Bloomberg, Boao Forum, China - Interview with Stpehen Engle

STEPHEN ENGLE: How have your meetings been at this Boao Forum?

JULIE BISHOP It has been very productive. I had a meeting with Foreign Minister Wang Yi and we talked about the breadth and depth of the Australia-China relationship. We are focussing on the possibility of a free trade agreement, it has been under negotiation for many years and we believe there is now a real impetus, momentum behind a free trade agreement between Australia and China which will complement our already very strong economic relationship. Across a whole range of issues, we had a very fruitful, productive discussion.

STEPHEN ENGLE: How much closer are we to an Australia-China free trade agreement today than we were yesterday or even December, the last time you were in China?

JULIE BISHOP We are much closer. Australia has concluded two other free trade agreements in North Asia – one with Japan and one with South Korea – and I think that has also built some momentum into negotiations between Australia and China. Our Prime Minister is here in Sanya, he's meeting with President Xi Jinping on Friday in Beijing, and I know that a free trade agreement will be a subject of discussion.

STEPHEN ENGLE: I wanted to ask you, how difficult is it to walk that diplomatic tightrope between, as the Prime Minister went to Japan and South Korea and then China, to walk that diplomatic tightrope between the two largest Asian trading partners, Japan and China, and at the same time those two countries have their rivalries?

JULIE BISHOP As we put it, just because we strengthen our friendship or relationship with one country does not mean that it comes at a cost to our friendship, relationship with another country. Both China and Japan are very important relationships for Australia, both very strong trading partners for us. Japan has been in the past Australia's largest trading partner for about 40 years. Now China is our largest trading partner, and we work very well with what we have – different relationships with each country but it is one based on bilateral interests. We work very well with China, we work exceedingly well with Japan, and Australia does not take sides in disputes like the territorial dispute between China and Japan – we don't take sides – we just focus on peace and prosperity, security and stability for our region.

STEPHEN ENGLE: There were some sharp words a few months ago over some of the comments, and also your calling in of the Chinese Ambassador to discuss the claims of this air defence zone over the Senkaku Islands, has that been discussed frankly on this trip?

JULIE BISHOP There is no need. We discussed that issue last year, it was a difference of opinion between Australia and China and we both spoke our minds and then moved on. Our meeting this time has been very productive, very engaged and constructive. We have got a lot of things to achieve. We are going to have another foreign strategic dialogue meeting hopefully in the next couple of weeks, possibly closer to the G20 which is being hosted in Australia. And of course we have APEC which will be hosted here in China. So, Australia and China will be working very closely together on the regional economic agenda as well as the global economic agenda.

STEPHEN ENGLE: What concerns are there if China's [inaudible], it has a new aircraft carrier and new high-tech weaponry as well and there is also allegations [inaudible] about cyber terrorism [inaudible]?

JULIE BISHOP I understand that the United States and China had a cyber dialogue and in fact that is something we want to discuss with China as well. It is all about being transparent and continuing to engage with each other, continuing to talk about what our plans are [inaudible]. We have that relationship with China and I know the United States has that relationship with China. Recently the Secretary of Defence Chuck Hagel visited China's aircraft carrier, so it is that level of cooperation that we must continue to promote and strive for.

STEPHEN ENGLE: How much cooperation has there been as well for the search for the missing Malaysian Airlines aircraft?

JULIE BISHOP This has been an extraordinary outcome of an otherwise deeply tragic event. Our condolences go to the families of those who were on that plane, it is a deeply distressing, anxious time for people. The level of coordination between a number of nations has been nothing short of astonishing. China, Japan, South Korea, the United States, Australia, Malaysia, New Zealand – a whole raft of countries in our region – are working closely together, literally side-by-side. Our aviators, navy personnel are all working together, sharing information and coordinating their efforts and activities.

Recently the Prime Minister of Malaysia, Prime Minister Najib, visited the Pearce Airbase in Western Australia, where much of the search has been coordinated from and I am informed he was very impressed to see people from all these different nations working so closely together in this coordinated humanitarian effort. It is a very powerful example of how countries can work together to achieve, hopefully, an outcome.

STEPHEN ENGLE: Are there lessons to be learnt on how this can be done better? Obviously, more than a month has passed and no aircraft has been found, not that it is anybody's fault, but are there lessons to be learnt from this?

JULIE BISHOP I feel sure that this experience will see much greater cooperation in this kind of field in the future. We are showing, demonstrating, how it can be done and the almost spontaneous level of commitment from countries involved in this MH370 incident has been quite remarkable. Australia is proud to be able to take a coordinating role because of the location of the plane and also the personnel and equipment that we have available. The people that have been coming, and the expertise that has been coming from Britain and further afield – it really has been an extraordinary regional and global effort – and I feel sure that there will be lessons and experiences taken from this and that means in the future we might be better prepared to respond.

STEPHEN ENGLE: Back to the air defence zone, I am just wondering to this day how much has Australia been damaged?

JULIE BISHOP We move on. We disagreed over the way that China announced the air defence identification zone –

STEPHEN ENGLE: [interrupts] But they haven't backed off.

JULIE BISHOP And neither have we.

STEPHEN ENGLE: Was it discussed at length during your private discussion?

JULIE BISHOP Not this time. We discussed at length, we disagreed and we have moved on. That is what good friends can do and we do have a productive relationship with China. It is focussed not just on economic and trade issues, but more broadly, we are agreeing to a student exchange program and we are looking at a cyber dialogue, we are discussing a free trade agreement and there are many areas where Australia and China interests coincide.

STEPHEN ENGLE: On that FTA negotiations, what is still on the table, what are the sticking points?

JULIE BISHOP Well we have had 19 rounds of negotiations since 2005 and I think both sides agree that the 20th round is about time to conclude an agreement –

STEPHEN ENGLE: [interrupts] Look how many round Doha is though and it hasn't gone anywhere.

JULIE BISHOP We intend to achieve more than Doha has and Australia, as I said, has completed two free trade agreements in recent days and so that has given us an idea of the kind of high-quality, comprehensive free trade agreement that is achievable. There are still a number of issues on the table that are to be negotiated.

STEPHEN ENGLE: What is the one sticking point?

JULIE BISHOP I think that on both sides there are issues that we want to determine. As you know these negotiations are confidential, so I am not going to give too much away but it is quite obvious that we will be looking for greater market access for agriculture and China is looking for greater access for investment and these things can be negotiated as we have proven with Japan and South Korea in recent days.

STEPHEN ENGLE: Do you have any reasonable timeframe that you can give me?

JULIE BISHOP We hope that by the time Australia hosts the G20 summit in November, so by the end of the year we are confident we can do a free trade agreement with China. It is ambitious and both sides acknowledge that. When we came into government in September of last year, our Prime Minister set out our hope that we can conclude three free trade agreements with Korea, Japan and China within 12 months and I think we are on our way.