The Strategic & Economic Dialogue / Consultation on People-to-People Exchange Joint Press Availability

Press Availability
John Kerry
Secretary of State
Secretary of the Treasury Jacob Lew
Ben Franklin Room
Washington, DC
June 24, 2015

MR KIRBY: Good afternoon, everybody. Since Secretary Kerry and Secretary Lew already made statements closing out the Strategic & Economic Dialogue, there won’t be opening statements for this media portion of the day. So we’ll go -- Well, you don’t have to do an opening statement, sir. So we’re going to go straight to questions. The first question will be to Andrea Mitchell from NBC News.

QUESTION: Thank you very much, Admiral Kirby.

Mr. Secretary, I first wanted to ask you about cyber security. You said that there were frank discussions and that you had serious concerns, yet Councilor Yang in his response said that the United States should proceed with caution and should stick to the facts. I’m wondering whether you got a lot of pushback or made any progress given the seriousness of the intrusion, as was testified to on Capitol Hill only today, which may have involved as many as 32 million Americans, some of whom in very sensitive security positions.

Secondly, I wanted to ask you about the revelations that the U.S. spied on three sitting French presidents, including President Hollande, and how this might affect the overall U.S.-French relationship, especially going into these closing talks on the very important Iran negotiations on which France is a key player. How will it affect that relationship, and most importantly given the hard line that the ayatollah has taken only in the last 24 hours on key issues that everyone thought had been agreed to back in March and early April? Thank you.

SECRETARY KERRY: Well, first on the issue of cyber and China, no, I think it’s fair to say there was not a direct kind of confrontational pushback. There was an honest discussion about – without accusations, without any finger-pointing – about the problem of cyber theft and whether or not it was sanctioned by government or whether it was hackers and individuals that the government has the ability to prosecute.

What we did was make it crystal clear that this is not acceptable and that we need to work through how all countries are going to behave, but particularly how we’re going to work this out in terms of the bilateral relationship. So I’m not going to mention anything particular about the OPM incident because it’s still under FBI investigation at this moment in time, and we have not come out with specific statements from the government.

But on the broader issue of cyber security, China also has a very clear interest in making certain that everybody is behaving by a certain set of standards. And President Obama made that very clear in the meeting that we had at the White House this afternoon. So what we want to do is bridge the differences now, and that’s what we set out to do in the conversations that we had today.

There are common international norms of behavior that are anticipatable by nations. We need to work together in order to define those and then live by them. And I think that that message was clearly delivered and received, and hopefully, that work will begin in earnest very, very quickly.

With respect to the issue of WikiLeaks, let me just be very, very clear: I know that President Obama talked to President Hollande and made it clear we are not targeting President Hollande; we will not target friends like President Hollande; and we don’t conduct any foreign intelligence surveillance activities unless there is some very specific and validated national security purpose, which I don’t know of in this instance.

So I’m saying clearly the French are indispensable partners in so many ways, and not the least of which is helping to work with us as a P5+1 member. I have a terrific relationship with my counterpart, Foreign Minister Francois – Foreign Minister Laurent Fabius. And the relationship between our two countries continues to get more productive and deeper. And so I can absolutely guarantee you there is no surveillance against nor is there any targeting of President Hollande or of anybody that I know of within the French Government.

And I think with respect to the supreme leader’s comments and tweets and other things of late, this has been something that’s been going on throughout the negotiation. It’s not new. And what we have always made clear is that we’re not going to be guided by or conditioned by or affected by or deterred by some tweet that is for public consumption or for domestic political consumption. What matters to us is what is agreed upon within the four corners of a document, and that is what is yet to be determined. So it may be that the Iranians will not fill out the full measure of what was agreed on in Lausanne, in which case there will not be an agreement.

And I have consistently said that this will be determined in the last days by whether or not the outstanding issues that we’ve been very clear about are, in fact, addressed. If they are not addressed, there won’t be a deal. And we’ve been very, very clear that we’re not going to negotiate in public. I am not tweeting. I am not making speeches, nor is President Obama. We are committed to going to Vienna and engaging, and I will be leaving on Friday for those discussions. And I look forward to finding out whether or not we will give the full-throated definition that this effort deserves so that we have an agreement that is not just any agreement but the agreement that the world deserves and that is needed in order to guarantee that this is a peaceful program. It’s that simple, and the proof will lie in the pudding over the course of the next days.

QUESTION: And you think the French will not carry any residual resentment, that they’ve accepted this explanation?

SECRETARY KERRY: Look, I’m not – this is an old WikiLeaks document. I don’t even know what the date is specifically that it starts at or refers too. I’m just telling you point blank we are not and will not target the conversations of any friendly president, anybody that I know of, and certainly not President Hollande or the French ministry. That is not happening.

MODERATOR: Thank you. Our second question comes from Jason Lange with Reuters.

QUESTION: Good afternoon. Secretary Lew, regarding the commitments you mentioned by the Chinese in the areas of currency intervention and financial reform, first I wanted to ask if you could provide specifics on – or details on how specifically it was laid out or agreed upon what constitutes disorderly market conditions and specifics on how the U.S. financial services firms and investors would gain more access to China.

And secondly, I wanted to ask you: Did you express concern to the Chinese that a slowing Chinese economy is slowing the pace of economic reform in that country? Thank you.

SECRETARY LEW: I think if you look at the exchange rate issue over the course of the last number of years, we’ve made enormous progress over the last year and a half. We went from a place where China essentially denied that it was intervening, to last year making an initial commitment that they’ve now lived by by not intervening, to a much tougher commitment that reflects what we all had in mind but they weren’t willing to say last year. I think that that is very significant, as is their declaration that they are prepared to be more transparent and do what other countries that are major currencies do in terms of the transparency of their monetary policy and their interventions.

But I also made clear that the real test – the real test is going to be, when there’s upwards pressure on the RMB, will China refrain from intervening? And that is still an open issue. So I don’t think we’ve said either privately or publicly that everything is done. They’ve made progress. I think it’s important that we acknowledge that progress, but there’s still work to be done. They still need to continue to work towards having a fully market-determined exchange rate. And they need to demonstrate when there’s upward pressure that they refrain from intervention.

You asked about market access as well. I think there are a number of areas where we discussed market access and made progress. Certainly in the area of financial services, we had extensive discussions about the ability of U.S. firms to go into China and do business on a more equal basis. We also discussed the Bilateral Investment Treaty and the need for there to be more progress made in order for that to become something that can further advance the economic relationship between our two countries.

I think that the question that you ask about the slowing of China’s economy and the world economy – all of our conversations begin with a discussion of where’s our economy, where’s your economy, where’s the global economy. That’s the world that we live in with economic policy. And I think they have been very candid about the fact that their economy has slowed and that they’re managing a transition to a more consumer-driven economy. And that is going to mean a slower but a more sustainable growth rate.

We obviously continue to view time in a slightly different way. We think there’s an urgency to move quickly on some reforms that they, for understandable reasons, are concerned about disruption if they move too quickly. What we heard, though, in all of the conversations was a continued commitment to a set of reforms that is really quite substantial. And I heard no backing away from that commitment. And I think it’s important to note that in our engagements, when we say what we think China needs to do, if you look at the list of things that they’ve set forth as their objectives and the things that we say that we think that they need to do, the lists are entirely overlapping.

The issues come down to how quickly do you move and how clear is it that you’re moving. And I think these exchanges that we have are very useful. It gives us more of an understanding of the pressures that they face. It also gives them an understanding of how important it is to the global economy for them to succeed, and that we’re rooting for their success. It is good for the United States and good for the global economy if these reforms and this economic transition is successful.

MR KIRBY: Next question will come from Yuanan Zhang from Caixin Media.

QUESTION: Good afternoon, Mr. Secretary. In the opening session yesterday, Vice Premier Liu Yandong brought a message from President Xi to President Obama. I’m wondering, in – after the two days of discussion, have the U.S. and China identified the bottom lines of the core interests of each other’s issues and found a way to accommodate, especially in the strategic areas, including maritime issues?

Secondly, I’m wondering, around the same time last year, some American scholars pointed out that there is a downward spiral in the U.S. and China relationships. Have you seen this trend been reversed? Thank you.

SECRETARY KERRY: I think over the course of the two and a half days of discussions, or two-plus days with – beginning with a dinner, a very candid discussion on both tracks at Mount Vernon, and then the subsequent discussions that we’ve had with lots of time for personal engagement as well as the more formal meetings, I think throughout that, both sides clearly identified core interests. Now we have said again and again that one of our core interests is a stable and prosperous China that is contributing to global affairs and global structure. That’s a core interest of the United States. China obviously has core interests with respect to its need to grow, to move its economy, and has defined other core interests in terms of sovereignty interests in the region. We, I don’t think, have any lack of clarity on either side about each other’s core interests.

But what makes this such an important discussion is, in fact, an answer to the second part of your question. I don’t think you heard in the four people who were sitting here a little while ago any scintilla, not one tiny piece of an indication of a downward spiral. I think what you saw was an ascending relationship with great clarity about the things on which we’re going to cooperate. I think State Councilor Yang mentioned some 100 different things on which there were agreement, even as there is some disagreement about how to approach one or two or three issues. There’s no question about that.

But as I said, the sign of a mature relationship is one that knows how to manage those differences even as you find the ability to work on those issues of common interest. The fact that China and the United States are cooperating on Afghanistan, cooperating on the Iran nuclear talks, cooperating on the possibility of reconciliation in Afghanistan, cooperating with respect to development of health capacity in Africa and the response to Ebola, cooperating on coast guard, on oceans, on cyber, on countless different issues that we have talked about here today is really quite remarkable. And I think that whatever scholar – I didn’t see this scholarly take on the downward spiral, but I know that in Washington, D.C. and in the course of public affairs today, it’s not hard to find somebody who will see the negative or the downside of any given issue.

The fact is that I would say that we are anticipating an historic visit by the president of China here. We look forward to continuing to develop the issues that we laid out today on which there is huge increase cooperation. And even as we differ on an issue here or there, I sense that what you heard today was two very powerful nations, the two largest economies of the world, two countries with different cultures and different systems both committed to trying to work together to find a cooperative path on any number of different issues, and that is clearly a relationship that is in the developing process, if not the ascendency.

SECRETARY LEW: I have to agree. On the economic issues, we have an ability to raise the most difficult issues and have frank and candid exchanges on the issues that used to be issues that just got put to the side. We now have serious progress being made. And it’s a relationship that will remain a complicated one because we’re the two largest economies in the world. We have many overlapping interests. We have some areas where we don’t have common interests. We have to separate the issues out, work together where we can, have clear communication where we have different interests, and the ability to do that only gets stronger with each engagement.

So having now – this is the sixth year or seventh year that I’ve done Strategic & Economic Dialogues – clearly, a much higher level of engagement now than when we started. And I think that doesn’t mean that we don’t have a lot of work to do. Whoever is sitting here at any point will have a lot of work to do. The question is: Do you have the ability to make progress? And we have a relationship both between our countries and at a working level where we can and do make progress.

MODERATOR: (In progress) question comes from Esther Zou from CCTV.

QUESTION: Thank you, Zou Yun with China Central TV, CCTV. So my question is a little bit more general. Secretary Lew, so after two days of candid question – talks and discussions with Chinese senior officials, what in your mind are the biggest achievements on the economic track front? And also, how do you see the progress of this year’s S&ED will pave the way for Chinese President Xi Jinping’s state visit to the United States in September this year? Thank you.

SECRETARY LEW: I think that on the economic side, the three areas that I think are the most significant – and there were many areas of accomplishment, but I’m just going to address three – were the exchange rate issues that I’ve already discussed; the detailed discussions we had regarding market access and the level of engagement to make progress as we go forward on the BIT; and the discussions we had on the area of the information and communication technology, ICT issues. I think that in a sense, the entire S&ED was preparation for the leaders meeting in the sense that it was in everyone’s mind that the work that we didn’t complete we needed to push down the road, because when our leaders meet, those issues have to be farther – further developed. On exchange rate, I think we made the kind of progress for today that was good, but we’re going to keep working for the kind of understanding that gives even more comfort.

On the market issues, there’s a – there’s a long process in negotiating a bilateral investment treaty. It’s – in baseball terms, if there are nine innings, we’re in the first few innings. There’s going to be many, many more rounds of discussion. So there’s a lot of work to be done. But you have to get started. You have to have clarity as to what the objectives are, what the obstacles are. And where the objectives are strong enough, there is a will to overcome obstacles. That’s what we found last year when we reached agreement on an information technology agreement. It, for many, many months, maybe for years, seemed to be deadlocked and unable to reach conclusion. But because we kept engaging, we, between the United States and China, have an information technology agreement that now should be the basis for a broader agreement amongst nations. The BIT – we need to make a lot of progress. We need to have a new exchange of negative lists in September. And I think that the fact that there’s a leaders’ meeting happening will focus all of the efforts to make progress for that.

On the ICT issues, we’ve been very clear – when I was in Beijing a couple of months ago, I was very direct and said that if that issue didn’t get resolved, it was going to be an obstacle as we tried to prepare for a good leaders’ meeting. I think they heard loud and clear how big of an issue it was. I think they took a look at the law that they were working on and understood that it needed more work, that it was not accomplishing a goal that was going to be helpful. And moving beyond that and to suspend it, to not have it be an active issue, is significant.

But I think that the thing about the S&ED and leaders’ meetings alike is it’s a mistake to think of any one of them as the final destination, as the final discussion. Because as soon as we get through the next leaders’ meeting, there’ll be preparations for the next S&ED, and that will be preparing for the next leaders’ meeting. I think we have a rhythm now of making progress through each cycle so that the relationship can get stronger and we can do things that are in the interests of both the American people and the Chinese people. And I think that process is a very important one. It’s why so many Chinese Government officials came and spent two and a half days here engaged with their counterparts, and it’s why next year, we will go to Beijing and have similar discussions.

So I think we did think of this S&ED as an important one because there are so many issues, but I’m sure we’ll think that about the next one as well.

MR KIRBY: That will conclude today’s press conference. Thank you so much.