine that is going to demand a response from the international community going forward, just as it has the last several months.  And the United States is going to be committed to leading that response.

MR. EARNEST:  Mark.

Q       Thank you.  Just a question for Mike and then a question either for Mike or Ben — if more appropriate.

On the trade talks, Mike, I’m paraphrasing, but you said earlier the best way to get Congress to pass a TPP deal is to bring them a very good agreement.  And some trade analysts say that that sort of has it backwards, that you sort of need to get the TPA authority first because that allows you to obtain concessions from trading partners.

I’m wondering sort of whether you think you can get those concessions without the President having TPA, and whether foreign leaders have pressed the President in the wake of the elections to try to get that authority from Congress.

And then secondly on cyber, the working group that Secretary Kerry set up on the cybersecurity issues obviously stopped working after the charges were brought against the Chinese military officers for hacking.  Will President Obama in his talks with President Xi encourage him, ask him to resume the dialogue of that working group?

MR. EARNEST:  So just to restate the two issues on the microphone, the second question was about the cybersecurity working group and the relationship between the U.S. and China and how the President will raise that with President Xi when they discuss it tomorrow.

And then the first question was related to does the Ambassador feel as if he can reach a good agreement with other countries without having TPA authority first, right?  Okay.

Ambassador Froman.

AMBASSADOR FROMAN:  Well, our approach has always been to pursue both in parallel and to make clear that ultimately, again, as I said the only guarantee that agreement gets the support of Congress is that it is a good agreement and meets that ambitious, comprehensive, high-standard outcome that we have sought to achieve.

I think — we have an ongoing discussion with our trading partners.  They follow our political system very closely, and we have made clear — and I think they understand — that every country has its domestic processes to go through on trade agreements.  And we’re responsible for ours, and they’re responsible for theirs.  And as the President has made clear that he wants to work with leaders in Congress, Republican and Democratic leaders in Congress, to advance the trade agenda, that has allowed our negotiations to continue.  So we’re continuing to work in parallel to close out the TPP negotiations consistent with the high standard that we’ve set for ourselves.  And we’re continuing to work with Congress to achieve trade promotion authority with as broad bipartisan support as possible.

MR. EARNEST:  Ben, do you want to do the cyber?

MR. RHODES:  Yes, Mark, it’s certainly the case that after those charges were brought we did see a chill in the cyber dialogue.  I think the fact that we pursued those cases demonstrates that we’re not going to simply stand idly by.  If we see activity that we don’t like, that we can call out, we’re going to do that.

At the same time, though, we do believe that it’s better if there’s a mechanism for a dialogue where we can raise concerns directly with one another.  So I think President Obama will highlight the importance of having a means to have a cyber-dialogue so that our governments can share information.  We can be direct about areas of concern.  We can try to find ways to build confidence in that space, as well.

So it is something where we’ve been very firm in our position.  We did see a Chinese reaction to those charges.  Again, we’re going to continue to call out behavior as we see it.  But I think the message in the bilat today, and has it has been going forward, is better for us to have a means to have a dialogue, just as we do on a whole host of other issues through the Strategic and Economic Dialogue, so that we can be more transparent.

MR. EARNEST:  Major.

Q       Ben, on Ukraine, I’m just trying to get a sense, if the President wants to use this venue for the G-20 as an opportunity to engage Putin directly and say, what’s happening in Ukraine right now?  Which seems to be an escalation after several months of relative calm, to protest in a very specific way, and to convey that message to him directly.

Secondarily, can you in any way shape or form provide any clarity on the status al-Baghdadi?

MR. EARNEST:  So just to repeat the two questions.  The first is does the President plan to raise directly with President Putin the concerns that the United States has about their actions on Ukraine either while we’re here at APEC or in the context of the G-20 meetings.

And then an update on the latest assessment about the strike against ISIL that may have had impact on al-Baghdadi.

Ben, do you want to —

MR. RHODES:  Well, Major, I think our position on Ukraine is well known, and it’s manifested in our sanctions and our policy.  So I don’t think we’re necessarily looking to focus to make this a — to go out of our way to try to make the focus of these multilateral Ukraine in the way that we did when we were in Europe, when it was obviously a more natural venue.

That said, I think if the President has the opportunity to talk President Putin, I know he’ll be expressing the need to highlight and get back to the Minsk agreement and express concern over these latest reports.

I also know that other leaders share those concerns, as well.  And yesterday, for instance, with Prime Minister Abbott, we discussed the situation in Ukraine.  He’s obviously very focused on the MH17 investigation and the need for there to be justice for Australian families.  So it’s not simply the United States.  You have a number of leaders — Chancellor Merkel, Prime Minister Abbott, a number of other European leaders — Prime Minister Cameron — who share our concerns.

And so this is not just simply a U.S. view.  I think it’s probably held among many of our friends and allies.  And so I can’t predict exactly what will happen except to say that I know where different nations stand, and I know that that’s what they’ve been saying to the Russians.

Q       Is it fair to interpret, Ben, then that you don’t consider what’s happening right now to be particularly alarming?

MR. RHODES:  We do consider it to be particularly alarming.  That’s why we’ve spoken out about it.  I guess what I’m saying is our position is very clear on this, and the pathway out of this is very clear.  It’s to get back to the Minsk agreement.  And the pattern of imposing consequences on Russia when we see an escalation is also established, as well.

So again, I could anticipate knowing how these meetings go that as the President has an opportunity to engage with leaders like Chancellor Merkel, for instance, on the margins of the G-20, this will certainly come up.  And again, I was just highlighting that President Putin knows full well where we stand.  And we’ve made that clear through not just our words, but our policies, our sanctions.  And that’s go to continue to be our approach here.

On Baghdadi, we cannot confirm his status at this point.  As you know, we did take a strike that successfully hit a number of ISIL vehicles that we assessed was associated with ISIL leadership.  We obviously take time to do due diligence to get an understanding of what the impact was.

The message I think is very clear, though, which is that we’re not going to allow for a safe haven for ISIL and its leadership and its fighters in Iraq or Syria.  And they had for months.  They were able to operate freely.  And I think what they’re finding now — whether it’s outside of Kobani, whether it’s in Anbar province, whether it’s in northern Iraq, whether it was that strike outside of Mosul — that if they move, we’re going to hit them.

Q       Just to clarify — you’re saying you don’t —

MR. RHODES:  I don’t have an update on his status.  No.

MR. EARNEST:  Josh.

Q       Two for Ben.  The first one on Indonesia and the second one in China.  At the meetings yesterday, were there any — meeting yesterday between the President and President Widodo, was there any discussion of Hambali, the terrorist suspect that’s been locked up at Guantanamo for more than 10 years.  I think President Bush at one point promised to return him to Indonesia for trial.  Regardless of whether it came up, what’s going to happen to that individual?  Is there any plan to do anything with him or just keep him at Guantanamo indefinitely?

And then on the Chinese front, given the concerns about press freedom in China, can you explain the President’s decision to do a written interview with the Xinhua Agency, since the Chinese leaders have been criticized in the past for insisting on sort of canned interviews with American news outlets?

MR. EARNEST:  The two questions.  Did the President discuss with the Indonesian leader the status of an Indonesian terror suspect that’s being held at Guantanamo?  And the decision-making behind the President’s decision to do a written interview with Xinhua.

Ben, do you want to take those?

MR. RHODES:  Yes.  Well, on the first question, it did not come up in the discussion.  Counterterrorism did, ISIL did.  We discussed ways to share information.  And we have a good relationship with Indonesia on information sharing related to counterterrorism.  And so those issues were addressed.

But on his specific status, I’ll have to check, Josh, on exactly what the status of his case is.  As you know, we’ve reviewed each one and have a very rigorous process to determine who is cleared for transfer, who is not.  So we can get back to you on that.

On the second question, look, it’s very — when we go on trips, this is something we do everywhere.  As you know from covering us, we tend to do written interviews with outlets when we arrive in a country.

Our view is on the one hand, we need to engage.  And the more the President’s voice can be heard in a country the better because people understand where we come from.  So we do engage Chinese media.  We engage CCTV in the Briefing Room every day.  We engage Xinhua.

At the same time, we’ll raise issues of press freedom.  And the President has raised it directly with President Xi in their believe meetings.  We’ve raised our concerns about the status of some U.S. media organizations and the treatment — the adjudication of their visas.  We’ve raised, again, our concern on having more free access to information here — not just as it relates to the news media, but as it relates to Internet.

So these are things that we will consistently raise, but again, I think better for the President’s voice to get out and to be heard in a country.  We use those interviews as important venues to address different issues.  But in no way does that diminish the fact that we have concerns about the press freedom here in China, just as we do in a range of other countries that we’ve visited who have — who are on a spectrum of how they treat the press.

MR. EARNEST:  Mr. Acosta.

Q       Yes, just to follow up on that with Ben.  What does the President see as his legacy with China?  Is it more engaging with China, but not changing China’s behavior?  Because I was struck by something the President said yesterday with Prime Minister Abbott that press freedoms he likes, that those are U.S. values.  But he does not expect China to have those traditions, to follow those traditions.  Why not?  Why not publicly with Xi push the Chinese to adopt a more American value system on press freedoms and human rights?

MR. EARNEST:  To repeat the question again.  Jim’s question is about who aggressively the President pushes the Chinese on some of the human rights concerns that the President himself has spoken about pretty publicly.

Q       And how that fits into his legacy?

MR. EARNEST:  Yes, and how that fits into his legacy, with that relationship.

MR. RHODES:  Yes, so I’ll start with the human rights piece.  Jim, the President doesn’t just see these as American values.  There are certain things that are universal values.  They’re embedded in the Universal Declaration of Human Rights at the United Nations.  And they should be able to take root in any society.  When you talk about freedom of speech, freedom of association, again, America has championed those values, but we believe that they are universal.

I think what the President is speaking about is the fact that China is at a different stage of development.  Obviously, it has different traditions.  But we do raise these issues.  And we do believe that certain things are universal, the right to, again, speak your mind, access information, to freedom of assembly.  And so it’s something that we’re going to press.  It’s something that comes up in every meeting.  It’s something that we raise publicly, as well.  And at the end of the day, again, I think the people of China are going to determine the future of their country.  But we want to make sure that just as we want China to live up to the rules of the road, we want them to live up to the rules of the road on universal values.

In a place like Hong Kong, that involves respect for freedom of assembly.  It also involves the people of Hong Kong being able to select their own leaders, as was agreed to, to choose their own leadership, again, which was the one county, two systems notion.

In terms of the President’s legacy, I think there’s — what did we get done with China.  On a bilateral basis to, again, improve the American economy, to save the global economy — and coordinated action with China was critical to that — to take the steps we’ve taken on this trip that will promote U.S. exports, promote more tourism and investment in the United States.  All that will have a positive economic impact for America and the American people.

Then I think, however, we want to look at where do we enlist China in regional and global efforts.  Because, again, we want them to play a bigger role.  We want them to be a part of international climate negotiations because you can’t deal with climate change unless China is coming to the table in a serious way.

We want them to be a part of settling disputes and resolving disputes around maritime security in the region.  We want them to be part of pursuing an agreement with Iran over its nuclear program.  So China kind of fits into the type of international order we’re trying to build in which nations are invested in solving problems.

And that very much speaks to rebalance, the signature Asia Pacific policy of the President’s.  We want to see this region more prosperous, more cooperative; again, a place of robust American engagement in ways that support our economy; support the security of our allies and the civility of the region; support the values we care about in a place like Burma where we have an ongoing transition.  And that mitigates the risk of conflict that could derail the extraordinary progress we see here.

So again, when we look at his legacy, it’s going to be where do we move the ball forward bilaterally in ways that benefit the American people?  How do we embed China, working with them, in an international system that can solve problems like climate change and maritime security?  And how is this region a more stable, prosperous and secure place which has robust American engagement.  They’re critical to all those things.  And human rights in our view is a part of the international norms that we uphold.

So just as we care about maritime security and cybersecurity, we care about universal values.  And that’s going to be a part of how we judge the status of the relationship.

Q       You mentioned Iran a couple of times.  If I could just follow up on that.  November 24th is coming up very quickly.  Do you foresee a scenario where that deadline might be put back a little bit?  And you’ve seen Netanyahu’s comments, where he seems to be pretty upset about Khamenei tweeting about the (inaudible) and what do you make of that?

MR. EARNEST:  Can you repeat the question?

MR. RHODES:  Yes, so the question.  Was the states of the Iran negotiations heading to the 24th and the Israeli Prime Minister’s comments on the Supreme Leader’s tweet.

On the first question, what we’ve been focused on is driving towards what progress can we make towards an agreement for the 24th.  We have not focused on discussions with Iran on extending those discussions because we want to keep the focus on closing gaps.

Secretary Kerry was meeting into the night in Oman.  He’s currently on a plane, set to arrive in Beijing.  He will give the President an update on where things stand and what progress he made, so President Obama will hear directly from him about the status of the talks.

And then there are negotiations scheduled in Vienna where we’ll see where we can get by the 24th, and we’ll keep people posted on where things stand.

With respect to the — first of all, the sentiments expressed by the Supreme Leader’s office in that tweet.  They’re obviously outrageous.  It’s the type of rhetoric we’ve seen from the Iranian leadership for years.  We completely reject it, of course.

The fact of the matter is what we’ve always said is even as we pursue this effort around diplomacy on the Iranian nuclear program, that’s about addressing a security concern of the United States and Israel and the international community.  If we can prevent Iran from obtaining a nuclear weapon, that’s in all of our interests.

At the same time, it doesn’t lessen our concern over other Iranian behaviors, including the virulent anti-Israeli rhetoric that has been a part of their political tradition.  So we’ll continue to speak out against that.

With respect to the agreement itself, though, what we would say is, again, if we can verifiably discern that Iran is not building a nuclear weapon, that it’s program is for peaceful purposes, that’s a good thing.  That’s far better than an outcome where Iran is back to trying to accumulate more stockpile, enriching at a higher percent and getting more breakout capacity.  So we’ve already frozen their nuclear — the progress of their nuclear program.  We’ve rolled back the stockpile just during these negotiations.

If we can get a comprehensive agreement, we would say that would be in the interest of American national security and also the security of our friends and allies.

MR. EARNEST:  We’re nearing the one-hour mark here, so we’ll just do two more.  Ching-Yi and then Jim Avila, I’ll let you wrap up.  Go ahead.

Q       Thank you, thank you, Josh.  First question is to Ambassador Froman.  According to interview with Xinhua, President Obama say our summit will also be an opportunity to make progress toward ambitious bilateral investment treaty.  So what kind of progress?  What kind of breakthrough that we can expect about the VIT?

And also the second question is to Ben.  Other than ITA and the visa, what else deliverables that the U.S. is looking forward to reaching this time.  Thank you.

MR. EARNEST:  Repeat the question so everybody can hear.  Ambassador Froman, an update on progress related to the VIT negotiations.  And, Ben, what other deliverables do you anticipate out of the meetings between President Obama and President Xi.

Ambassador Froman?

AMBASSADOR FROMAN:  Well, as you may recall it was about a year and a half ago that China agreed to negotiate a bilateral investment treaty on the basis of what we call a negative list, which is to open up their economy but for specific carve-outs that they negotiate with us.  And that was a major step forward, as were some of the other provisions that we agreed to then.

Since that time we’ve had very good discussions in the bilateral investment treaty channel.  We’ve had a series of rounds to walk through our model of it and to talk about how it would be applied in the case of China.  We have further work to do.  Next year, early next year, China has agreed to give us their first version of their negative list.  And it will be very important if we’re to achieve early progress in these negotiations that that list be as short and as focused, as narrowly tailored as possible.  And we’re encouraging our Chinese counterparts, including while we’re here for this visit and around this summit to focus on making that list as narrow and as short as possible so that we can proceed with negotiations and make progress next year.

MR. RHODES:  I, of course, will let the leaders speak to the specific deliverables.  I think we certainly focused on the visa issue and ITA in these first couple of days because of the economic theme of APEC and the venue of the CEO forum.  So again, I think the President’s meeting will certainly address economic issues.  But I think we’ll also d

Press Releases: Press Availability in Beijing, China

SECRETARY KERRY: Good evening, everybody. Thank you for being patient. We’re delighted to be here. Let me begin by thanking our Chinese hosts for their very warm welcome and for the depth and breadth of the discussions that we had in this year’s Strategic and Economic Dialogue.

During our meetings with President Xi and Prime Minister Li, Secretary Lew and I discussed a number of important bilateral, regional, and global issues. And we have addressed those issues in great depth with our counterparts over the course of the last two days.

The United States and China are committed to a new model of relations based on practical cooperation but also constructive management of differences. And we recognize the need to avoid falling into the trap of a zero-sum competition, and that recognition is now driving our partnership on issues from climate change to wildlife trafficking to Afghanistan to peacefully resolving the Iranian nuclear issue.

This week’s Strategic and Economic Dialogue was an opportunity to take stock of our relationship, and frankly, to be able to build on the progress we’ve made in these last years and move past some of the differences which have accented the relationship in the most recent months, and frankly, to push for practical action, joint action that will make a difference, and that in the end defines the relationship.

During our joint session on climate change, I spoke with our Chinese counterparts on how we can work together to address one of the defining threats of our time, and one where the United States and China have a unique role to play together. We agreed to adopt stronger fuel efficiency standards for heavy and light-duty vehicles, and for greenhouse gas emissions standards that will have enormous impact on reducing emissions and improving air quality. We launched four carbon capture utilization and storage demonstration projects and four smart grid demonstration projects that will help to provide for the foundation of a clean energy future which we believe is within reach – which we both believe, I might add, is within reach.

We also took the important step of launching a new initiative on climate change and forests. Secretary Lew and I held in-depth discussions with our Chinese counterparts on key economic issues. And together, we made progress on ensuring that American workers and businesses compete on a level playing field, driving each other to even greater innovation and problem solving. And we explored practical ways to encourage greater Chinese integration into the rules-based international economic and trading system that has helped both of our countries to prosper.

Close U.S.-China cooperation is essential for meeting common regional challenges, and we held in-depth discussions on our military-to-military cooperation, particularly on early warning and communications structures. And we will continue that strategic mil-to-mil relationship, including with additional exercises, additional visits, additional communication in the near term.

The United States and China agreed on the importance and urgency of achieving a denuclearized, stable, and prosperous Korean Peninsula. China shares the same strategic goal, and we discussed the importance of enforcing UN Security Council resolutions that impose sanctions on North Korea’s weapons of mass destruction and its ballistic missile program. We talked about specific ways in which we intend to work together in order to further our ability to achieve this goal and try and change the dynamic that has existed for the last several years.

China has also strengthened its own sanctions enforcement, but there’s more that each of us can do, and we agreed that there is more that we can do in order to bring North Korea into compliance with its international obligations. And obviously, we believe that China has a unique role in this regard.

As part of the S&ED, the United States and China released a joint outcomes document that highlights the breadth and depth of our countries’ cooperation. In recognition of our shared interest in regional and global security, we agreed to form a working group on the shared challenges posed by the proliferation of weapons of mass destruction. We also took steps to make it easier for millions of Chinese and Americans – tourists, students, business leaders – to be able to travel between our two countries.

The United States and China demonstrated over the course of these two days our serious commitment to addressing challenges facing the international community. We committed to work together on a detailed study of ways to reduce the CO2 emissions of industrial boilers by transitioning from coal-burning boilers to natural gas boilers. And our two countries also issued a strong statement to support humanitarian assistance for Syrian refugees and an opposition to the proliferation of and use of chemical weapons.

I also had a productive session with Vice Premier Liu in the Consultation on People-to-People Exchange. We discussed our shared commitment to develop additional exchanges as a foundation for our bilateral relationship going forward. And we were particularly pleased today to hear about China’s commitment to grant 1,000 scholarships to students from historically black colleges and universities.

I also took part in a signing ceremony for six new eco-partnerships that will harness the ingenuity and innovation of the private sector in order to promote economic growth, energy security, and environmental sustainability. And this year’s new EcoPartnerships, we are convinced, will drive change in bio-fuels, battery storage, and other clean technologies.

Even as we sought common ground with China building on areas of common interest, we also had frank discussions about those areas where we have differences.

We continued our conversation on cyber security and cyber theft. And the loss of intellectual property through cyber means has a very chilling effect on innovation and investment. I emphasize that incidents of cyber theft have harmed our businesses and threatened our nation’s competitiveness. And we believe it is essential to continue the discussions in this area.

I also reaffirmed that the United States will continue to stand up for our values and promote universal human rights and freedoms that all people should enjoy. These rights and freedoms are vital to stability and prosperity. And I raised our concerns about some of the recent detentions and arrests of journalists, lawyers, and activists.

We also discussed with our Chinese counterparts the rise of tensions between China and many of its neighbors over maritime disputes. Chinese actions in the South China Sea and the East China Sea have generated concerns. And while the United States does not take sides on the sovereignty questions underlying these territorial disputes, we do believe that claimants should exercise restraint – all claimants – and adhere to peaceful and diplomatic ways of dealing with their disagreements. Throughout our meetings, we emphasized the critical importance of maintaining a rules-based international order, including such principles as freedom of navigation, unimpeded lawful commerce, and respect for international law.

So as you can see, we had an enormous agenda. We spent a great deal of time, perhaps more on some than others, but all of these subjects and more were covered. And from our dialogue on trade and investment to intellectual property to maritime security to human rights, we are committed to working through the difficult issues, including through important mechanisms like the S&ED.

So meetings such as these, I think we all came away reinforced in the value of them, in the importance of the dialogue that took place. And I think everybody here left with a sense that this was really constructive. I want to thank our hosts. The Chinese clearly put great effort into this. Their welcome was generous. Their focus was disciplined and comprehensive. And from my position, it was one of the better international meetings of its kind that I have attended. It had a seriousness of purpose and intent, and I think all of us were pleased with the outcome.

So we’d be happy to take a few questions after Secretary Lew has made his statement.

SECRETARY LEW: Thank you very much, and thank you all for being here and for – we apologize for the delay, but the benefit of having good and productive meetings is that they sometimes also run a little bit long, and that’s why we were a little delayed.

Our discussions with our Chinese counterparts over the past two days were focused on key issues of interest to both of our countries and to the global economy, including ways to boost sustainable growth and create jobs through increased trade and investment and by leveling the playing field. Through our engagement in the Strategic and Economic Dialogue this year, we secured key commitments from China that will further implement China’s reforms. These commitments will create new opportunities and deliver concrete benefits to both of our citizens – both our citizens and level the playing field for American workers and firms.

We held discussions on a wide-ranging set of issues and made a number of commitments that help further create a more open and fair economic relationship. I want to briefly highlight a few key areas and the concrete progress that we’ve made that will deliver results for American workers and firms.

Today, China committed to reduce market intervention as conditions permit. It is making preparations to provide greater transparency, including on foreign exchange. This commitment will help accelerate the move to a more market-determined exchange rate and is central to creating a level playing field. This also reflects the increasing role and responsibility China has in promoting balance and strong growth in the global economy.

As the fastest-growing major economy, China offers substantial opportunities for U.S. businesses and workers. Addressing practices that distort trade and impede investment will help the United States further access growing markets and create jobs at home. To this end, China committed to further open up to foreign investment in the services sector, including the financial sector, and will accelerate the revision of its foreign investment catalog.

Building on last year’s announcement, we also agreed this week to intensify negotiations toward a high-standard bilateral investment treaty and begin the process of negotiating China’s negative list in early 2015. China also made new commitments to further reform its state-owned enterprises, which will help provide a level playing field for the U.S. companies that compete here, including significantly increasing the amount of dividend payments that go to the government budget to support social welfare, taking measures to improve their corporate governance structures and providing greater transparency.

We also took steps together to open energy markets to enhance energy security and promote a clean energy future for both our nations and the world. The United States and China reached an agreement on the parameters for their fossil fuel subsidies peer reviews and to provide an update to the G20 in November. The United States and China also signed a memorandum of understanding to increase cooperation in exchanges on transparency, data quality, and policies of China’s strategic petroleum reserve. This commitment will help manage uncertainty in global energy markets, respond to future supply disruptions, and reduce oil price volatility.

We also worked together on expanding opportunities for U.S. firms through promoting a more open and market-oriented financial system by expanding opportunities for U.S. financial service providers and investors, strengthening financial regulatory cooperation, and continuing the development of China’s financial markets.

We also discussed the importance of strengthening the protection and enforcement of intellectual property, which is critical to promoting innovation and fair competition and addressing trade secret theft. China committed to vigorously investigate and prosecute trade secret theft cases, to publish civil and criminal judgments, and to protect trade secrets submitted in regulatory, administrative, and other proceedings.

We welcome the important commitments China made during the dialogue. While these commitments represent real progress for the United States, for China, and the global economy, we still have a lot more work to do. These discussions will continue over the next few months and for many years to come as we continue to strengthen the relationship between our two economic powers. And I join Secretary Kerry in thanking our Chinese colleagues, Vice Premier Wang and Councilor Yang, for the efforts that they and their team put in and for the efforts of our team working together to make the progress that we’re reporting to you tonight.

And with that, we will be happy to take your questions.

MR. RATHKE: The first question tonight goes to Brad Klapper of AP.

QUESTION: Thank you, Secretaries. Secretary Kerry, in the two days you’ve been here, a lot’s happened in the world. I’ll only ask you about a couple of places. In Afghanistan, which you mentioned, there still seems no clear resolution in sight for the post-election – for the election results. Presidential candidate Abdullah mentioned today that he expects you in the Afghan capital tomorrow. Are you going, and what would you hope to accomplish there?

And then secondly, on the situation in Israel and the Gaza Strip, are you worried that the situation is getting so out of hand so quickly that it’s going to be hard for both sides to pull back from the violence? Talking about a few dozen dead now in Gaza, and attacks continuing on Israel, including missiles even aimed at an Israeli nuclear reactor the other day. I mean, is this getting out of hand and does there have to be a resolution quickly? Thank you.

SECRETARY KERRY: Thank you very much, Brad. With respect to Afghanistan, we are working very closely with all of the stakeholders in Afghanistan with enormous concern, obviously, for the restoration of credibility to the process, the election, either through the Independent Election Commission’s efforts to conduct an audit and to further verify the balloting, or through the joint efforts of the candidates themselves to take steps in order to provide for future leadership in the country. And I’ve been in touch several times with both candidates as well as with President Karzai.

We would encourage both of them to not raise expectations with their supporters, to publicly demonstrate respect for the audit process and the accountability process, and also to show critical statesmanship and leadership at a time when Afghanistan obviously needs it. This is a critical moment for the transition, which is essential to the future governance of the country and the capacity of the ISAF 50-nation-plus support group to be able to continue to be supportive and to be able to carry out the mission which so many have sacrificed so much to achieve.

So it’s our hope very much that over the course of these next days, very soon a way forward can be found that will provide the foundation for Afghanistan to grab a hold of the future that so many millions of voters came out to express their will about just a short time ago. So we’re very hopeful about that and we’ll see what happens over the course of the next days.

QUESTION: And on Gaza and (inaudible)?

SECRETARY KERRY: Oh, I’m sorry. Well, the situation on the ground in Israel, in the West Bank and Gaza is obviously not only tense, but it’s very, very dangerous for Israelis and for Palestinians in the aftermath of the deaths of the Israeli and Palestinian youth. And no country, no country can accept rocket fire aimed at civilians, and we support completely Israel’s right to defend itself against these vicious attacks.

But de-escalation ultimately is in the interests of all parties – in the interest of the region, in the interests of Israel and the Palestinians.

And I’ve been in touch with both Prime Minister Netanyahu, with President Abbas, and with others in the region in order to try and see whether or not there is some capacity to be able to restore the status-quo ante with respect to a ceasefire. But clearly that is complicated because the residents of southern Israel who have been forced to live under this rocket fire have been subjected to this conflict because of Hamas’s decision.

Hamas has refused against all movement and trends in the region, against all urging of the Arab community in the region, against all indicators of the Arab Peace Initiative, against all efforts of peace, stubbornly refused to even accept the Quartet principles and to disavow violence as a means of finding a negotiated way forward. A negotiated way forward is the only way, ultimately, to resolve the problems and actually establish a Palestinian state and put in place the security measures and other things necessary.

At this moment, that obviously is not the topic of conversation. At this moment, it is one of saving lives, protecting Israel, exercising the right of self-defense, and trying to de-escalate in a way that accomplishes all of those goals of protecting Israel while at the same time not seeing innocent people brought into the line of fire.

So it’s a dangerous moment, and we will do everything in our power. I’ve made it clear that the United States of America is available to do everything possible, and we are already engaged in trying to see if it is possible to bring an end to the violence and find a different way forward.

MODERATOR: We’ll take another question. Ian Katz, Bloomberg. Right here, thanks.

QUESTION: Thank you. For either Secretary Lew or Secretary Kerry: There is a report out in the last day about Chinese hackers getting into files of the Office of Personnel Management and getting some information of people applying for high-security government jobs. Did either of you discuss that with your Chinese counterparts, and if so, in what form and what was their response?

And I also just have a separate question for Secretary Lew on the Chinese pledges to reduce currency intervention. Can you explain a little bit about what it is they pledged to do, and is there a timetable? What specifically are they going to do, and how does it compare with what you would like to see them do?

And lastly, on the currency. You’ve been pushing for a stronger yuan. Does that imply or mean that you’d like to see a weaker dollar?

SECRETARY KERRY: I’ll just take the cyber thing quickly and then turn it over to Secretary Lew. We were both notified about this alleged incident only minutes, literally, before we came out here. So we did not raise it in the specific term; we raised the subject, obviously. But what we have learned is that apparently this story relates to an attempted intrusion that is still being investigated by the appropriate U.S. authorities. And at this point in time, it does not appear to have compromised any sensitive material. And I’m not going to get into any of the specifics of that ongoing investigation, but we’ve been very clear for some time with our counterparts here that this is in larger terms an issue of concern.

SECRETARY LEW: Ian, on the question of the exchange rate, I think it’s important to go back to the first principles: Why do we raise the issue and make it such an important one? It’s fundamentally about the fairness of the trading system and the opportunity of U.S. workers and firms to compete fairly and for Chinese consumers to have the purchasing power that goes with a fairly valued currency.

We have, I think, successfully gotten an agreement that reflects the decisions made by China’s government to move towards a market-determined exchange rate. By putting in the statement today the commitment to gradually reduce interventions and to limit interventions to what are really extraordinary circumstances, that’s a big change. By indicating publicly that the process of gaining greater transparency on interventions, that’s also a major change. I think that we still have a process ahead of us because the experience of the next few months will tell us a lot about what the real impact is, but it is a very important issue that there be clarity on and that there be an understanding that it is just a basic tenet of moving towards a more market-determined economy that the exchange rate has to move as well to a more market-determined level.

I think that when we think of this in U.S. terms, it is about having there be a level playing field and fair rules of engagement. Market conditions will determine whether rates go up or down, but if they’re increasingly driven by the market with less and less intervention, that’s a good thing. And I think the document today reflects that, and we will now move forward working on the issue and continuing to monitor closely what we see in the coming months.

MR. RATHKE: Next question is Chen Huihui from CCTV.

QUESTION: Thank you. My question is for Secretary. Some American analysts believe that the new type of major power relationship that China proposes is a trap, and it means unilateral U.S. accommodation of China’s core interests and therefore the U.S. should not accept that idea. So what is your comment on such a kind of view? Thank you.

SECRETARY KERRY: Well, President Obama has made it clear that the United States of America welcomes the rise of a peaceful and prosperous and stable China, and one that plays a constructive role in the region and in the world, that works by a rules-based structure in concert with other partners. We plan to work together and the U.S. is not, as we have said many times, in a rivalry competition with China in terms of trying to contain it or otherwise.

So we don’t see a problem in defining a great power relationship in the 21st century that is a new model for countries, but it’s not going to be defined by talking about it. It’s not going to be defined by us carving up areas and suggesting there are spheres of influence. It’s going to be defined by our mutual embrace of standards of global behavior and activity that protect the values and the interests that we have long worked by – the norms of international behavior. And that means not engaging in unilateral actions to enforce a particular assertion of sovereignty or otherwise. It means working within the rules-based system.

We don’t take a position on those sovereignty issues, but we do take the position that they ought to be resolved through the legal structures that exist for a resolution of those kinds of disputes. And we certainly had a discussion about those kinds of things.

So we agreed – really, what I think is important about what took place here over the course of these last two days is that China and the United States were able to talk reasonably and cordially, respectfully, even as we differed about some of these kinds of issues.

At the same time, we found there was much more that we agree on and much more where there was a common interest – in having a denuclearized North Korea; in making sure that the region is free to navigation and open for respect for the rule of law; in finding that we share concerns about Afghanistan; that we are working together cooperatively in the P5+1, and China is an important partner in the nonproliferation activity and in the enforcement of the P5+1 efforts; that we agree on Middle East peace and the dangers of the region; that we agree on counterterrorism, and the need to work together in order to reduce threat to all of us. And I could find – I mean, there’s more where we have – on climate change – very serious agreement where we are making breakthrough choices, agreements that were articulated by Secretary Lew on the need to reform economic measures, access to markets, and other things.

So I think that, all in all, when you read the summary of outcomes, you will see that there’s a high level of cooperation, but a respect for the fact that we do differ on certain things, and we will. But managing those differences is a critical component of this new great power relationship.

MODERATOR: Great. We’ll take one last question. Ling Wang with Caixin.

QUESTION: Thank you. Well, I have questions for both tracks. For Secretary Lew, concerning the BIT negotiations, so far what are the difficulties and problems encountered in the first phase? And is China SOE the – your biggest concern in the next phase and —

SECRETARY LEW: Sorry, I couldn’t hear the last part.

QUESTION: I’m sorry. For the first question or the second question?

SECRETARY LEW: It was — the last thing you said.

QUESTION: Is Chinese SOE, state-owned enterprise, your biggest concern in next phase?

And for the strategic track, Secretary Kerry, if there is one thing that you would like to highlight for this year’s dialogue, what is it? And how do you see the economic track and the strategic track affected each other in the past two days’ dialogue? Thank you.

SECRETARY KERRY: Say the last part again? How did I see the —

QUESTION: How do you see the two tracks affected each other in the last two days?

SECRETARY KERRY: The economic?

QUESTION: Yeah.

SECRETARY KERRY: Absolutely. Sure.

QUESTION: Thank you.

SECRETARY LEW: So let me begin with the question about the bilateral investment treaty. And let me take a step back, because I think the importance of the agreement we reached last year where China agreed to basically flip its presumption from its markets being closed to its markets being open was a very dramatic one, and it was one that reflected the mutual interest we had in promoting a strong U.S. and Chinese economy and to promoting more cooperation.

Just as Secretary Kerry was saying a moment ago on the strategic side, so too on the economic side there is – we have a vested interest in each other’s success, and there’s much that we agreed on. Now obviously the process that China’s going through is a very substantial one. The presumption is markets are open, unless there are specific items that are excepted from it. China’s now going through the process of coming up with its list of exceptions, and then, as we agreed to in the summary of outcomes, we will next year begin negotiating that list of exceptions between our two countries.

I think that the process of reaching an agreement on a bilateral investment treaty is always a difficult and complicated one. And I think the ground covered since last year has been substantial. A lot of progress has been made, and we’re now cued up in the beginning of next year to go into the next round of very serious negotiations.

Along the way to an agreement on a full BIT, there are a number of other issues that are very significant. The items reflected in the summary of areas where we were able to agree reflects opening of some financial markets. We continued to have very productive discussions about a technology agreement. I think even before there’s a BIT, we have things we can do along the way that will open markets, build confidence, and build a sense that the value of reaching a BIT is as great as it was when last year’s S&ED reached the point of commencing the process.

So I think it takes a little bit of patience because it is a long process, but there is real progress being made, and I think that the provisions that are reflected in today’s document show that even in this round we have some real points of progress to show. And we will look forward to engaging at the beginning of next year and going through the next phase of negotiation.

SECRETARY KERRY: You asked me to highlight the one thing that might stand out, and I think I did. But I’ll take advantage of the question, to bear down on one part of that. I said that the level of cooperation overall on major issues of global concern is significant. And the capacity that I think we saw to manage our disagreements about certain things but still remain focused on those areas of agreement is critical, and it’s very important.

But bearing down on that, let me just pick climate change as an example. I’ve been involved in the issue of climate change for more than 25 years – even longer. But in the Senate, for many years, it was incomprehensible that the United States and China would find cooperation on climate change. As recently as two years ago, no one would’ve thought that that was possible or expected it. And last year, when President Xi signed onto this idea that it was important to work with the United States and find ways forward, because China was increasingly finding certain challenges domestically with respect to air quality and pollution and other things, but also learning more about the challenge of the science, as the consensus began to grow that we needed to take action, we found some common ground.

And already this year with our eco-partnerships, with our mutual targets with respect to fuel and trucks and fuel changing and fuel switching, and the idea of working together to try to figure out what are appropriate targets going forward into next year’s global negotiation on this subject, this is important. Because together, China and the United States represent about 45 to 48 percent of all global greenhouse gas emissions. We are the world’s two largest economies. And therefore to come together in this way at this moment in time is very significant.

Now the true significance will be determined by what is agreed upon hopefully between the presidents, and we intend – and President Xi was very clear today that he looks forward to this work continuing, he looks forward to talking to President Obama and working up towards the APEC summit, and it’s our hope that this will actually be given greater meat on the bones than it has today. But at this point in time, this is an improbable act being played out, and we hope that ultimately it’s – it will be well received and be fruitful.

MR. RATHKE: Okay. Thanks everyone. Good night.

# # #

Speech: Thriving in a global economy

European Commission

[Check Against Delivery]

Karel De Gucht

European Commissioner for Trade

Thriving in a global economy

Launch: “Spirits: A European Power House for Trade”

Brussels, 25 June 2014

Ladies and gentlemen,

The international success of the European spirits industry is based on tradition.

Consumers around the world look to European products because of our strong sense of the past. Time itself is a key ingredient in many of them.

But for all the importance of heritage, your industry is also an excellent example of how European companies can prosper today and adapt for the future; and in doing so create jobs and business opportunities for the people of the European Union.

The report we are launching today shows the lessons you can teach others about how to thrive in a global economy.

First, your target market is the world. We all know the advantages that come with the European Single Market. Having such a home is invaluable for any company. But it’s not enough.

Over the next twenty years 90% of the world’s growth is going to happen outside of the European Union’s borders.

So the more European companies are ready to meet that demand, the better off will be the 500 million citizens of the European Union.

Second, the report shows how you can compete on quality – and indeed how quality is becoming ever more important to your export success.

That shows us that European companies cannot rest on their laurels. A tradition only has value if it continues to produce high quality results. If not, it’s just a tourist attraction.

Producing high-value added goods is essential for a developed economy like ours – because high-value goods – incorporating skill and experience – allow for well-paying jobs for people with those skills and that experience. This is relevant across the board for the European economy.

Finally, the report shows the importance of intellectual property. We have to protect both your individual company trademarks and the more than 300 geographical indications linked to spirits – not just Scotch and Irish whiskies or Cognac but also Polish vodka, Orujo de Galicia and many others.

Why? Because intellectual property is how we monetise quality. It’s essential for the model of a European economy that specialises in the high value tasks of global value chains.

So the model of your industry is encouraging. It can show the way for others who are struggling to find their place.

And that is how Europe will gradually adapt to this changed world – company by company – understanding and preparing for the future.

But there is, I believe, an important role for government in all of this.

I see the role of government – and of the European Union’s trade policy in particular – as facilitating the connections that bring prosperity back to Europe.

That means making sure Europe has an open economy, so that companies that are part of global value chains can gain access to the best quality goods and services from around the world, at the best prices.

Even for an industry such as yours, for whom local production and local ingredients are so important, access to internationally traded goods and services does play a role, whether those are capital goods, transport, logistics or finance.

This access is essential for Europe’s broader competitiveness.

But as your report highlights, in an economy like ours it’s not just political decisions made in Europe that count.

Governments around the world make decisions that affect your ability to do business every day – like levying a discriminatory excise duty or using unfair methods to value goods at the border. And by getting in the way of your exports, they undermine your ability to bring growth back home to Europe.

The underlying goal of the European Union’s trade policy is to make sure that those decisions are made in a fair and balanced way.

How should we do it?

Our first priority must remain the World Trade Organisation.

The multilateral system has been through a difficult decade, and the issues at the core of the Doha Round are still not resolved.

But a system that allows us to deal with so many partners at the same time – that establishes uniform rules for almost the entire world economy and that is backed up by the world’s best international dispute settlement system must be preserved and expanded.

Last December in Bali, WTO Members showed they understand this. The deal on trade facilitation reached there will directly benefit the spirits industry – simplifying customs and border procedures across the world.

We now need to make sure that deal is implemented, and get to work on what remains to be done.

The second major task for EU trade policy is to complete our unprecedented agenda of bilateral free trade agreements.

The virtue of these negotiations is two-fold. On the one hand, they allow us to move ahead with opening markets with those countries who are willing, rather than be held back by those who are more reluctant.

This has allowed us to put in place deals with Korea, Columbia, Peru and Latin America. It is what has brought us close to achieving final deals with Canada and Singapore. And it is why we are engaged in major initiatives with the United States, Japan, India, Mercosur and several ASEAN countries.

The second reason free trade agreements are important is because they allow us to go deeper, tackling more of the issues that affect businesses.

Of course that includes India’s 150% tariff on spirits. But it also allows us to promote the enforcement of intellectual property rights in Latin America and tackle discriminatory technical labelling regulations all around the world.

The final pillar of our work is enforcement. And it is necessary because negotiations have no value if the agreements reached are not put into practice.

As your report highlights, our case against the Philippines’ discriminatory excise duties is one example of how the WTO’s dispute settlement system can be very effective. We are committed to using that system whenever it is necessary – just as we are committed to using our trade defence measures when those are required.

These legal tools are complemented by our Market Access Strategy, which uses all channels of trade diplomacy to help us focus governments’ minds on problems that need to be solved. This approach has allowed us to resolve issues around distribution in Vietnam and push for progress where difficulties have arisen in China and Russia.

Ladies and gentlemen,

All in all this is a comprehensive strategy to make sure Europe is well placed for another century of prosperity as the world changes around us.

We will be able to put this strategy into practice for as long as the European people understand that our economy as a whole benefits from being part of an open global system.

Most people do see that the rise of vast new economic powerhouses is also the rise of vast new markets for European goods and services.

But many of them also see that globalisation presents challenges for Europe, most of all the need to adapt to rapid changes and deal with new competitors.

As the European elections have confirmed, some – a minority but a significant one – wish to react to these challenges by shutting our doors. I do not believe that would be anything other than a disaster for the European Union. And I’m confident you agree with me.

That means it is very important that people understand how open markets help industries such as yours to be successful.

People need to know that shoppers in China and the United States are buying high-quality goods from all across Europe. And they need to know what that means for their local economies.

It is certainly the role of politicians to tell that story. I do it wherever I go.

But you as companies have the specific examples of how international trade helps real people at home.

And now more than ever, it’s essential for that story to be heard.

Thank you very much for your attention.

U.S.-China Relations

Introduction

Chairman Menendez, Ranking Member Corker, Members of the Committee, thank you for the opportunity to testify today on U.S.-China relations. It is also a great honor to be participating in today’s hearing with one of our nation’s most accomplished diplomats, Ambassador Stapleton Roy – a friend, former colleague, and one of the foremost experts on U.S.-China relations. Ambassador Roy’s contributions to the U.S.-China relationship have been invaluable, and I look forward to hearing his insights.

I would also like to take this opportunity to thank you, Mr. Chairman, for your leadership and to acknowledge this Committee’s contributions to the rich bipartisan tradition of engaging China. I have found it extremely valuable to work closely with the Committee’s Members, and in particular with the Asia Sub-committee, in advancing U.S. interests vis-à-vis China and the Asia-Pacific region as a whole.

Overall Bilateral Relations

This year marks the 35th anniversary of the establishment of official diplomatic relations between the United States and China. We have made remarkable progress since the era of back-channel messaging and secret trips. The scope of today’s U.S.-China relationship was unimaginable when President Nixon made his historic visit in 1972 to China.

Yet there is still enormous potential for progress in the U.S.-China relationship. Progress that will yield benefits to the citizens of both countries, our neighbors, and the world. To realize this progress and these benefits, we seek to ensure that the relationship is not defined by strategic rivalry, but by fair and healthy competition, by practical cooperation on priority issues, and by constructive management of our differences and disagreements. Where interests overlap, we will seek to expand cooperation with China. These areas include economic prosperity, a denuclearized Korean Peninsula, peaceful resolution of the Iranian nuclear issue, and a reduction in the emission of greenhouse gases. Where they diverge – and we have significant and well-known areas of disagreement – we will work to ensure that our differences are constructively managed.

Mr. Chairman, there are those who argue that cold war-like rivalry is inevitable and that the United States and China are condemned to a zero-sum struggle for supremacy, if not conflict. I reject such mechanistic thinking. As anyone who has served in government can tell you, this deterministic analysis overlooks the role of leaders who have the ability to set policy and to shape relationships. It gives short shrift to the fact that our two economies are becoming increasingly intertwined, which increases each side’s stake in the success of the other. It undervalues the fact that leaders in Washington and Beijing are fully cognizant of the risk of unintended strategic rivalry between an emerging power and an established power and have agreed to take deliberate actions to prevent such an outcome. And it ignores the reality of the past 35 years – that, in spite of our differences, U.S.-China relations have steadily grown deeper and stronger – and in doing so, we have built a very resilient relationship.

We view China’s economic growth as complementary to the region’s prosperity, and China’s expanded role in the region can be complementary to the sustained U.S. strategic engagement in the Asia-Pacific. We and our partners in the region want China’s rise to contribute to the stability and continued development of the region. As President Obama and Secretary Kerry have made very clear, we do not seek to contain China; to the contrary, we welcome the emergence of a stable, peaceful, and prosperous China. We believe all countries, and particularly emerging powers like China, should recognize the self-benefit of upholding basic rules and norms on which the international system is built; these are rules and norms which China has participated in formulating and shaping, and they are rules and norms that it continues to benefit from. In this context, we are encouraging China to exercise restraint in dealing with its neighbors and show respect for universal values and international law both at home and abroad.

A key element of our approach to the Asia-Pacific region, often called the rebalance, is strengthening America’s alliances and partnerships in the region. This contributes directly to the stable security environment that has underpinned the region’s – and China’s – dramatic economic growth and development.

A second element is working to build up regional institutions in order to uphold the international rules-based system and create platforms for the countries and leaders to work on priority strategic, economic, and other issues. These institutions help develop habits of cooperation and promote respect for the interests of all parties.

A third key element has been expanding and deepening our relationships with important emerging countries such as China, including through regular and high-level dialogue.

In just two weeks, our countries will hold the sixth round of the U.S.-China Strategic and Economic Dialogue – the “S&ED” – in Beijing. This annual dialogue is unique in its level and scope. It is led on the U.S. side by Secretaries Kerry and Lew and brings a number of Cabinet-level and other senior U.S. government officials together with their Chinese counterparts to work on the major issues facing us. The breadth of the agenda in the two tracks – strategic and economic – reflects the breadth of modern U.S.-China relations. The S&ED is an important vehicle for making progress in the pursuit of a cooperative and constructive relationship; for building a “new model” that disproves the thesis that the United States and China are somehow destined for strategic rivalry and confrontation.

The S&ED is an important forum for the United States and China to take stock of and set goals for the bilateral relationship, to review regional and international developments and explain our respective policies, to coordinate and seek practical areas of cooperation on important issues of mutual interest, and to constructively manage areas of difference through candid, high-level discussions.

Let me preview of some of the topics for upcoming discussions at this year’s S&ED:

  • We will exchange views and explore prospects for progress on regional challenges, including Sudan, Afghanistan, Iran, North Korea, Ukraine, Iraq, and maritime disputes in the South and East China Seas;
  • The world’s two largest economies will work on strengthening the global economic recovery;
  • The world’s two biggest energy consumers and carbon emitters will work on combating climate change, and expand cooperation on clean energy;
  • We will discuss global challenges ranging from cyber security to counterterrorism to wildlife trafficking, and the United States will raise our concerns over human rights;
  • Secretary Kerry will co-chair the annual U.S.-China High-Level Consultation on People-to-People Exchange, which supports exchange programs that build the foundation for mutual understanding and trust;
  • And Deputy Secretary of State Bill Burns and his Chinese counterpart will hold the U.S.-China Strategic Security Dialogue (SSD), our highest-ranking joint civilian-military exchange with China, where we will conduct frank discussions on some of the most sensitive strategic issues in the relationship.

The S&ED and our numerous other dialogues and official exchanges with the Chinese each year reflect the importance we attach to managing this relationship. This level and pace of engagement show the commitment of both sides to producing tangible benefits for our two peoples, the Asia-Pacific region, and the global community.

The United States and China have a vital stake in each other’s success. That is why we maintain an intensive schedule of engagement; President Obama and President Xi met in Sunnylands, California, a year ago and have met twice more since then. The President plans to visit Beijing in November when China hosts APEC. Secretary Kerry, as well as numerous Cabinet and sub-Cabinet officials, have visited China already in 2014 and have met with Chinese counterparts in the United States or at international fora.

We work with China in virtually all important international arenas, including the UN, the G20, the East Asia Summit, and APEC where we are cooperating closely on regulatory transparency, supply chain efficiencies, promoting clean and renewable energy, cross-border education, and combatting corruption and bribery. Our relationship touches on nearly every regional and global issue, and, as such, requires sustained, high-level attention. Moreover, few of these issues can be effectively addressed if China and the United States do not cooperate.

Economic Relations

Economic issues play a central role in the U.S.-China relationship. China’s economic success has added to our growth and increased the purchasing power of consumers in the United States. Our two-way trade has almost quadrupled since China joined the WTO in late 2001. While the long-standing imbalance in that trade remains troubling, China is now one of the fastest growing U.S. export markets. In fact, U.S. exports to China grew by more than 90 percent between 2007 and 2013. In our bilateral engagements, we are encouraging economic reforms within China to ensure not only that its economic behavior is sustainable on its own terms, but that it contributes to strong, sustainable and balanced growth of the global economy. This includes re-orienting its economy away from a development model reliant on exports and credit-fueled investment in real estate and infrastructure to one that increases consumer spending and contributes to global demand. Central to this goal has been urging China to move toward a market-determined exchange rate. We are also addressing sources of friction in our bilateral relationship by pressing China to change a range of discriminatory policies and practices that harm U.S. companies and workers and that undermine incentives to innovate. These include subsidies that tilt the competitive playing field in favor of Chinese national champions, policies that pressure companies to hand over intellectual property as a condition for access to the Chinese market, and export credits that unfairly advantage Chinese companies in third markets. U.S. businesses have investments totaling over $50 billion. And from 2012 to 2013, Chinese direct investment flows into the United States more than doubled, according to private sector figures, and now contribute to thousands of jobs here. Our ongoing bilateral investment treaty negotiations hold the potential for even more mutually beneficial economic ties.

Even as we increase trade and investment, we will continue insisting on tangible progress in other economic areas that matter to the United States. These include:

  • China continuing to move toward a market-determined exchange rate;
  • negotiating a Bilateral Investment Treaty;
  • increasing access to Chinese markets for U.S. businesses;
  • developing a more transparent regulatory regime;
  • ending industrial policies that favor state-owned enterprises and national champions and seek to disadvantage foreign companies and their products;
  • ending forced technology transfer; and
  • addressing U.S. concerns over the theft of intellectual property and trade secrets, including government-sponsored, cyber-enabled theft for the purpose of giving Chinese companies a competitive advantage.

We will also continue to encourage greater Chinese integration into the rules-based international economic and trading system, in order to create a level playing field

for domestic and foreign companies operating in its and other markets. Over the last few months, China’s leaders have announced plans for sweeping reforms that, if realized, could go a long way in moving China’s economy toward market principles. We are encouraged that these announced reforms would potentially give the market a greater role in the economy, and we are keenly interested to see such reforms put into practice. I believe we can do much to work with China as it transitions to a consumption-driven, market-oriented growth model that would benefit both our economies.

Military-to-Military Relations

On the military side of the U.S.-China relationship, we are committed to building a sustained and substantive military-to-military relationship that focuses on identifying concrete, practical areas of cooperation and reducing risk. This includes not only deepening the use of institutionalized dialogue mechanisms, including senior defense participation at the SSD and S&ED, but also inviting the Chinese to join regional cooperative exercises and expanding talks with the Chinese military about operational safety in the region. For the first time this year, China will participate in RIMPAC June 26-August 1 in Hawaii.

We also aim to continue high-level exchanges between our militaries. Recent exchanges have included visits to China by Secretary Hagel in April and General Odierno in February, and a visit to the United States by Chief of the General Staff General Fang Fenghui in May.

At the same time, we will continue to carefully monitor China’s military developments and encourage China to exhibit greater transparency with respect to its military spending and modernization. This will help countries better understand the motivations of the People’s Liberation Army. We continue to encourage China to use its military capabilities in a manner conducive to the maintenance of peace and stability in the Asia-Pacific region.

Global and Regional Issues

As the largest energy consumers, greenhouse gas emitters, and renewable energy producers, the United States and China share common interests, challenges and responsibilities. These are issues that relate directly to our economic and national security. Cooperation on climate change, energy, and environmental protection is more critical than ever and is an important area of focus in the U.S.-China bilateral relationship.

Through broad dialogues such as the Ten-Year Framework for Energy and Environment Cooperation and the S&ED, over the last year we have been able to produce new and expanded commitments to cooperation on climate change, energy, and the environment. During Secretary Kerry’s February trip to Beijing, he announced implementation plans for each of the five initiatives under the Climate Change Working Group as well as a new enhanced policy dialogue on domestic and international policies to address climate change that will be held on the margins of the upcoming S&ED.

China is a vital partner on some of the world’s most pressing proliferation challenges, including the DPRK and Iran. The United States and China agree on the importance and urgency of achieving a denuclearized, stable, and prosperous Korean Peninsula. While differences remain between us on some of the tactics, we coordinate closely and consult intensively on how to advance these shared goals. The result has been a tightened web of sanctions targeting North Korea’s nuclear, ballistic missile, and proliferation efforts. China has also strengthened its own sanctions enforcement, which we welcome, though it could do more to prevent North Korea from engaging in proliferation activities. Indeed, North Korea remains in flagrant violation of the UN Security Council resolutions that the United States and China approved and support. So we are urging China to make greater use of its unique leverage with the DPRK to produce concrete signs that the DPRK leader has come to the realization that his only viable path forward is denuclearization.

On Iran, the United States and China share the goal of preventing Iran from acquiring a nuclear weapon and are working together within the P5+1 negotiations with Iran toward that goal. Through our frequent and high-level engagement, we will continue to press China to honor its commitments, in particular those related to its imports of Iranian oil and enforcement of UN sanctions, in furtherance of reaching a comprehensive and long-term solution to the Iran nuclear issue.

Managing Differences

In the Asia-Pacific region, Beijing’s neighbors are understandably alarmed by China’s increasingly coercive efforts to assert and enforce its claims in the South China and East China Seas. A pattern of unilateral Chinese actions in sensitive and disputed areas is raising tensions and damaging China’s international standing. Moreover, some of China’s actions are directed at U.S. treaty allies. The United States has important interests at stake in these seas: freedom of navigation and overflight, unimpeded lawful commerce, respect for international law, and the peaceful management of disputes. We apply the same principles to the behavior of all claimants involved, not only to China. China – as a strong and rising power – should hold itself to a high standard of behavior; to willfully disregard diplomatic and other peaceful ways of dealing with disagreements and disputes in favor of economic or physical coercion is destabilizing and dangerous.

The United States does not take sides on the sovereignty questions underlying the territorial disputes in the South and East China Seas, but we have an interest in the behavior of states in their management or resolution of these disputes. We want countries, including China, to manage or settle claims through peaceful, diplomatic means. For example, the Philippines and Indonesia have just done so in connection with their EEZ boundary. Disputes can also be addressed through third-party dispute resolution processes. Where parties’ rights under treaties may be affected, some treaties provide for third-party dispute settlement, as is the case of the Law of the Sea Convention, an avenue pursued by the Philippines in an arbitration with China currently being considered by an Arbitral Tribunal constituted under that treaty. The United States and the international community oppose the use or the threat of force to try to advance a claim, and view such actions as having no effect in strengthening the legitimacy of China’s claims. These issues should be decided on the basis of the merits of China’s and other claimants’ legal claims and adherence to international law and norms, not the strength of their militaries and law enforcement ships or the size of their economies.

Another area where we believe China’s actions run counter to important universal principles is the worsening human rights situation in China. Just this month, China conducted a harsh crackdown on commemorations of the 25th anniversary of Tiananmen Square. China’s actions included the detention, harassment and arrests of journalists, lawyers, and activists. Top U.S. officials raise our concerns with Chinese leaders on a regular basis, and, as we have in every previous round, Secretary Kerry plans to raise human rights at this year’s S&ED. We express concern about the Chinese government’s censorship of the media and Internet. We push for the release of all political prisoners, including but not limited to prominent figures like Liu Xiaobo. We urge China to address the policies in Tibetan areas that threaten the distinct religious, cultural, and linguistic identity of the Tibetan people. Instability and violence are on the increase in the Xinjiang Uighur Autonomous Region. As we unequivocally condemn the acts of terrorism and violence, we also urge China to take steps to reduce tensions and reform counterproductive policies that stoke discontent and restrict peaceful expression and religious freedom.

Conclusion

Clearly, a wide-ranging and complex relationship such as ours with China comes with challenges. Some degree of friction is inevitable. But an essential tool for managing and resolving differences is open and extensive communications between our two countries – at senior and working levels of government, military to military, through local governments and organizations, between our business communities, and at the grassroots level.

We are now reflecting on the considerable progress attained in 35 years of bilateral relations. One key lesson is that to ensure that our relationship grows and matures, we need to build up the links among our two peoples. People-to-people exchanges are essential to enhancing mutual understanding and furthering U.S. strategic and economic goals. To that end, the United States in 2013 received 1.8 million Chinese visitors who collectively spent $9.8 billion on goods and services in our economy. Our State Department personnel work hard to facilitate growing Chinese demand for international travel by maintaining average visa wait-times under five days over the past two years.

Education also plays an important role fostering mutual understanding. In 2013, we had 235,000 students from China studying in the United States, more than from any other country, and the United States aspires to increase the number of American students studying in China and learning Mandarin through the 100,000 Strong Initiative. In March, PRC First Lady Peng Liyuan welcomed First Lady Michelle Obama to China where together they met with U.S. and Chinese students and faculty and promoted the value of study abroad and educational exchange.

We are also working with groups like the Sister Cities International and the U.S.-China Governors Forum. These programs help by encouraging and supporting cities and states to deepen their cultural or commercial ties with Chinese counterparts. In the last year alone, we have supported numerous visits of governors and state delegations and helped them to find opportunities to deepen their involvement and links to China.

The Department works closely with the United States Chamber of Commerce, AmCham China, the U.S.-China Business Council, and other business groups to support key priorities for U.S. companies doing business in China and to promote – greater Chinese investment in the United States. In partnership and consultation with those organizations, we have encouraged the Chinese government to eliminate investment restrictions, strengthen IPR protection, increase regulatory transparency, and establish a level playing field for all companies in China.

In conclusion, let me paraphrase what President Obama said earlier this year when he met with Chinese President Xi at the Nuclear Security Summit in The Hague. The U.S.-China relationship has made great strides over these past several decades, and both sides are committed to building a new model of relations between our countries defined by expanded cooperation and constructive management of differences.

Mr. Chairman, I thank you for the opportunity to appear before you today to discuss U.S.-China relations. I look forward to answering any questions you and others from the Committee may have.