MR KIRBY: Good afternoon, everybody. Thanks for coming today. I’ve got a couple of special briefers to start us off with today. I’d like to welcome Under Secretary of State for Economic Growth, Energy, and Environment Cathy Novelli, who I think you all know; as well as our Assistant Secretary of State for East Asian and Pacific Affairs Danny Russel, who I also think you all know very well. They’re going to open up today’s briefing with some comments and a little bit of a preview about the Strategic and Economic Dialogue that the Secretary will be participating in early next week in Beijing, and then they’ll stay around, take a couple of questions, and then we’ll get to the daily briefing after that.

So with that, I’m going to first introduce Assistant Secretary of State Russel.

ASSISTANT SECRETARY RUSSEL: Thank you, John. Thank you, Cathy. I’ll try to provide a little context on what will be our eighth Strategic and Economic Dialogue taking place in Beijing, June 5th through 7th. The Strategic Track, again, will be led by Secretary Kerry. The Economic Track will be led by Secretary of the Treasury Jack Lew. Also, say a word or two about some of the associated dialogues, the Strategic Security Dialogue and also the Consultation on People-to-People Exchange, and then Under Secretary Novelli will cover the economic and the environmental parts of the equation.

So the S&ED really is the flagship dialogue or annual mechanism for connecting the work of our two governments, and over the last eight years we’ve used it to do two things: one, to set the goals and the direction of the relationship; but secondly, to help us work through and absorb some of the shocks to the system by allowing our teams to talk through, to think through, and to work through real problem areas.

The S&ED is one of the instruments that’s helped us put a floor under the U.S.-China relationship capable of absorbing stress, but also serving as a foundation for practical progress. It also – because it’s an annual high-level meeting – serves as a kind of action forcer in terms – or a deadline to galvanize our bureaucracies to reach agreement on things that they’ve been discussing. It’s helped to germinate some new areas of collaboration and to tee up accomplishments that can be brought across the finish line when our two presidents meet.

There is, in my view, huge value in this institutional mechanism. It brings together on a regular basis, predictable basis, not only two cabinet secretaries from the U.S. side, but representatives of multiple agencies, leading staffers covering a broad spectrum of our interests. Specifically, the Strategic Track of the S&ED, I think, has demonstrably contributed to real accomplishments in the U.S.-China relationship over the last eight years, one of the most visible examples of that being on climate change. I think it helped foster the cooperation that in the P5+6^[1] led to the Joint Comprehensive Plan of Action with Iran. It is certainly an element behind the cooperation that’s culminated in the toughest-ever sanctions on North Korea. It’s helped us build a improved and stable military-to-military relationship with China; led to cooperation in fighting infectious diseases and pandemics like Ebola; in expanding Chinese support for peacekeeping; and for our cooperation in Afghanistan and other global hotspots.

At the same time, it’s served as a venue that allows us to discuss and in some cases to narrow our differences, and that includes our concerns with Chinese behavior in the South China Sea; our concerns with things like the NGO management law and other forms of restrictions on human rights; our concerns about anti-business discriminatory regulations and the use of cyber to disadvantage our companies. These are all difficult issues. They’re important issues that we address in the S&ED and important parts of our effort to manage, if not resolve, problem areas.

Now, one of the adjunct meetings that go hand in hand with the Strategic Track is what we call the Strategic Security Dialogue, the SSD, which is headed on our side by Deputy Secretary of State Tony Blinken. And it includes representatives from the militaries on both sides, so it’s a civilian-military session. This gives us that integrated venue for communication on some of the thorniest strategic issues that we have to contend with. And as in the past, we expect the SSD will engage candidly, constructively, on issues like maritime behavior, like cyber, like North Korea, and so on.

Concurrent with the S&ED but separate is an important meeting in its own right, the Consultation on People-to-People Exchanges, the CPE. That’s led on our side also by Secretary Kerry. And we have developed programs, we’ve expanded programs through the CPE that directly impact our two countries and our two people. More than 30,000 Chinese, for example, studied here in the United States last year. That’s – I’m sorry, I misspoke – 300,000 Chinese students were in the U.S. and that’s a threefold increase since President Obama took office and constitutes something on the order of a third of all of our international students.

The 1 Million Strong Initiative aims at getting a million Americans to learn Mandarin Chinese, and there’s a variety of other exchanges between young scientists, athletes, artists, and so on.

So the CPE is a major driver of our people-to-people ties, which, after all, are a huge investment in the U.S.-China relationship.

So you don’t need me to tell you how important the U.S.-China relationship is both to addressing global challenges, but also to the welfare and the economic interests of the United States, but I will turn the floor now over to Cathy, Under Secretary Novelli.

UNDER SECRETARY NOVELLI: Thanks, Danny. And just as Danny has said, the S&ED has actually been a very productive and important bilateral forum for a number of the issues that are the economic, the environment issues. And so we have really been able to use these meetings to come together and, in places where we disagree, to try to have frank discussions and resolve those things and also figure out how we can work together. And so I thought I would just take a few minutes to talk about some of the things that maybe aren’t quite always on the front page but are very important in terms of issues that we’re going to discuss.

And the first one is clean energy. The S&ED has a real important opportunity for us to build off of the progress that was made in Paris last December at the COP21 because we’re the world’s two largest emitters of carbon dioxide, but we also accounted for more than half of the record $329 billion in global investment in clean energy in 2015. And so we’re going to actually sit down and talk about how U.S. and Chinese experiences can support China’s power sector reforms. And the reason why this is important is because it’s going to open the way for more market-oriented strategies to increase renewable energy integration into China. We’re also going to talk about a number of key issues impacting the environment, and those are going to range from wildlife trafficking and combatting that to ocean conservation and also to supporting Chinese and American innovators in trying to address a wide array of innovation challenges, including how innovation can help in these areas like wildlife trafficking and ocean conservation.

And you may know that the last S&ED in Washington set in motion President Obama and President Xi’s historic announcement of their commitments mutually to implement near-complete bans on ivory imports, exports, and domestic and commercial trade. And this was widely recognized at the time as a game-changing event in the worldwide effort to stop elephant poaching, and in fact, the price of ivory in China has decreased by half since that announcement.

So what we’re planning to do in the S&ED is to talk about how this is going to actually get implemented. The U.S. is getting ready to roll out its regulations that are going to actually put this ban into effect, and we’re going to talk with the Chinese about how they’re progressing and doing their own regulations as well as talk about how we can work together with third countries who are facing problems of poaching.

We’re also going to talk to them about how we can jointly address the urgent threats our ocean faces from manmade pressures and how we can work together to find solutions to threats like plastic pollution and illegal, unreported, and unregulated fishing. We had a great first session on oceans at our last S&ED, and so we’re going to build on that for this one. And we’re also hoping that we can entice the Chinese to play a more prominent role in the Our Ocean conference that we’re going to be hosting here in September, on September 14th – or 15th and 16th, because that is a very, very important conference in bringing the world together to combat illegal fishing, to combat pollution of the ocean. And we want China to participate since they are a big ocean state.

Another way that we see an opening for greater collaboration is a new dialogue that we’re just starting up, which is going to be on aviation-related issues. And there we’re going to have representatives from seven U.S. agencies who have aviation responsibilities, including ourselves at the State Department, to meet with our Chinese counterparts and their interagency to talk about how we can adapt our national aviation systems to meet the needs of the 21st century. And we have – obviously, in the U.S. we have experiences from the growth of our own commercial aviation system, and we think that talking with Chinese that we can convey what our experiences have been, it can benefit China as it expands its own aviation system. And so we’re hoping that we’ll be able to have some very tangible results of that on a going-forward basis.

Lastly, we’re also going to talk about how we can work to support the science and technology innovations across the board that can provide jobs and improve the quality of life for both of our countries. So we are going to be introducing some of the newest members of our EcoPartnerships program, which is a fantastic program that supports local and state actors in China and the United States who work together to find technical solutions to environmental challenges. This has been going on for several years, and we have a whole new set of EcoPartners that we’ll be announcing.

So we’re going to cover a lot of important ground on energy, environment, and of course, the economic realm. And I think that it speaks to the large relationship that we have. It’s a very large and diverse relationship, and we’re trying to work together where we can agree, because when we agree, we can have great results and be very constructive. So I thank you very much and I think we are going to take some questions.

MR KIRBY: Okay. Matt, we’ll start with you.

QUESTION: So two very brief --

MR KIRBY: Oh, you guys are actually in the hot seats. You’ve got to come up here. (Laughter.)

QUESTION: Just two very brief ones. One as it relates to North Korea, Danny. This concept the Administration has had for years now of strategic patience with the North Koreans, which I guess the Chinese have been on board with and may even have encouraged. I’m just wondering, given the latest missile test even though it failed, if you guys – you and China – think that it’s worthwhile pursuing that.

And then secondly, you mentioned, Cathy, enticing the Chinese to come to the oceans conference. Are they resisting for some reason? And if – even if they’re not, how exactly does one entice China to show up at a conference in Washington?

ASSISTANT SECRETARY RUSSEL: Well, I’ll start on North Korea, Matt. You’re reaching pretty far back into the history of our North Korea policy in the first term to come up with strategic patience. I think that was at the time a badly misunderstood concept. And right now I think the phrase that captures our strategy most succinctly is UN Security Council Resolution 2270.

QUESTION: Strategic – strategic impatience.

ASSISTANT SECRETARY RUSSEL: China is a coauthor of the toughest sanctions ever levied on North Korea, and by its own declaration is determined to implement them fully. One of the things that we will and do talk about, and the S&ED provides a platform for that, is the practical question of how to ensure that the pressure that is built on an international basis on North Korea culminates in the outcomes that we want, which is, as I’ve said, not to bring North Korea to its knees but to its senses. And the outcome that we’re looking for is North Korean agreement to negotiate the denuclearization of the Korean Peninsula. That’s not unconditional surrender. That is a reasonable and consistent objective of ours. We have a vastly improved chance of getting there with China’s full cooperation, and we intend to use the S&ED to game out how we can speed up the outcome that we’re both working to achieve.

UNDER SECRETARY NOVELLI: So in answer to your question, China, similar to the U.S., has many different agencies who are responsible for everything that touches the ocean. And in the U.S. we have actually pulled together. We have a presidential task force that pulls all of us together to talk about what is our plan for doing this and how are we going to work together, for example, to deal with the illegal and unregulated fishing. And China has been in a much more stovepiped situation, and that’s why we wanted to start this oceans dialogue. They have participated in a very sort of low level in the last ocean conference, partly because it was sort of a, “Well, are you doing it or am I doing it” type of thing inside their own government. So what we’re hoping is that by having this organized dialogue with them we can pull all their actors at the table the same time all of ours are, and then we’ll be able to kind of map out here’s what we’re going to do in the oceans conference and here’s how you can actually constructively participate and so that we can actually get some organization around that.

MR KIRBY: Elise?

QUESTION: Thanks for doing this. I was wondering if you could – I can’t remember a time that there wasn’t, like, a little bit of tension in advance of one of these S&EDs. And I also think as you talk about the kind of breadth and depth of the relationship, it’s pretty clear that – and I think you’ve said that there’s no issue in the world today in which the U.S. and China aren’t cooperating. But I’m wondering – that we’ve been talking about the tension with China over the South China Sea in recent months, and I’m wondering to what extent does this kind of tension seep in or hang over the discussions? Or do you think that – is there like a kind of gentlemen’s agreement to acknowledge that but put that aside for the type of greater cooperations, or does that tension kind of seep into every little issue where there’s mistrust and acrimony?

ASSISTANT SECRETARY RUSSEL: Well, I’ll give you my experience and then turn to Cathy. I think that one of the real accomplishments of the Obama Administration with regard to China has been the creation of a relationship that can handle both significant friction and global if not galactic-scale cooperation. The indicator of health, I think, in the character of the U.S.-China relationship that we’ve helped to build is the fact that there is so little spillover. So there is no gentlemen’s agreement to pretend that these problem areas don’t exist, nor is there an insurmountable impasse that blocks us from practical cooperation on issues that matter to both our countries and to the world. And getting to that place has been no easy matter, which is why I describe it as a major accomplishment.

We have, just taking the S&ED as an example, in the Strategic Track some small sessions where Secretary Kerry and State Councilor Yang Jiechi can really dig down on the areas where we have some significant friction or significant disagreements and talk through not just the ritualistic exchange of talking points but talk through what we are going to do, what it would take, what it is that really matters and where the problems and the potential for crisis or conflict exist. And that has been one of the secrets of the ability of the U.S. and China to deal with and to manage problem areas without coming to blows and without developing the kind of strategic rivalry that creates an absolute Cold War, zero-sum dynamic.

At the same time as some of the issues that we’ve both mentioned, including most dramatically on climate change, we’ve been able to harness the area of common interest and find ways to work together for mutual benefit and for the benefit of the region and the world more broadly that are independent of the fact that we disagree on problem areas. So what we haven’t done is simply paper over the differences in the name of harmony, nor have we allowed a situation to emerge where we have to stand down on our disagreements over Chinese behavior, for example, on human rights in order to get their cooperation on global issues.

UNDER SECRETARY NOVELLI: And I would just add to that I think that just like we’re a big country and we have a lot of diverse things going on in our country, so does China. And so we are able to engage them on all this diversity and really engage in a constructive way, as Danny said. And we really just have not found – I certainly haven’t found and I lead a number of these dialogues – that there’s any real spillover from the South China Sea type of thing. But instead, it’s a very much of a practical – how do we roll up our sleeves? We’re both interested in protecting our oceans. What do we need to do together?

One of the things, for example, there that we’re working on is sister marine protected areas, so that they have areas that allow their fish to not be fished, and they’re gathering scientific information from it. We have similar ones. How do we kind of exchange our scientific information so we can use that for conservation? And that’s in an area that even touches the ocean. So there’s a lot that goes on that’s constructive.

QUESTION: I don’t know – I’m sorry I missed the top of your remarks, but if you didn’t – and I don’t know if you have that information on you – could you give a little bit of the statistics about the size of the delegation, the amount of cabinet secretaries, how many agencies are represented? That would be really helpful in terms of just showing the kind of breadth and depth of the delegation.

ASSISTANT SECRETARY RUSSEL: Well, we can get you the actual statistics. I think last year 20 U.S. – something on the order of 20 different departments or agencies were represented in one fashion or another. I think, as Cathy mentioned, the Chinese ministries often have a more stovepiped character to their operations. And we find that the great value comes in bringing them together to meet with our agencies and – but we’ll get you some of the stats.

QUESTION: Yeah. That would be helpful. Thanks.

MR KIRBY: (Inaudible.) Arshad.

QUESTION: Yeah. One question on the South China Sea. The president-elect of the Philippines, Mr. Duterte, today was asked about the possibility of bilateral talks with China. And he replied, quote, “We have this pact with the West, but I want everybody to know that we will be charting a course of our own. It will not be dependent on America,” close quote. Are you concerned that a new Philippine government may seek to negotiate bilaterally with the Chinese and make, as it were, a separate peace with them on the broader South China Sea, on the South China Sea issues, and therefore make it harder to pursue the kind of multilateral approach that you’ve talked about?

ASSISTANT SECRETARY RUSSEL: Well, some of the issues and some of the disputes in the South China Seas are multilateral, and that’s not going to change. Some of the issues are, frankly, issues not only among the claimants, including China, but between China and ASEAN, which is made up of 10 members, of which the Philippines is one. And every Philippine government in the last 35 years has been committed to work with and through ASEAN. I’ve never met anybody who suspected that that was going to change in the next administration. Now we’ll, of course, wait until President-elect Duterte is inaugurated, and we’ll have opportunities ourselves to confer with him and with his government.

But there’s never been a problem or resistance on the part of the U.S. to the idea of bilateral talks among the claimants. Some of the claims are such as to involve just two parties, and in that case bilateral talks are perfectly fine. And there is a number of instances in which China and one or another claimant has made some headway in bilateral talks.

What we have affirmed again and again is that bilateral approach, and certainly bilateral talks in which the smaller party is unwilling, aren’t the only avenue to find solutions. And so in addition to the sorts of things that need to be done by all the claimants, in addition to the sorts of things that need to be done with ASEAN, and in addition to the right of any party to avail itself of a legal mechanism, such as arbitration under the Law of the Sea – a right that we certainly respect – there is abundant room for direct talks. And that’s something that we have no problem with whatsoever. But I think that there are any number of issues that can’t be resolved on a bilateral basis, but those that can, we’re all for it.

MR KIRBY: We’ll just take one more. Nike.

QUESTION: Yes. Thank you for doing this. The first question is for Under Secretary Cathy. So you mentioned the breakthrough of last year on ivory trade. So it seems like it’s not a elephant in the room type of issue. Could you please elaborate: What is the goal you would like to – like the United States would like to achieve with China, and what is the status of implementation?

And then the next question is for Assistant Secretary Danny. So one of the big accomplishment over the last seven rounds of S&ED is the MOU on the confidence-building measures, in particular the air-to-air maritime encounter. So could you please give us a sense where we are, and are those procedures under the MOU are implemented? Thank you.

UNDER SECRETARY NOVELLI: Well, so, on the wildlife trafficking, we have three things that we’re working on. First is to stop the killing, stop the poaching; second is to stop the transit; and the third one is to stop the demand. And so the ban on the commercial sale of ivory is the third one, stopping the demand. And as I said, last year we announced that both of us were going to implement regulations that would effectively ban the commercial sale of ivory. Ours are just about ready to be rolled out; Chinese are working on theirs. We’re hoping to get a little more specificity on when those will be actually implemented. We know they’re working very hard on it, however.

And then we are also talking about how can we work together – because we both have presences in Africa and we’re partnering with the countries in Africa who’re trying to stop the poaching – to work with those countries and make sure that we are kind of pooling our energies to work with those countries so that we can actually achieve that piece. And then we’re also working together on the transit piece, which is everything from tracking systems to working with both of our respective private sectors on what they can do to better inspect their cargoes, et cetera.

ASSISTANT SECRETARY RUSSEL: The MOUs that you reference are, I think, illustrative of a real increase in cooperation between the PLA and the Pentagon. And the degree of communication and, in some instances, practical cooperation, whether it’s at the Gulf of Aden and anti-piracy operations or whether it’s China’s participation in exercises like the Rim of the Pacific exercise, further illustrates that.

I would defer to the Pentagon in providing an analysis on the status of the implementation of the two MOUs, but the – I think the question that we’d like to try to answer in the course of the Obama Administration is whether we can’t expand the scope of cooperation and establish broader frameworks beyond what we have with the Navy and with the Air Force.

But the short answer is that, partly as a result of the CBMs and partly as a result of the expanded dialogue between our two militaries, I think there is a strategic stability in U.S.-China relations that didn’t exist when President Obama took office.

MR KIRBY: Thanks, everybody. We’ve got to get our briefers on their way. Appreciate it. Thank you very much.

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[1]  P5+1