Conference Call Briefing by Ben Rhodes, Mike Froman, Ambassador Jeff Bader, and Danny Russel

PRESS BRIEFING
BY BEN RHODES, DEPUTY NATIONAL SECURITY ADVISOR
FOR STRATEGIC COMMUNICATIONS;
MIKE FROMAN, DEPUTY NATIONAL SECURITY ADVISOR
FOR INTERNATIONAL ECONOMICS;
AMBASSADOR JEFF BADER, SENIOR DIRECTOR FOR
ASIAN AFFAIRS AT THE NATIONAL SECURITY COUNCIL;
AND DANNY RUSSEL, DIRECTOR FOR ASIAN AFFAIRS
AT THE NATIONAL SECURITY COUNCIL
 
Via Conference Call

6:10 P.M. EDT
 
     MR. HAMMER:   Thank you, everybody, for holding on.  I know that you’ve had to wait a little bit.  But we have with us for this briefing -- which will now be on the record.  Again, it’s on the record.  We have Ben Rhodes, the Deputy National Security Advisor for Strategic Communications; Mike Froman, Deputy National Security Advisor for International Economics -- and of course, you all know him as our stellar sherpa.  We have Ambassador Jeff Bader, who is Senior Director for Asian Affairs at the National Security Council; and we have Mr. Danny Russel, who is Director of Korea and Japan at the National Security Council.
 
     With that, I will turn over the beginning for Ben.
 
     MR. RHODES:  Thank you.  I'll just say a quick few words here and turn it over to my colleagues. 
 
     The President had a busy afternoon of bilateral meetings, beginning with a meeting with Prime Minister Cameron -- actually following about a nearly one-hour helicopter ride on Marine One from the G8 to the G20, where they were able to have some discussions, and continued it in their bilateral meeting, focusing on Afghanistan, Iran, Middle East peace, and the global economy.
 
     Then the other two meetings he had this afternoon were with the Republic of Korea and then with China.  And as we said in the lead-up to this summit, the United States has put a particular focus on renewing our engagement and leadership in Asia.  We'll have bilats tomorrow with Indonesia, as well as with Japan. 
 
     So, with that, I'll turn it to Mike, who can begin with an overview of what took place today on trade.  And then Jeff can fill in on the other aspects of the Korea bilat and the China bilat.
 
     Mike.
 
     MR. FROMAN:  Thanks, Ben.
 
     As many of you know, the President announced today that, to create jobs and improve the economy for all Americans, he was launching an initiative to complete the Korean-U.S. free trade agreement.  In his bilateral meeting with President Lee, he informed President Lee of his intention or his plans to ask U.S. Trade Representative Ron Kirk to initiate new discussions with his counterpart to resolve the outstanding issues in a way that would level the playing field and allow those issues to get resolved for the President’s visit to South Korea in November for the next G20 summit.
 
     He also told President Lee of his intent that once those issues had been resolved, he would plan to submit the Korean FTA to Congress in the following months.
 
     This, as you know, is an important agreement.  Korea is a large and growing market.  It’s the 14th largest economy in the world.  We export about $50 billion worth of goods and services to Korea, and this trade agreement is expected to add another $10 billion -- $10 billion to $11 billion a year just in goods, and when services are added, substantially more than that.
 
     The President decided to do this as part of our national export initiative to expand -- double our exports over the next five years and increase the jobs -- the good-paying jobs that are associated with exports, and to maintain a competitiveness of U.S. exporters and our engagement in Asia.  Korea is a place where our market share of their imports has declined from 23 percent to 9 percent over the last 20 years.  It’s got other actors in the field -- the EU, Canada and others -- negotiating free trade agreements with Korea and others.  And the President decided that the U.S., in order to maintain and increase its market share in with some very important markets who export both goods, services and agricultural products, that the free trade agreement -- he would move forward with the free trade agreement if we can resolve the outstanding issues.
 
     The outstanding issues include non-tariff measures related to autos and beef.  And the President and President Lee agreed that they would have their two trade ministers have discussions about how to proceed between now and the President’s visit to Seoul in November, with the goal of resolving those issues at that time.
 
     MR. HAMMER:  Thanks, Mike.  Jeff Bader will now give us a little bit more on the Korean bilat as well as the China bilat.
 
     AMBASSADOR BADER:  Thanks, Ben.  Thanks, Mike.
 
     First, the Korea bilat.  The other issues that came up were -- first the President expressed his strong solidarity with President Lee and the Korean people in the wake of the sinking of the Cheonan; the unshakeable commitment of the United States to the alliance with the Republic of Korean and to the defense of the Republic of Korea.
 
     He noted that we’re working together to craft a clear message in response to the North Korean actions, including at the U.N. Security Council, where the South Koreans, U.S., and other members have been making progress on a statement.  That will part of the reaction, but not the entire reaction.
 
     In addition, the President, at the request of President Lee, agreed that the -- what’s called opcon, operational control over South Korean forces in wartime, should be -- transfer of that operational control should be postponed from 2012 to the end of 2015.  This was done at the -- the South Koreans first raised this with us early in the year, I believe in February, before the Cheonan.  The purpose of the decision is to send a clear message of the U.S. staying power in the region, at a time when that message is important.  Given North Korean conduct over the last year and a half, we judged it important to respond positively to President Lee’s suggestion that we stretch out the transfer of operational control by a few years.
 
     Another subject that arose was Iran.  The President appreciated South Korea’s support for the U.N. Security Council resolution and stressed the need for firm implementation of the resolution by all countries, including South Korea.
 
     The China bilateral -- I think this was the sixth meeting between President Obama and President Hu.  The topics covered -- there was a discussion of economic and trade issues, of Iran, and of North Korea.  In addition, the President extended an invitation to President Hu to visit the United States on a state visit.  President Hu accepted, and the two sides will work out the timing.
 
     Specifically in each subject -- on North Korea, the President noted that we could not tolerate North Korea’s attack on the Cheonan, that we had to send a clear message in response at the U.N. Security Council and elsewhere; that we looked to China to help reinforce that message, including at the U.N. Security Council.
 
     On Iran, we expressed -- President Obama expressed appreciation for China’s help in crafting Resolution 1929 at the U.N. and called on China to work with us on implementation of the resolution.  The President also described the legislation that is passing -- that is in the process of passing the Congress, and what the impact would be upon Iran.  And the President finally emphasized that we remain committed to a diplomatic track with Iran -- if the Iranians will come to the table and take the necessary steps, that the 1929 did not end the diplomatic track but makes it possible.
 
     On economic issues, the President stressed the need for balanced and sustainable growth and the role that China could play in contributing to balanced and sustainable growth.  He said that he welcomed the Chinese announcement of their decision to increase flexibility in their foreign exchange regime, noted that implementation of it was very important.
 
     He stressed the need for a level playing field on trade issues, including issues such as the consultation on issues such as innovation and industrial policy and for improvements in the Chinese intellectual property regime.
 
     MR. HAMMER:  Thanks, Jeff.  With that, we’d be happy to take any of your questions.
 
     Q    Gentlemen, thank you for taking the time to speak with us this afternoon.  On the China bilat, I’d like to ask did the President raise the issue of China’s refusal to renew military-to-military dialogue, and what was the Chinese response?  On the Cheonan incident, what is your time frame for getting out the U.N. statement, and will it have any actual consequences for North Korea?  Thank you.
 
     AMBASSADOR BADER:  Josh, Jeff Bader.  First on the military-to-military issue, the issue was discussed.  I’d actually let the Chinese side speak for themselves.  But the two sides -- I think it’s fair to say the two sides agreed on the importance of military-to-military relations both as part of the broader bilateral relationship and as a contribution to regional and global stability.  There was not a difference in assessing the overall importance or value of a military-to-military relationship.  As you know, the Chinese have restricted it for their own reasons.
 
     As for the Cheonan action in the Security Council, we don’t have a deadline.  We’re looking to get good action, good statements out of the U.N. Security Council.  We don’t have a deadline.
 
     Q    Hi, good evening.  I’m just wondering if you can handle a question about the U.S.-British bilat.
 
     MR. RHODES:  We can take a question, although these guys were in the Asia bilats so we wouldn’t be giving you the kind of firsthand information that they’ll be giving on the Asia ones.
 
     Q    All right.  When will we have a readout on the Cameron/Obama bilat?
 
     MR. RHODES:  We can get you something here in the not too distant future.
 
     Q    All right.  My question is, going into the meeting, Prime Minister Cameron had told an interviewer here in Canada that he planned to “make the case through quiet diplomacy for BP.”  And I’m wondering if he did do that.
 
     MR. RHODES:  Well, the President and the Prime Minister have had conversations about BP at several times leading up to this bilat.  My understanding is that it did come up in the bilat and that, again, the leaders have been in agreement that BP has certain obligations to cap the leak and to clean up the damage and to provide compensation to those who have legitimate claims and that -- they’re in agreement that BP must pay out those obligations. 
 
     Again -- so my understanding is, yes, it did come up and that they reiterated their agreement on those issues.  And again, we can see if there’s anything to add to that.  I can check with my colleagues, but that was my understanding of how the conversation went.
 
     Q    Okay.  Would appreciate it very much.  Thank you.
 
     Q    Hey, good evening.  I have an inquiry about the Korean FTA.  Can you tell us exactly what you’re going to do to revise the FTA enough to placate Congress and the automakers without doing so much that it alienates the Koreans?
 
     MR. FROMAN:  Thank you.  We are first going to complete some consultations with Congress and stakeholders.  We’ll then enter into discussions with the Koreans with the goal of resolving the outstanding issues, which include, as I mentioned, non-tariff barriers in the auto sector and in the beef sector.  And that will be our objective between now and November.
 
     I think the President has made clear from the start of his administration that he would like to move forward with this agreement if those outstanding items could be resolved.  There’s been a fairly clear consensus as to what those outstanding items are and there’s a willingness on both sides to sit down and try and resolve them.
 
     Q    Thank you.  I had another, further question on the Korean FTA.  I wondered if you could go a little further in distinguishing them from pledges that the President has made in the past to renew efforts on this agreement, particularly in November in Seoul.  And I’m also wondering how exactly this would be done.  Could you go a little bit more into the procedural aspects of it?  Is this a series of amendments or side agreements?  How does this actually happen?
 
     MR. FROMAN:  I think this goes further than what -- you were right that in November when the President was in Korea, he then said that he would like, as I said, to move forward with the agreement if the outstanding issues could be resolved.  And what is different at this point is that he is prepared to direct his team, his U.S. Trade Representative and his counterpart, to sit down and to begin to discuss those issues, with the timetable of trying to resolve those issues by -- or for his visit in November to Seoul.
 
     In terms of the modalities, the focus at this point is going to be on the substance of the outstanding items.  And we’ll work with the Koreans to explore various modalities.
 
     Q    Thank you. 
 
     Q    Hi, yes, thanks.  You’ve answered some of the questions.  But I wanted to come back to the talks with China on encouraging its own domestic growth.  Any promise from the Chinese on working your concerns about indigenous innovation?  It’s my understanding that resolving that is essential to meeting your goal of doubling exports.
 
     AMBASSADOR BADER:  Well, the President did raise the innovation issue and industrial policy with President Hu, noted how important these were to growth and U.S. exports.  I would say that -- again, without characterizing President Hu’s answers, which I’d rather the Chinese side did, I would say that he reiterated that the Chinese side is committed to ensuring a level playing field for foreign and domestic enterprises.
 
     Q    Thank you, gentlemen.  In reference to the North Korean torpedo incident, you’ve talked repeatedly about showing solidarity with the South Koreans, and one aspect of that is obviously a military show of force.  There has been some discussion in Washington in recent weeks about a possible increased U.S. involvement in terms of a show of solidarity with the South Koreans.  There had been some reports in Washington about the USS George Washington and others -- other sort of ships heading to the region.  Can you discuss that and whether it was discussed with the President and the South Korean leader?
 
     MR. RUSSEL:  This won't come as a surprise to you that we don't comment about military operations.  But the President, previously in his telephone conversations with President Lee, had agreed that the U.S. and the ROK would intensify our defense cooperation and look across the spectrum of alliance operations, how we can do an even better job in deterring North Korea adventurism and in the defense of the ROK.
 
     There are a number of measures that respective military commanders on both the U.S. and the ROK side are examining.  And those announcements -- any announcement is not ready to be made.
I’d come back, though, to the issue that Ambassador Bader raised earlier of the transfer of operational control, because in addition to the political and strategic aspects of that decision that he mentioned, there are also some considerable operational significance to it, as well.
 
     The respective defense departments of our two governments have examined the question at the request of the ROK and come to the conclusion that this extension will strengthen the current transition plan, will allow us to synchronize more closely with the ROK’s lead of the combined defense and that the result will be a more capable alliance.  So I think across the board what you will see in the short- and the midterm is a strengthening of the alliance transformation efforts to take into account the changes and evolution in the security situation in Northeast Asia.
 
     MR. RHODES:  This is Ben Rhodes, I’d just note that that was Danny Russel.  And I’d just add that in general the U.S.-Korean alliance is one that we believe is -- really is on as strong footing as has been in quite some time.  The depth of cooperation that we’ve had with President Lee and his government over the last year and a half is quite substantial and extends, of course, to economic issues. 
 
     But also in the political and security realm, we’ve really been in lockstep with the Koreans.  And we view the delay in opcon as a significant step -- both, again, signaling the U.S. commitment to the region, which President Obama has made a key pillar of his foreign policy approach, as well as a key signal, particularly given the current state of play on the Korean Peninsula, about the depth of America’s commitment to the alliance and to the stability and security of the region.  So I would just echo my colleague’s comments and underscore the importance of the delay in opcon transfer and the full range of activities that we’re taking to deepen and strengthen this alliance.
     
     Q    Thank you.  My question is also on North Korea.  China and Russia have been refusing to blame North Korea for the Cheonan attack, but Russia agreed to the wording of the G8 communique, so I’m wondering if you see this as a shift in their position?  And also did you get any assurance or indication from the Chinese President that China is going to support the action of the U.N. Security Council?
 
     MR. RHODES:  Well, I’ll just say something -- this is Ben Rhodes -- and turn it over to Ambassador Bader.  You’re right to note that the G8 issued a strong statement today.  It was a condemnation of the sinking of the Cheonan and, again, a recognition of the investigation’s conclusion that North Korea was responsible for that sinking.  So the G8’s condemnation was an important step forward in sending a signal from the international community, to include Russia, that North Korea’s action was again unacceptable.
 
     Jeff may want to speak a little bit more about the state of play in New York and China.
 
     AMBASSADOR BADER:  Yes, all I’d say on that is that the U.N. Security Council action is not yet complete, but there has been significant discussions in the last three or four days, including the Chinese, in which gaps have been closed.  And we’re moving closer towards a satisfactory statement.  So we are not yet at the point where the G8 issued a statement -- we’re not yet at that point in New York, but we’ve moved in that direction.
 
     MR. HAMMER:  Great, thanks.  And we’ll take one more question because some of us have to run to other meetings.
 
     Q    I have a question to Ambassador Bader on Chinese yuan issue.  Could you elaborate a little more on the specific exchange between leaders?  Did President Obama call for quicker and larger appreciation?  And what was the reaction from Mr. Hu on the issue?
 
     AMBASSADOR BADER:  I'm sorry, the first question was on the U.N. and the second question was on --
 
     Q    Also a U.N. issue.
 
     MR. FROMAN:  It’s currency.
 
     Q    Yes, currency issue.
 
     AMBASSADOR BADER:  Well, President Obama talked about the importance of sustained and balanced growth, and he noted the recent Chinese decision increasing flexibility in the Chinese exchange rate mechanism.  He welcomed it.  He said the implementation of it would be very important.  He noted that we each have tasks we have to undertake, we each have obligations, we each have statements that we’ve made at the G20 that we should be pursuing.  But he acknowledged that the statements -- the change by the Chinese was a welcome first step.
 
     Q    Did he call for quicker, larger appreciation?
 
     MR. RHODES:  Once again, I’d just echo what Jeff said, and we welcome that decision and, again, have encouraged them to implement it effectively, which, again, we believe will have a positive effect on the broader effort to sustain balanced growth that will be discussed at the G20 here.
 
     With that, I think we have to wrap because some of us are going in different directions here.  But I appreciate people joining the call.  The President’s next step of course is the dinner tonight with his fellow leaders to kick off the G20, and we’ll keep you abreast of his activities at the G20 tomorrow. 
 
     Again, he’s got several bilats scheduled -- one with President Yudhoyono over breakfast in the morning; another with Prime Minister Singh of India in the afternoon.  Then he’ll of course be holding a press conference, and then he’ll be holding a bilateral meeting with Prime Minister Kan of Japan -- the first bilateral meeting he’s been able to hold with the new Prime Minister.
 
     So it’s another busy day tomorrow.  And we -- again, we had a busy day today, but we’ll, again, keep you up to date, and appreciate you joining the call.
 
                             END           6:36 P.M. EDT