1. The Australian Minister for Foreign Affairs, Alexander Downer, and the
Minister for Defence, Ian McLachlan, the United States Secretary of State,
Madeleine Albright, and Secretary of Defence, William Cohen, met in Sydney
on 30-31 July 1998 to advance further the Australia-U.S. alliance relationship,
and to discuss regional and global issues.

2. Australia and the United States noted that the depth and maturity of the
relationship and the scope of their common agenda underlined the enduring
value and importance of these consultations. They welcomed the opportunity
to exchange views and assessments, and to consider ways of advancing their
common interest in global and regional peace and prosperity, and in the development
of the bilateral relationship. Australia expressed support for continued,
comprehensive U.S. engagement in the Asia Pacific which provides the underpinning
for the security and stability of the region and its return to prosperity.
The United States welcomed the important contribution that Australia's wide-ranging
engagement in the Asia Pacific continues to make to regional security and
stability. Ministers reaffirmed their strong commitment to the 1996 Sydney
Statement, observing that events over the past year had confirmed once again
the special quality of the partnership between the two countries.

3. Ministers focused particularly on two developments with important implications
for regional and global stability and security:

• First, developments in the Asia Pacific, with particular emphasis on
  the Asian financial crisis, including measures to enhance Australia-U.S.
  cooperation to promote a secure and prosperous region; and
• Second, events in South Asia, with particular emphasis on the ramifications
  of India's and Pakistan's nuclear test explosions, and the crucial importance
  of the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) and the
  Comprehensive Nuclear Test Ban Treaty (CTBT) as two global pillars of
  the international nuclear non-proliferation and disarmament regime.

REGIONAL CHALLENGES AND OPPORTUNITIES

4. With profound economic, political and strategic changes underway in the
Asia Pacific region, Australia and the United States emphasised the importance
of practical and well-focused bilateral, regional and global cooperation in
helping the Asia Pacific to meet current and emerging difficulties. The Asian
financial crisis continues to pose major challenges for affected regional
countries, with wider implications for the Asia Pacific and globally. The
two governments expressed confidence that the fundamental regional strengths
which had generated prosperity and stability in the Asia Pacific would provide
the basis for regional recovery over the longer term.

5. Sound macroeconomic policies, stronger and more transparent financial
systems, structural reform and more open markets are the key to restoring
financial stability and confidence in the economic health of countries affected
by the financial crisis. Implementation of economic reform programs supported
by the international financial institutions will continue to have a central
role in helping to restore financial and monetary stability in the region,
and in alleviating the wider social impact of the crisis. The two governments
underlined the importance of social policies which address the burden of the
economic adjustment on the poor and most vulnerable members of affected countries. Australia and the United States expressed strong support for the continued
leadership shown by the International Monetary Fund (IMF), the World Bank
and the Asian Development Bank, in mobilising financial and other assistance
for countries affected by the crisis. Both governments expressed their support
for the on-going efforts of international financial institutions to tailor
their assistance programs to meet the needs of individual countries. Australia
and the United States recognised the important role played by APEC in responding
to the crisis, including in holding the line on free trade and in endorsing
the Manila Framework, which facilitates bilateral assistance to those countries
in the region requiring balance of payments support, as well as the work arising
from the Special Meeting of Finance Ministers and Central Bank Governors held
in Washington in April 1998.

6. Australia and the United States agreed that international assistance to
support economic reform should continue to be based on progress in implementing
economic adjustment goals. Australia strongly supported the efforts
of the U.S. administration to obtain Congressional approval for contributing
to the IMF's Eleventh General Quota Increase. The United States welcomed Australia's
contribution to the management of the international response to the economic
crisis, and its role as a source of support to countries affected by the economic
downturn. The two governments praised Thailand and the Republic of
Korea on the progress made thus far in stabilising their economies and implementing
appropriate financial sector reforms.

7. Recent events have underscored the significant influence which Indonesia
has on the stability, security and prosperity of South East Asia and the wider
region. Australia and the United States emphasised their conviction that Indonesia
was in transition to a new era and both sides expressed strong support for
the Indonesian Government's commitment to political reform and the staging
of early elections consistent with the aspirations of all Indonesians. Both sides urged all parties in Indonesia to continue to give priority
to an orderly and peaceful transition. The two governments expressed
their common resolve to continue to help Indonesia overcome its pressing economic
difficulties, including increased humanitarian assistance, as Indonesia proceeds
with its commitment to implementing economic reform in close cooperation with
the IMF. Both governments urged all parties to exercise utmost restraint in
pursuit of a lasting solution to the future of East Timor.

8. Strong and confident bilateral and regional relationships are the foundation
of the Asia Pacific's efforts to manage the financial crisis and its wider
implications. Australia and the United States undertook to continue to work
closely together, and with others in the region, to help the region overcome
the financial crisis. The two governments welcomed the increased level of
bilateral consultation and exchange of information and assessments on economic
and financial developments in the region, including through key regional and
international institutions, and agreed to maintain this enhanced cooperation
and dialogue. Both sides underlined the importance of promoting good governance
and national institution-building in the Asia Pacific, including implementation
of the program agreed by APEC Finance Ministers, and more broadly in APEC,
through the development of projects aimed at enhancing economic governance
in the region.

9. Australia and the United States resolved to keep their markets open and
called on other countries to do likewise. In this regard, both governments
welcomed the reaffirmation by APEC leaders in November 1997 of their commitment
to implement the Bogor Declaration for free trade and investment in the region
by 2010/2020, and recognised the importance of the preparatory process for
the next World Trade Organisation (WTO) round of multilateral trade negotiations.
The two governments agreed on the imperative for APEC to conclude in November
the Early Voluntary Sectoral Liberalisation initiative approved by APEC leaders
in November 1997 and to press ahead with further improvements in Individual
Action Plans.

10. In a transition period marked by rapid change, effective and dynamic
relationships between the major regional powers are a vital component of the
region's strategic resilience. Australia expressed continued support for the
U.S.-Japan alliance as a central element in the region's security architecture,
and welcomed the recognition by the U.S. and Japanese governments of the importance
in the region of their relationship. Australia and the United States welcomed
the formation of a new administration in Japan and looked to the Government
of Japan to take strong action to restore and strengthen the Japanese economy.
Australia and the United States agreed continued implementation of policies
to advance economic growth in Japan would have significant benefits, both
economic and strategic, for the Asia Pacific region. The United States
and Australia welcomed recent positive developments in relations between Japan
and China, and between Japan and Russia, as important steps in fostering the
Asia Pacific's growing sense of community and cooperative endeavour.

11. Australia and the United States also acknowledged the profound importance
of the U.S.-China relationship to regional security and prosperity. Australia
welcomed the successful visit of President Clinton to China in June-July 1998,
and congratulated the United States and China on recent progress made in their
relationship. Both sides emphasised the essentiality of comprehensive and
practical engagement with China, and of supporting China's development as
a stable, open and prosperous power, and a strong and constructive partner
in the international community. Both governments agreed that a "one-China"
policy best served the region's interest in stability and prosperity.

12. Australia welcomed the continuing U.S. commitment to security and stability
on the Korean peninsula, expressed through the maintenance of the important
U.S.-Republic of Korea (ROK) security relationship, its active participation
in the Four Party peace process, and its leading role in the Korea Peninsula
Energy Development Organisation (KEDO). The United States welcomed Australia's
latest contribution to KEDO. Australia and the United States agreed KEDO has
provided a critical vehicle to avoid nuclear proliferation in North Korea
while promoting confidence building and constructive engagement between the
Democratic People's Republic of Korea (DPRK) and the broader international
community.

13. Australia and the United States emphasised that the further development
of regional multilateral security dialogue would help strengthen the existing
web of mutually supportive regional relationships. The two sides stressed
the importance of the ASEAN Regional Forum (ARF) in promoting and enhancing
security dialogue in the Asia Pacific. Both sides expressed satisfaction with
the ARF's development and emphasised their continued commitment to strengthening
the ARF's work on confidence building measures and to the development of a
preventive diplomacy role for the ARF.

GLOBAL SECURITY AND POLITICAL COOPERATION

14. Australia and the United States reaffirmed their strong conviction that
the spread of weapons of mass destruction, and the delivery systems for such
weapons, pose serious challenges for global and regional security. The two
governments place enduring value on the effective implementation of non-proliferation
and arms control regimes as the foundation of global and regional efforts
to prevent the spread of weapons of mass destruction and to enable their eventual
elimination. The United States and Australia stressed the crucial importance
of the Treaty on the Non-Proliferation of Nuclear Weapons (NPT), the Comprehensive
Nuclear Test Ban Treaty (CTBT), the Chemical Weapons Convention (CWC) and
the Biological Weapons Convention (BWC) as pillars of the global non-proliferation
and disarmament regime. The United States congratulated Australia for its
ratification of the CTBT. Both sides expressed strong support for the
prompt establishment of the CTBT's global verification regime and development
of the Treaty's institutional structure in Vienna, and for the immediate commencement
in the Conference on Disarmament of negotiations on a treaty to ban the production
of fissile material for nuclear weapons or other nuclear explosive devices
(FMCT). Both sides agreed that the FMCT and CTBT would provide important non-proliferation
as well as disarmament benefits. Australia and the United States agreed on
the urgency of the START II Treaty entering into force so that the major nuclear
arsenal reductions provided for in that Treaty could be implemented, and so
as to clear the way for the expeditious conclusion of a START III agreement
between the United States and the Russian Federation.

15. The United States expressed strong support for Australia's proposal to
convene a high level meeting to highlight the political and security imperatives
of concluding, as soon as possible, a draft protocol to strengthen compliance
with the Biological Weapons Convention through the Ad Hoc Group negotiations.
Both governments reaffirmed their shared commitment to an effective global
ban on anti-personnel landmines and agreed to continue to work closely on
this issue, including the negotiation of a transfer ban in the Conference
on Disarmament. They reiterated the importance of effectively targeted international
contributions to humanitarian de-mining and mine victim assistance programs
as a complement to efforts to achieve a global ban. Australia and the United
States look forward to continued dialogue on these and other security issues
at the next Australia-U.S. political-military talks and disarmament consultations.

16. Ministers considered the recent nuclear tests by India and Pakistan a
source of deep and lasting concern, coming at a time when the commitment of
the international community to nuclear non-proliferation and its confidence
in effective progress on nuclear disarmament has never been stronger. These
tests had affected both countries' relationships with the United States and
Australia and had diminished rather than enhanced their security and their
international standing. Australia and the United States pledged their full
support for the benchmarks outlined in the communique issued by the P-5 in
Geneva on 4 June, UNSC Resolution 1172, and the 12 June G-8 Foreign Ministers
communique. They both expressed the strong hope that India and Pakistan would
decide not to take the fateful further step of deploying nuclear armed weapons
systems. We have agreed to continue to work closely together and with others
to prevent an accelerating nuclear and missile arms race in South Asia, to
strengthen the international non-proliferation regime, and to promote reconciliation
and peaceful resolution of differences between India and Pakistan.

17. Australia and the United States emphasised the importance to their national
interests, and the interests of the international community, that Iraq abide
by its international obligations to eliminate its weapons of mass destruction
capability. Australia congratulated the United States on the leadership it
had shown on this protracted issue. The United States expressed its warm appreciation
for Australian Defence Force deployment to the Gulf as part of the U.S.-led
military coalition. Both governments called on Iraq to comply fully with the
UN Security Council resolutions on the declaration, verification and destruction
of its weapons of mass destruction capability. The two sides reaffirmed their
continued commitment to the UN Special Commission's efforts to account for
and destroy Iraq's chemical and biological weapons and long range ballistic
missiles and to the International Atomic Energy Agency's on-going monitoring
and verification activities.

18. Australia and the United States reconfirmed their commitment to the reform
and reinvigoration of the United Nations system to enable it to face the challenges
of the next century. Australia expressed its disappointment that the United
States Administration and Congress had not resolved differences over payment
of UN assessments and expressed concern for the effective functioning of the
UN.

19. The United States and Australia expressed their strong commitment to
effective global action on climate change, noting that an effective global
response to the problem cannot be found through commitments by Annex I countries
alone, and agreed to continue their close cooperation within the Umbrella
Group of countries to develop a satisfactory and cost efficient framework
for international greenhouse gas emissions trading. Both governments noted
the need to ensure that the proposed biosafety protocol to the Convention
on Biological Diversity protects biological diversity while not hindering
international trade. The United States expressed its appreciation for
Australia's hosting of the International Coral Reef Initiative (ICRI) Secretariat
during the past two years. Both sides noted the continued threat to the world's
coral reefs - as recently witnessed by the extensive coral bleaching on the
Great Barrier reef - and agreed to continue actively supporting ICRI. Australia
and the United States reaffirmed their commitment to implement criteria and
indicators for sustainable forest management. The two governments expressed
their commitment to continue to work with regional countries to address fire
and haze problems and to develop sustainable solutions for the underlying
causes of the fires aimed at long term fire prevention. This would include
long term, regionally-oriented solutions.

20. The two governments reaffirmed the importance of close cooperation between
them in efforts to counter international terrorism, including in the context
of the hosting by Australia and the United States respectively of the Sydney
2000 Olympic Games and the Salt Lake City Winter Olympics in 2002.

21. Ministers noted the great value to both Governments of the exchange of
intelligence and assessments in understanding global developments.

DEFENCE COOPERATION AND ARRANGEMENTS

22. Australia and the United States welcomed the fact that defence cooperation
under the alliance remained vibrant and forward-looking. Ministers restated
their view that the several U.S. alliance relationships in the Asia Pacific
and the forward deployment of U.S. forces are a fundamental element of the
security regime in the region. Ministers welcomed the fact that these arrangements
provide a secure foundation on which the region is building a more multifaceted
security regime and seeking to share security responsibilities. Australia
also made it clear that it would continue to support this U.S. posture in
practical ways, including through access to Australian ports and airfields
and providing areas for joint and unilateral training, exercises, and tests
of new capabilities. Ministers expressed satisfaction with the progress being
made on developing training areas in Northern Australia to allow larger-scale
exercises by U.S. ground forces. Ministers also agreed to simplify the procedures
for providing diplomatic clearance for visiting naval vessels to reflect the
importance of ship visits to the relationship.

23. The two governments emphasised that a high degree of interoperability
between their armed forces was a hallmark of the alliance. Ministers stressed
their determination to continue to make interoperability a priority goal,
particularly in view of the challenges posed by rapid technological change,
especially in the information arena. In the light of this outlook and the
lessons from the recent coalition operations in the Gulf, they agreed to renew
the focus of joint training and exercises on this objective; to broaden the
exposure of the Australian Defence Force (ADF) to U.S. theatre commands other
than Pacific Command through personnel exchanges with Central Command and
Atlantic Command; to intensify collaboration between the respective national
force elements exploring the ramifications of the Revolution in Military Affairs
for the conduct of military operations; and to facilitate access to particular
U.S. technologies important to the effectiveness of the ADF and its capacity
to contribute to coalition operations, notably in the submarine, airborne
early warning and control, and combat aircraft fields. Ministers also endorsed
a reciprocal fellowship program involving the National Defence University
in the United States and the Australian Defence College to develop further
mutual understanding of defence cultures.

24. Australia and the United States agreed on the centrality of the `knowledge
edge' to the successful conduct of military operations. Ministers observed
that intelligence was one critical factor in the knowledge edge and that Australia
and the United States continued to enjoy a particularly close and productive
partnership in this area. Ministers also agreed on the importance of emerging
new capabilities for wide-area surveillance. They endorsed a program of cooperative
research and development and joint investigation of the doctrinal implications
of these new capabilities and looked forward to a long-term partnership in
this field. In view of the diversity of collaborative activities, Ministers
endorsed a proposal to establish a new committee to coordinate and promote
cooperation in equipment acquisition, technology and support.

25. The Ministers welcomed the recent 10-year extension of the treaty governing
the Joint Defence Facility at Pine Gap. They noted the planned closure in
1999 of the ballistic missile early warning facility at Nurrungar and expressed
confidence that the closure of the facility and the United States Air Force
withdrawal from Woomera would be managed to the satisfaction of both sides.
They further agreed that it would be appropriate to commemorate the critical
function Nurrungar has performed over some 30 years with a ceremony involving
senior officials from both sides. At the same time, they expressed their pleasure
that Australia-U.S. cooperation in this field would continue in new ways,
including Australian involvement in the management of the Relay Ground Station
for early warning data to be located at Pine Gap, in the data processing operation
in the United States, and in associated research development.

TRADE/ECONOMIC ARRANGEMENTS AND COOPERATION

26. Australia and the United States reaffirmed their commitment to the liberalisation
of global trade and investment as fundamental to global and regional security
and prosperity. They underlined their support for a clear and enforceable
rules-based system governing international trade and investment. Both governments
welcomed the positive outcome of the second WTO Ministerial Conference in
May 1998 which laid the groundwork for a new comprehensive round of multilateral
trade negotiations, including preparation for agricultural negotiations in
1999. Australia welcomed the leadership shown by the United States both through
President Clinton's statement at Geneva on 18 May in support of negotiations
to secure a more open global trading system, and the U.S. offer to host the
third WTO Ministerial Conference in 1999. Australia strongly supported the
continuing efforts of the United States to obtain Fast Track authority for
free trade negotiations. The United States commended Australia's continued
leadership of the Cairns Group of agricultural fair trading nations, and committed
to work cooperatively with the Cairns Group to liberalise further global agricultural
trade in the next round of WTO negotiations, commencing in 1999.

27. As an integral part of maintaining and enhancing their bilateral relationship,
Australia and the United States reaffirmed their commitment to reducing and
eliminating barriers to trade, to expanding bilateral trade and investment
ties, and to working collaboratively to address outstanding issues. The two
sides commended the close and ongoing consultations held over the last year,
highlighted by the bilateral Trade and Investment Framework Agreement (TIFA)
talks in April 1998. Australia and the United States emphasised the importance
of liberalising agricultural trade, including by removing trade-distorting
subsidies. The United States reiterated that it would continue to seek to
avoid using the Export Enhancement Program (EEP) and the Dairy Export Incentive
Program (DEIP) in ways that undermine Australia's interests. Australia and
the United States reiterated their willingness to work constructively on issues
of bilateral trade concern, including sanitary and phytosanitary and subsidy
issues, and to continue cooperation on other trade and investment matters.

28. Recalling their shared interest in helping the Asia Pacific recover from
the regional economic crisis, both governments agreed that carefully considered
and well-targeted export credits, which did not distort traditional patterns
of trade or disrupt markets, were a legitimate and important means of assisting
countries affected by the crisis.

CONCLUSION

29. Both sides reaffirmed the value of annual Australia-U.S. Ministerial
Consultations, and the United States invited Australia to take part in the
next round of talks in the United States in 1999.

Sydney, 31 July 1998

<AUSMIN Index>