there is some risk involved as our own market has shown. and the infrastructure for more >> rob:

perhaps you could spend a couple minutes on the global economy, u.s. economy, and chinese economy. >> thank you. and thank you to the council for being here. my colleague in the front row there. one of the key points of both report as one of the answers to your question is that china has reemerged as one of the world's major economies. with that has come trade,

finance, and investment. and one aspect of that traditionally has been increasing use of the currency. and so as we look the china's increasing economic role in the world, it's also important to think about the increasing role of the currency. and in particular as the relationship between the major currencies like the dollar, the euro, and as the rnb emerges, challenges for global markets of the relationships between those currencies. >> let me ask about the use. >> rob: is getting. it is very small. in fact, very small. one is to an increase in the rnb. >> initially we talked rapid growth. if we look at asian currency

usage, it has become really very, stamm. it has been below or above the level of the yen or just below the canadian dollar. still small particularly when you compare that compared to the size of china's trade floats. i think over the past year and a half there's been a lot of attention on the internationalization process. but we have also had a lot of volatility in chinese domestic markets. in particular, the stock market. and just over a year ago in the context of the currency markets. i think it has slowed progress down in the context of international usage.

>> why is china pursuing this now. ? . >> this is not the first time china wanted to play a major role in the economy. it was in trades, financial float n. fact, in the previous regime, in 2006, they had a big meeting inviting a lot of foreign leaders, particularly those from emerging markets to launch global policies. so this is a very different kind of globalization this time. in terms of trade, in terms of

investment abroad, china has been sort of pushing very hard. the reason is because the opportunity for the economy largely gone. regarding china's economic growth is a lot of time they wanted to use some external pressure to facilitate. in fact, the prime minister at that time said it's not so much about trade. it is privatization. it is is so difficult to privatize some of these enterprises. so they will provide pressure and regime for them in all of these firms. so i see similarities. on the one hand, china wants it

to be more powerful in terms of other countries to use the currency. they need pressure. >> interesting. >> we saw tilt and global capitals of what the foreign exchange strategy was. how did the chinese government reduce that confusion and uncertainty, and how successful do you think they've been? >> so i got my training in the u.s. once in a while there could be room for the government to intervene.

but the way the chinese government have been doing, it has been by and large disappointing. as a result, the kind of housing bubble we have seen in second tier cities in china these days is sort of like a consequence of the regulation of the financial market. so that has been in my opinion development in terms of having additional reforms on the financial sector. so hopefully with the rmb being included a currency of the imf it would provide legitimacy and external pressure. on the one hand, their hands are tied. they could not just be in any time they want. on the other hand, it will provide more confidence and

credibility about their financial system. >> clyde, let me ten to you. first of all, can you pick up on that last point. how successful do you think the calming measures have been in terms of foreign exchange markets more recently after all the jitters we saw earlier this year? >> well, i think obviously a year to 18 months ago we were in a rather difficult situation. we had a lot stresses in the global markets from the fed tightening. that was strengthening the dollar. and so a number of currencies were weakening. at the time you had concerns about the trajectory of growth in china. some calling for a hot landing. and this led to -- and preceding that of course china had begun to globalize some elements of the capital account to allow for investment from china to move overseas.

of course with the off-shore renminbi, it trades as a currency offshore. and these factors were contributing to pressure, downward pressure on the currency. what we have seen before, in the global financial crisis when obviously we had less liberalization at that time. but we saw from the authorities in china that they tend to have a batten down the hatches approach to situations is such as this. and i think what's important is to just focus on the long-term trajectory here of the reform and internationalization process. we believe that will continue. what we saw 18 months ago was more a blip in terms of, okay,

let's calm things down, try are remove the dislocation between the on shore currency and the offshore currency. and i think after the sdr inclusion, we will see an acceleration that will make those two trade with each other. >> in the report, the transaction costs could be reduced. what kind of benefits are you currently seeing for your clients in terms of this process? >> yeah. that's a great question. because we have seen over the last few years the ability for corporate obviously transact and renimbi. you don't have control of the currency conversion. you're essentially leaving it to

the supplier. often prices can be inflated. corporate now are finding out if they are, for instance, sourcing manufacturing goods from china. they're asking for invoicing in rmb. they are setting up rmb acts in the offshore. and they have no documentation or regulatory requirements attached to them. they are finding 4% savings on what they were paying previously.

>> i highlighted a couple of them. but i think from the benefit standpoint, a as we see ever increasing trade and investment flows, using the domestic currency provides an alternative in accessing the domestic chinese market. one of the things we picked up on the report is much of the trade and investment so far from china has largely focused on commodities and resources. and this is something in the context of thinking about the region going forward. we think there is a need for rebalancing that direction and that use of the rmb to target the very large and rapidly growing chinese market is one of the important options. >> okay. you talked a little bit about the same point, targeting the chinese market. what are the barriers for

targeting process. >> morin vestors and banks to use the renminbi, even though the transaction costs could be substantially reduced as a result of renminbi in is sdr and reforms, the amount of money that can be channeled out and in or heavily regulated. i think they were worried about driving up the housing market and stock market. but these days they are more worried about outflow. so they are still invest in the so-called qualified constitution of the investors. there are about 300 of them. at the same time, you know, the

investors can invest abroad of the quality domestic investors. so with those substantial removal of the capital control, i don't think at this moment we can say how much the rmb could be major global currencies yet. they were very committed n. fact, two years ago the premier said about 2020 the chinese government is going to have full confidently in the rmb. of course we are talking about china. magic could happen. but it is hard to imagine in four years we will see the rmb could be fully convertible mostly because of the capital control and partly because i think the financial market and the associated legal environment still need a lot of reforms for that to happen. >> i'll go back to you in a second.

clyde, what are your observations in. >> in the last few years, one thing we have noticed, and if i may pat ourselves on the back a little bit, we have tended to in our research have been talking about the pace of reform is going to be faster than most expect. certainly in the period of 2010 to 2013. and that is definitely true. so i think there is scope for an acceleration of reforms going forward. i think we have been through a rocky pass vis-a-vis for the chinese economy and what's happening in global markets. we have seen the brexit vote. we have the u.s. election coming up. you know, there are uncertainties. and i think the authorities in china are going to remain very cognizant of that. assuming particularly on the domestic front, china's economy remains steady and stable. we don't see any capital outflow pressures, i think what you could see is an acceleration of

the process. whether it will have full convertible by 2020 remains to be seen. but i wouldn't doubt it too hard. i think, you know, already going to see major stram banks buying rmb for their investments. that is the trend we are seeing, and i think we will see that continue. >> douglas. >> it's been a joke the last 20 years we have been five years away from convertible currency in china. i think we thought that five years might actually happen this time. but it still seems like it is five years away and could be five years away for some years to come. one question on your point on use of central bank reference.

since the opening of the inter bank bond market, are you seeing more basically direct access. >> we are seeing significant in flows the last six months. prior to march of this year that the in flows were actually pretty negligible. we have seen a significant pickup in in flows from constitutional vestors and central banks as well. >> this takes us back to the trade point. one of the reasons central banks are going to be increasing their reserves is that given the trade flows, and if we see, as we are seeing, an increasing denomination of those trade flows in rmb, there is a necessity for central banks to manage those.

as a result, central banks around the world have a need to access assets particularly in the domestic bond markets to manage their own reserves, to manage flows as a result of trade and investment. >> do you agree with that assumption? >> yes. i think in the long run there will be an increasing amount of related investment going into china. but there have got to be prerequisites. convertibility is one of them. of course we don't expect full convertibility in four or five years. but increasing level of convertibility giving foreign investors some confidence that they can in that situation convert back to their own currencies. how much many remain in rmb, i remain very optimistic that more of that will be involved in rmb.

because i do some research on china and i realize one trick -- i shouldn't use the word trick. but one thing they have been doing is raising a lot in. that is an effective way of sort of putting it into rmb. the reason why i am a little bit more reserved is because i think there's still quite a bit of, you know, legal reforms and financial market reforms that need to be done before that can happen. you know, morgan stanley i think has a very optimistic estimate that in the long run i think they have 10 years in mind. there will be $1 trillion flowing into china as a result

of currency reserve purposes. >> let me take a step back now and look at the bigger picture. and particularly the announcement or the landmark reached over the weekend with the sdr. douglas, what are the practical implications for this? how important -- is it mainly symbolic, or do you think it is a major, major thing for the development of the chinese currency? >> i actually go back to clinton and one of his earlier points. when we look at the sdr inclusion, there are really two principle reasons why it is important. the first has to do with the process of domestic financial restructuring. in other words, much of the strategy have the chinese leadership saw sdr inclusion much in the same way as wto joining. in other words, this was a way to lock in the reform process. and i think internationally as well. once that became understood that

sdr inclusion was one way to lock in this continued process of domestic financial reform, that has tremendous importance. the other expect is largely political. it is something that is symbolic and important from the standpoint of as trade flowsen increase, the redenomination of assets, the sdr inclusion makes it simpler. from the standpoint of will this cause a dramatic increase in transactions, i think the answer is no. it's i much sort of longer term restructuring and political recognition process. >> can we talk a little bit about the implications for the u.s. then as the prime currency or the whole of the prime currency in the world. over what period could you start to see. are we talking many, many

decade. is this a threat or an opportunity for the u.s.? >> it is something i don't think is a threat. just in terms of currency flows, they do try every three years to do a survey before an exchange market. the u.s. dollar is still by far the dominant currency that over 90% is those transactions. the renminbi is a small part of that. in watching this sur fay, you have seen volumes going up every three years. they are now up to the eighth largest of all currencies.

interestingly, in a three-year span when volumes have fallen, renminbi has fallen. commodities are priced in dollars. i don't think that's going to change any time soon. i think latin american commodity exporters may struggle to the try to shift. i think it is important forex porters to look very seriously at being paid in rmb as opposed to dollars for the exports to china. in particular because chinese companies now are running into road blocks and hurdles

themselves domestically to pay for their imports in u.s. dollars. it's becoming increasingly easier for them to do that in rmb. so i think they will be quite open to latin american exporters to china approaching them and being paid in rmb. it will be more convenient for both parties and potentially see cost savings for the latin american companies export to go china. >> what are your thoughts on the same topic? what are the implications for the dollar and the u.s. more generally? >> so i think the way i would analyze this is to separate the denomination and currencies if those financial flows. in terms of the denomination in rmb for trade, as i said, i think there would be an increasing use of rmb particularly within asia. trade is such a complicated subject these days because of

the development of increasing generalization. there could be sort of network is and multiplying effects which would push to international trade. in terms of the denomination for financial transactions, i think, you know, rmb is still sort of far away from the u.s. dollar as being the major safety investment asset. and also the associated relatively inefficient financial system. but lessee, give china 10, 20 years, the gap will be reduced. but for now i wouldn't be worried about the u.s. dollar being displaced by any major currencies in the world. as the major safety asset and the major currency. >> douglas, i'm going to ask you

to respond to that question. if you have any questions, do raise your questions. >> just i think i would knew answer that a little bit. what we are likely to see is in the near future the rmb will emerge around the third spot. in the context of chinese economic size and relationship, you can expect it will probably eclipse in the near future. >> by near future, you mean -- >> next year. they almost did it this year. this is something near term. so i think what we're looking at is three major currencies going forward. i don't see any likelihood in the medium term of the rmb eclipsing the dollar. but something in parallel to the euro makes a great deal of sense. finally, from the standpoint of the financial as oppose to the trade side, we have now seen china emerge as a net foreign

creditor, as one of the world's major foreign investors. as an increasing push for that investment and credit to be provided in rmb and international markets. and as a result, if we look at historical processes of other creditor nations emerging throughout history, we will see an increase in use of the currency for financial transactions as a corollary of that. >> right. questions from the audience. please raise your hand and do say where you're from when you ask your question. gentleman here, please. and please wait for the microphone. >> i have been in china. i will ask you a simple question because there is a trade in balance between all the countries, between china and the

rest of the world. eventually chinese people will demand and the chinese will demand, et cetera, et cetera. from other countries they will say no more chinese product will be brought into our countries. it will go down with the same situation. there's no way they can sustain it. other countries close the markets and the imbalance is so great. what will be the future of chinese currency if this happens? >> if i understand you correctly, you are concerned that foreign consumers may not want as many chinese goods to be exported to those countries so the amount of rmb will be

reduced. is that the conjecture? i'm a economist. i still think china still has a lot in international trade. they have been increasing quite a lot. compared to those in mexico and the u.s., they are still much lower. i worry about more is the pro tag nymph in the u.s. and around the world. that may push back one or two percentage points if i have to put a number on it. you are absolutely right that the rmb has been weakening. if you look at the exchange rates, it has been depreciating since he november last year. but i don't think that sort of sudden increase in trade protection will lead to a collapse of the rmb. there is still a lot of demand for chinese goods.

>> (inaudible). >> give this one to douglas. >> i was just going to say we're already seeing this as an important trend. wage levels are increasing. consumers in china is increasing traumatically. that is probably the chinese government's biggest thing right now, restructuring the economy to push it up the innovation scale. and very much rmb internationalization is in fact, part of that process to drive the development of the chinese economy. in fact, what you're saying is

it is already happening very dramatically. in southern china, wage levels have increased dramatically in the low cost manufacturing have been pushed out to bangladesh. you see quite innovative developments. >> the lady here first. please wait for the microphone. >> my question is on the previous question of the domestic chinese reforms and as douglas mentioned the internationalization is more --

would have implications with the domestic chinese reforms. i wonder how much is going to cost chinese in terms of, for example, unemployment or we are talking about the rising wages or increased cost of living and other things. so would these reforms be the cost in terms of unemployment, social unrest, all of that. >> okay. do you want to the take that one? >> yeah. what is the cost? i think the quick answer is that the sort of view in china at the moment is that the risk of not doing anything with staying with the old export oriented low wage manufacturing driven model is at the extent of its possibilities.

and that as the labor forces are already shrinking, then in fact, that previous model is no longer sustainable. so the only option to avoid much more severe problems is in fact, a process of restructuring the economy to avoid the middle income trap. and financial reforms are very important process of making that happen. so it's very much a balancing act between the costs and challenges of the restructuring versus the costs and challenges of the fact that the old economic model is no longer sustainable. so trying to balance the two. >> clyde, how bumpy is this proving to be? >> i think remarkable smooth so far. i think the government switch to

focusing on domestic consumption a few years ago and part of that reform process was to disencourage savings from domestic -- of the chinese population. typically the chinese are very good savers. they save primarily for retirement and their children's education. and health benefits. and so what the government has been doing is they have been building new public schools and hospitals to try to encourage dissavings and more consumption. in general that has become a relatively successful policy to date. i think this trend will continue. i think the economy is evolving and certainly moving away from the export-led economy. and i think as long as you don't

see significant pressures in certain parts of the economy, especially the property sector, then we can be relatively san goo sanguine about the outlook. >> hi. thanks. just a quick question. shawn minor from the peterson institute. clyde, you mentioned that you think the sdr inclusion will sparks reforms that close the gap between the onshore and offshore rmb. do you think it will move toward more convertibility, or is there another reason? >> the difference between the onshore market and offshore market. onshore is basically domestically in china. and the offshore is all of those other centers where you can trade the renminbi. it is literally like trading the ire row.

they set up clearing houses in 16 cities around the world now. the first was in hong kong. but you really have to imagine a pool of liquidity in renminbi in the onshore market. so what we have in certain periods of stress is the liquidity in the offshore market become smaller. and that leads to pressures on the currency and the money market. we see money market rates going up. currency weakening relative to the onshore market. so certainly this can be a concern. since 2010 when we began to see the advent of the offshore market, there has been a dislocation between the onthe shore and offshore market. it was trading more strongly, especially in the early months of this market where there was extreme demand for renminbi

assets. in the last 12, 18 months, you have seen it go the other way with stresses the other way. reforms will really focus on moving liquidity between those two centers and the ability for banks that has presence in both markets to pull that liquidity. that will encourage the process of unifying the two rates on a longer term basis. obviously if we get to a period where the full capital account liquidity there will be no issues. >> sit a huge, historic moment, historic week in terms of economic policies around the world. a lot of this will be debated the next few days. the imf is having their annual meetings. this is germane. it has a long way to go, the internationalization story. for the time being, please join

me in thanking the panel. [ applause ]. >> good morning. i'm director of the latin america economic growth initiative at the adrienne arsht latin american discussion. thank you, doug and clyde for your insight. you did such a good job. now you really set the bar for our second panel. now we have a bar to hit. i would like to congratulate andre and douglas in the first year. excellent report on a topic that frankly may be overlooked by some as a technical development in the world. but really has the potential to reshape how business is done across emerging markets, including latin america.

that's really no small statement. but frankly it's true. the rmb becoming an international reserve asset is not something to be overlooked. it has a huge potential for big changes, not just the chinese market and the pace of reforms but global implications. we spent the last half hour looking at the ins and outs of the chinese currency market. so the next panel is going to look at what this means for latin america. and we have a dream team of speakers, my dream team of speakers at least to look at that. we're going to sit down here. the first speaker, you have their full bios in a handout when you came in. to my left is barbara, a senior investment policy officer in the trade and global competitors global practice at the world bank. she spent eight years previously at the peterson institute. you published on a number of

topics. this is a topic very familiar to barbara. next to barbara is a person who is no stranger to washington. somebody who commands respect around this town and globally. that's ambassador miguel luis castil castilla. ambassador castilla was previously ambassador to washington just a few months ago and among his many other responsibilities in his life he was in economy and finance under the administration of the president of guatemala. so now we can ask you the difficult questions. and the washington correspondent of a newspaper in sao paulo

known to many. claudia spent six years living in beijing. but that's not her only claim to fame when it comes to china. you have written two books on china. i don't know how you find the free time being the correspondent submitting daily stories. but living in china and writing about china. so i asked the speakers. i actually encouraged the speakers to the disagree with each other. that's what makes the panel fun. let's see if you all follow through on that. what we are going to do in the next half hour, we are going to look at the general picture and risks, investment potential. and of course although this is about klein that/latin america, we will look at the u.s. implications of renminbi as it relates to latin america. barbara, you have done a lot of work on fdi latin america/china.

do you see rmb reshaping the investment picture across the region in the short to the medium term? this is a tough question. are the implications really still so much unknown that it won't be clear for years to come on what the real impact is? >> thanks for such a narrow and specific question, jason. i appreciate that. you have given me -- well, we really don't know. >> i'm not going to let you get away with that. >> i probably should stipulate that although on my bioi represent the world bank. i'm probably here more with my georgetown professor. >> many of your many claims to the fame. >> one of my many claims to the fame. i think it is an interesting question. 7up, obviously. and the report mentions this. congratulations on an excellent

report. china's interactions in latin america have been leading up to this. in terms of renminbi internationalization, three countries have arrangements with china. so there has been some activity in local currencies. >> explain what a swath agreement is. >> the swath agreement, and i think the audience probably knows, means that commercial transactions can be paid in the local currency. if brazil exports goods to china, the goods can be paid for in renminbi and vice sversa. and that brings up a point on the previous panel, the hope that this would lead to rebalancing between the relationship between china and latin america, as has been mentioned many times, there is a massive trade imbalance between china and just about all of china's trading partners.

so latin america imports chinese goods but hasn't been able to break into the market in terms of exports or investment. we'll talk investment in a little bit. if the internationalization of the currency of the ability to use the renminbi can expand, that would be great. if hrat american companies can gain greater access, this would allow latin america to break into a dynamic market. this said, china has been under taking some reforms of its foreign direct investment regime, but there are still tremendous regulatory administrative and legal barriers in addition to reserved sectors. so i do hope this is a signal that china is under taking further economic reforms and that those can be of benefit to latin american companies. >> barbara talks about the first

panel. this has been something the latin american companies are struggling with. how do you break into the potential of the chinese market. ambassador cast industryeo, or miguel as you prefer to be called, rmb use provides a lot of opportunities, new opportunities for latin american companies, attracting investment from china. all of this coming against the back drop of a boom of chinese investment in the region. so i want to take you pack to your days as finance minister. i don't want to bring up any bad memories. what steps should the finance ministers take to seize on the opportunities to bring. and there is also some risk as we discussed in the first panel. how do you mitigate some of those risks? >> well, thank you, jason. and let me also congratulate the

authors for a very insightful report. actually when we talk about latin america here, i want to be clear. here we have to do the distinction. one thing is the reality of cash starved country. they need it to build reserves. i won't mentioned country. but you know it went into a swath agreement. and the other thing is a sophisticated country that would like to give options to investors. so there are different motivations for countries. i think opportunities trade wise, i think commodities will still remain a driving factor for many south american countries in spite of what's being told. and actually i think for the commodity which would perhaps fit better in terms of rmb denomination, i think there's

still a lot of, as the same line that pasch ra mentioned, a lot of restrictions to enter the chinese market. one talks about paris. one looks at the vat, the charge for imports for different agricultural products. they are huge. over 50%. so it is very difficult to access the chinese market for nonstandard commodity products coming from anywhere in the world, particularly in latin america. i would be less bullish in terms of this huge opportunity there is. i see it more of anpportunity in terms of locking in reforms, in terms of trying to liberalize its capital account, he deepen its financial market. i see that as the main, you know, objective of this process

of sdr in -- rmb inclusion on the sdrs. i wouldn't be too overoptimistic in terms of the new way for trade to be te nominated indeed rmb or finance. in terms of finance, there also needs to be an adjustment. and i'll tell you the case of peru, for instance. in my own country, the chinese were very aggressive in terms of opening up one branch of their -- of the chinese. our legislation has constraints towards linked companies. and given that for tax purposes and for banking purposes f. you're linked to a home office, a home firm, then there are restrictions. and given that most things in china are owned by the government, that implies we have

to change our banking system, our tax code to be able to accommodation. there are also restrictions in that regard. in terms of risks, i think the document does a good job in terms of the main objective of picking a way the current risks. but still we are a region i think primarily seeking towards reducing its mismatches in mismatches currency. you see because of chinese

restrictions the potential to move into that market >> i see this as a long process. it is very country specific. i wouldn't actually pull i wouldn't pull all latin american countries in the same bed. american companies in the same. >> didn't want to mention any names of countries, but he mentioned about china being -- becoming a lender of last resort in the last decade for certain countries in the region. i'll name the countries. one of them is venezuela, and the other one is argentina. clarify this, not under the current argen teen government, and it helped to prolong conditions in those countries. so why is it in latin america and china's interest to ensure its loans and investments are being used, and again, for sound

technical and economical -- i say latin america, but miguel mentioned, talking about specific countries. >> i think the main reason is to try to guarantee that these resources are used in the most efficient way possible. and they are used in projects that make sense from an economic point of view. and does not perpetuate a development model that isn't sustainable. i think that's clear in the case of venezuela. falls on five china gave 60 billion u.s. dollars to venezuela, and no indication that the oil production in venezuela is more efficient. there is production and it is unprecedent. from the chinese side, there is

the evidence of not being repaid from the loan, and i think one could also agree that there is a political backlash, being the situation where you have a change in the government after being associated so strongly with the previous government. but i think if we look at the example of argentina, i think the expectation might be wrong. assumed office last year, and initially there was suspicious in the new government that china was increasing a lot its influence in argentina, but the suspicion quickly vanished. had two meetings with the president this year, and china has announced in the first semester of this year,

investments of $25 billion in argentina. so i think there is a gravitational pull on the chinese capacity to export capital, political backlash. >> of course, from china's perspective, they want to -- the chinese want to invest in sound policies in which the investment will be able to pay back their investment too. >> yeah. >> which is a concern. >> yeah and i think from what i hear and talk with people, i think the experience of venezuela, kind of had learning effect from the chinese side to be more cautious in their decisions, their land money and to be more concerned with the economic and returns of these

investments in the long run. >> that's great. thanks, claudia. i want to turn back to you, miguel if. there are cautionary winds around the renminbi, and in this report, which is i think should be on everyone's chair and i highly encourage you to read it, it is a fantastic report, although i am a little biased. in this report, we know the dynamic that increased win for country, but also cautionary notes. how an increase in renminbi could lead to greater fears of over dependence on chinese, chinese trade, chinese investment, chinese finance. so miguel, from your perspective, what steps should be taken to ensure the increase or potential increase of renminbi, the renminbi brings in investment to necessary sectors in latin america doesn't result in overdependence on china, or too farfetched? >> i think that's too farfetched.

still, you know, our dominant investors, our countries that, you know, the european u., the . are dominant in the countries. i would say that could play more towards africa, chinese relationship than latin america, you know, relationship of china. just to give you an example and we were discussing with claudia before coming here, the first official visit of peru's new president was to china. to actually signal his intention to deepen, you know, the link, and to tract investment, not to, you know, ask for loans, which is a different, you know, important point made. but we were talking about this bill, withdrawing brazil, and a

huge train that was announced when the prime minister of china came to the region a year ago. and this was actually -- came by and that huge project of $60 billion was reduced to a commuter train outside of lima as a priority. so this overdependence theory, it doesn't really apply. we do still have huge necessities of investment, of fdi, which is receding in many country, and obviously we're open to receive a lot of investment. i don't see any particular fear. also, i see a change in the nature of investment, even extract sectors. we privatized the public soe firm of iron. and it was actually really bad experience, lack of compliance with environmental labor standards, that was 25 years ago. nowadays, we have, you know, huge chinese companies coming in

that meet high standards. they actually stock hong kong and london market, so very sophisticated run, you know, under high standards. and there has been a change, i think in also the composition and type of investors we're seeing from china coming into the region. >> barbara, on that point, do you see as miguel mentions, more sophisticated investors, more sophisticated projects, but you know, with the -- talking about the renminbi internationalzation that can open up the latin market to chinese companies that don't necessarily have access to international credit in dollars to invest, it's -- previously companies were constrained by that. you had to be able to invest and that access to dollar credit. how can latin american companies best evaluate the investment offers that could come from this

new crop of chinese companies that don't likely have had as much global experience as something we've tackled a little bit in the report, but i would love your perspective on this. >> two things. one, the composition is changing to a certain extent. there has been a chinese learning curve. i think peru is sort of the poster child for that. both sides have really gone through an evolution in terms of country like peru, setting out standards for all investors, including the chinese investors, and china, through changes in its policy and also just learning the peru environment. for chinese companies dealing with civil society was a new experience. and when we did our reports, some of our interviews really pointed to the difficulties in learning the culture of the country. china has been invested in peru for decades, gone through

difficult and positive periods, and i think that has contributed somewhat to the increased sophistication and increased also sophistication of investments in peru in some of that change. you sue he that happening in other countries in peru as well. china still invests predominantly in natural resources, and infrastructure. so china is natural resource seeking in and market seeking investor. if the naturalization can somehow move china more into an efficiency seeking investor and help latin-american companies become part of global value change, that would be a tremendous help to those countries, and i suspect that another part of your program, the pacific alliance companies are thinking about ways to align their policies in order to do that. the second part, should we worry, should latin-american companies worry about the chinese companies that are coming in without standards, without having to hold up to

sort of new york stock exchange and without u.s. dollars. well, if a chinese company comes into a country like peru, it is going to have to meet the standards of the peru environment. it will have to meet labor and environmental standards. here, i think there is a burden on latin american policymakers to think about what risks might be associated with investment from companies that which they may not be as familiar. really make some, you know, resource allotments, so that those standards can be enforced, particularly at the local level, where you sometimes don't have great budget for evaluation of this. in terms of the currency issue or the capital issue, i would just say that companies that aren't prepared and aren't well capitalized and don't have proper business plans are probably not going to do well in the market.

>> well, looking at chinese investment into the region, one deal on the table is possible chinese financing of petro, brazil's state oil company, with a potential $10 billion loan from chinese banks. let's look at this and the brazilian company, brazil is important because of the huge increase in trade and china and the last few years. but how significant would this deal with for the overall state of chinese investment in brazil and along the lines of our topic today, does rienminbi make more deals going forward? >> well, at the time ppetro is company, and largest corporate debt in the world. it has a debt of $125 billion, last year, it lost its

investment grade, which made it more difficult, more expensive, chuck says the capital market. and the chinese have been one of the main sources of finance for petro grants. and these deal, it has been negotiated since the beginning of this year. there was an expectation that it would be announced that during the visit of president michelle pimenta to china earlier this month. but the negotiations have not been concluded. but there is an expectation that it will happen sometime soon. so i think it shows the importance of china as a source of finance to brazil and to brazilian companies and to show the deepening of the finance links between the countries. and i think one of the possibilities that r rmb

international might open provided that the reforms that are needed to get internationalzation are by the chinese government is probably the possibility of [ inaudible ] and have one more access to a source of cocktail inside the china, chinese market. >> president temor was recently in brazil, his first trip after he was -- sorry. >> yes. >> his first foreign trip after he was confirmed as president. he used that as an opportunity to try to attract more chinese investment into infrastructure projects in brazil. how successful was that. >> a bit by chance that his first international visit was to china. it was because of the timing of the impeachment process, and the impeachment of former president

rousseff was completed in the afternoon. he was sworn as president in a couple of hours. he was on a plane to meeting in china. there was so big uncertainty of who would represent brazil in the meeting, that the dignitaries have the names of all the representatives of all countries, and in the case of brazil, it was the leader of brazil. because nobody knew if it would be temov or vilma. and president temor had a meeting with president china, and he took part in a seminar to present the opportunities of investments in a huge

infrastructure program that launched earlier this year. it's projects that total around $100 billion. and there were 250 representatives of chinese companies. and i think there was a great deal of interest. especially in projects related to transport and logistics that could make it more efficient to the export products from the region to china. and i think there is -- the reason increase, especially last year in invest, chinese investments in brazil, i think it is a factor of convergence of factors. the need of chinese companies to invest abroad. the evaluation of the currency that made it cheaper to investment in brazil, and also something that we might see the

effect more in the future, the huge investigation of corruption scandal in brazil, that affected many of the large brazilian companies that used to take part on infrastructure products. >> i want to have one last round of questioning, just quickly on the u.s. implications. we obviously are here in washington, so we would be remiss if we didn't talk about the u.s. implications, but then the last few minutes to open up questions to the audience. i know there was one in the first row from the last panel. we can take that first. but u.s. implications. miguel, you were -- you served most recently as a diplomat, peru's ambassador to the united states. and i think we've talked about in this panel that the potential implications that renminbi has for bringing in more investment into latin america, i think the

panel seems to conclude that there is probably less potential that that will bring for latin -- countries of into china. how does this -- how do you see this -- as this having political or economic ramifications in the u.s. relationship with those countries in the region with which they will be even greater commerce and investment with china as a result of this? >> actually, i think more important is the lack of approval of tpp than the discussion to tell you the truth. and actually, now that apec is being -- there is tension in terms of actually pursuing a free-trade agreement where china is part of it, and that's the blueprint being discussed in

lima at the end of, you know, you know, in november, when we have the summit, summit of leaders. and what will happen, you know, if the t approximatpp postponed knows when. that's more important in terms of the impact on latin america, china, plus relationship. i see real tensions. i see, you know, a concern from the u.s. administration. of giving away space for, you know, chinese involvement. obviously, the rmb will be a vehicle to accelerate the flows and to -- it is another way to join both regions. but i suspect that actually now the focus will be what happens with trade agreements. and that's actually something that we are more concerned as a

former ambassador. >> as a former ambassador. you still carry the title, though. barbara, do you agree with miguel? also along those lines, maybe this can be an opportunity of not necessarily of u.s./china competition, but does this present an opportunity of working together on, you know, the, you know, kind of greater good, which is the economic development of latin america, and rising up the good of the region as a whole? >> so i can't disagree with miguel, even though i'm supposed to. >> i'm trying to get something to disagree with each other. >> i like your scenario, the u.s. and china working together for the greater good of latin-american, but i'm going to disagree with you. >> perfect. >> i'm trying to get somebody to disagree. >> we first need to stop about

building walls against our major trading partners in the region and also just, you know, making statements about trade wars with china is not helpful for the greater good of the latin american region either. peterson institute has done really nice work on what that might mean for the u.s. economy, for the latin american economy, it would be a disaster. the u.s. and china being two major trade-in vestment partners. so if we want to constructively engage with china, yes, that would be wonderful and maybe apec is one forum for which that is being done to a certain extent. and that could be used as a screen board for that. i think the yates has an opportunity to show latin america that it is committed to the region with a strong latin america policy that does not include trade and investment barriers. >> i want to make sure we have time for questions. so we're going to go back to

jerry's question. >> no, it is a different question. >> okay, good, different panel, different question. >> i just spent two weeks in china recently, and one thing that i find out is that the odi in 2016 is going to be first time higher than the fdi. so china is going out to invest. having said that, the investment in china out of the financial, like the chinese development bank in brazil, we didn't see too many projects coming in the infrastructure of the real projects we can touch. the biggest one was probably bahamas which was a failure. $3 billion went down. and the -- i don't see many more investments going to mexico, because it is kind of coke and pepsi. so where you see real projects going, this is a question they

asked me, so i'm asking you, going into latin america? specifically, there has been an announcement of $250 billion going to latin america in the next five years. >> thanks. >> still, you know, would be the sector. we have huge gaps to fill. i don't know whether -- each country has its own framework, but we follow private/public partnerships. chinese have been quite interested in many of the big projects, extra line of subway in lima or other countries. there is also this pragmatic view. huge train, 60 billion between brazil and peru, and now it is a commuter train in lima. there is some realism into many projects. i would say infrastructure and

energy. >> do want to add something? >> it shows how difficult infrastructure projects are. everyone was expecting that things would go much more quickly and now reality has set in and expectations are being ratcheted down. hopefully, pragatism will prevail. the viability of funds will stimulate. there is still a pretty good potential. i think brazil being a big potential market, but this last year hasn't been easy for brazil and for big infrastructure projects in brazil either. so i would say with time, take a medium to longer term view rather than short-term excitement fireworks view. i think that is an area in which there can be, not to be negative

on u.s./china cooperation, but where u.s. and china could help increase welfare. >> i think the case of brazil, it is also infrastructure, and i think there is an effort with this government to redone the regulatory in which environment in which this projects are done. there is decisions also to do public/private partnership, and i think one area that will probably be attractive is oil and gas. there is to date, they are voting a change in the rules expiration of the reserves. and eliminate petro grass having 40% participation in each project, which will make it more

attractive to foreign companies. >> as a huge development, something we at our center had a report on that in july about brazil, the potential of brazil's oil and gas market, specifically how to propel it. we have time for one last question. we can maybe take these -- i saw your hand. sorry, sir. i had the fifth row first. same your name and organization. >> benjamin christfelt, johns hopkins university. i would be very interested to know if the opposition of renminbi in latin american increase scrutiny or maybe ease transactions, ease the sort of ease in, looking at transactions between china and latin america? they're both very cash spaced. i'm encouraged having taught in columbia that generally young entrepreneurs don't even know what the rmb is, but there will be possibilities of easing trade, easing transactions, and i wondered whether this will

enable greater scrutiny. we focused on the high end, big investments, but the possibility of easing trade, trade flow and trade flow between china and latin america. >> thank you for that question. miguel, barbara? >> i would say -- so, i think that's what jason is hoping in his question with you, cautions against these investments that may not be as transparent as we would like. i think that trends are going in that direction already, the internationalzation won't be a silver bullet for that but will certainly help increase the -- increase visibility, i us spect that this panel is an indication that people are paying more attention to this. and i suspect that that also depends on how much latin-american companies and

governments use the renminbi. so i think that people like yourself, paying attention to this and writing papers and so will probably help increase the knowledge among young entrepreneurs that the renminbi exists, and it may become an option and may be able to take advantage of that potentially. >> barbara, that's great way to end our discussion, give homework to the audience. to help us. i would like to end by thanking along with peter here, i want to thank maria, standing in the back, working tirelessly to help make this happen along with ivy and her whole team at the art center. i would like to thank adrienne, our founder for being here today, and also jerry and the whole team, martin, jim, everyone over at hsbc, for their sponsorship, that lois allows u

do, washington and beyond, looking at the details of the chinese relationship with markets like latin america, and realize there is no black or white answer. the answer always lies somewhere in the gray. thank you very much, panelists for excellent report, which you haven't read. it is right here. [ applause ]

join us for a discussion on money and politics, fixing our democracy, supreme court, including ideas impacting judicial election, public financing and racially diverse democracy movement. you can see it live at 6:30 p.m. eastern on c-span 2.

watch the debate between hillary clinton and donald trump tonight. the preview from las vegas starts at 7:30 eastern. the briefing for the debate studio audience is at 8:30 eastern and the 90 minute debate is at 9:30 eastern. stay with us for viewer reaction, including your calls, tweets and facebook postings. watch live or on demand, using your phone or tablet, c-span.org. free span radio app, download it from the app store or google play. this weekend on american history tv, saturday evening, just before 7:00 eastern, ohio state university's michael less benedict talks about the 1866 supreme court case, where the

court ruled unconstitutional to try civilians. >> the milligan trial was part of this debate. designed to prove to the public that the danger was real. and that therefore, the military trials were justified. and as we know, it worked. lincoln won the election of 1864. and at 8:00, george washington professor, on the origins of the gay rights movement. >> gay liberation front is playing on and building on all of the lessons that the whole other array of social and cultural movements from this period are developing. the anti-war movement, the civil rights and black power movement. women's liberation movement. they're taking the best as

spegt speg -- aspects and building upon them. and then 6:00, woodrow wilson house, executive director, robert enholm, where the president retired in 1921 and died three years later. >> the armenian people were very grateful and raising money for amin y armenian charities, and presented this painting to president wilson. at 8:00 -- ♪ ♪ >> neil oxman talks about the history of presidential campaign ads, beginning with dwight eisenhower's tv jingles through the 2016 campaign. for our complete american history tv schedule, go to c-span.org.

now surrogates from the clinton and trump campaigns discuss their respective candidates views on u.s. east asia policy and the years ahead. topics include our continuing relationship with china, and the growing nuclear capability of north korea. the korea economic institute of america hosted this 1:35 event. good afternoon, i'm don manzul manzullo, the president and ceo of the korea economic institute and we welcome you here this afternoon. we have two surrogates of the

respective presidential nominees, the honorable kurt campbell for hillary clinton, and the honorable peter hoekstra for donald j. trump, discussing foreign policy and security, as those issues relate to greater asia and the world as a whole. north korea's nuclear development is not juan asia problem. i've had the pleasure of knowing these speakers personally and consider them to be extraordinary statesmen. extraordinarily qualified. let me stress, this is not a debate. but a discussion seen from the eyes of two viewpoints. we are not presenting this discussion where you are expected to leave leaving either-or both are correct. or incorrect. foreign policy and security are determined by the times, the world political players, and develop over long periods of time. they are influenced to an extent by the president, the cabinet

and by congress depending on the event or crisis. the development of foreign policy is not like planning a seed in a greenhouse, and waiting for the fruit or vegetable to mature with totally predictable results. there is planting all right with the seeds and neutrients, rain, hail and human interaction. their perspectives are different. a diplomat and member of the u.s. house of representatives, kurt campbell received his degree from university of san diego, certificate kit of music. ph.d. international relations from oxford. he was an officer in the u.s. navy and the joint chiefs of staff. the chief of naval operations special intel jensz --

intelligence unit. served in numerous capacities in the u.s. government, including deputy assistant secretary of defense for as asia specific. i know him from his position as assistant secretary of state from east asian and pacific affairs, where he served from june of 2009 until february of 2013, a term overlapping mine when i served as chairman of house foreign affairs on asia and the pacific. dr. campbell is currently the founder and ceo of the asia group consulting winter natio l international businesses. also a private consulting firm. pet pet pet pet peter hoekstra was born in

holland. ross school of business and became affiliated with the furniture maker, herman miller, where he stayed for 15 years, and became the vice-president of marketing. one of the few members of congress to be a high ranking executive in a fortune 500 company. in 1992, he ran for congress, opposing and defeating a 13 year incumbent in the primary and succeeding the in the general election in november. he rode his bicycle as he campaigned in subsequent elections. we were members of the same freshman class and entered congress together in january of 1993. congressman hoekstra in 2004 was selected for membership on intelligence, where he served with congresswoman jean harman, who is now the president and ceo of the woodrow wilson institute. eventually became committee

intelligence and that capacity handful of members periodically briefed with highly sensitive information concerning the security of the nation. he also served on the education and work force committee. he left congress after nine terms. he is the founder of his own consulting firm, hoekstra global strategies. he joined the investigative project on terrorism in 2014 as a showman senior fellow. he is a frequent con ttributor cnn, fox news and other media. the audience will have an opportunity to ask questions. they are limited strictly to 30 seconds. that's it. no speeches. because a lot of people will have questions. they came here to hear these people and not you. just your questions. both these men are our guests.

they've been very gracious with their time. and now i have the opportunity to hand the program over to our kei vice-president, mark tokola, career democratic -- career diplomat. forgive me. >> in the afternoon, there it is. >> i said it wrong. forgive me. forgive me for saying it wrong. mark is the 38 year career diplomat. having served as dcm in korea, iceland and mongolia, among other posts. his latest was counselor at embassy in london. he helped organize among other high level events in london the g20, the soul of g20, the conference and the 2014 nato summit. he was awarded the state

department's superior honor award on his work, in bosnia. >> thank you. i mean congressman men zula. >> let me emphasize again, this afternoon, the event not a debate about general politics. we'll have a discussion about foreign policy. i'm going to ask each of the guests to make an opening statement. i'll have a few questions of my own and turn to the audience, because i'm sure you have questions of your own also about foreign policy. so let's start with secretary campbell. >> thank you very much. i want to thank you ki, my friend congressman manzula, thank mark for his service and a pleasure to see all of you here today. this is an opportunity to explore issues that will be of manifest importance to the united states going forward.

so let me just say all of us travel the region and asia, and as you listen to conversations carefully, in every capital, there are the obvious concerns. what's going on in china. more assertive, provocations in north korea, missile and nuclear tests, anxieties about regime change, prospects in countries in southeast asia. big problems lurking in terms of maritime security. right now, probably at the top of the list are not any of these concerns. the number one issue that animates the thinking of most people in asia is what's going on in the united states. and i think we have to recognize that the united states has played a central role to the 40 best years in asia's history, the last 40 years. we've helped create an operating system that has brought unprecedented peace and prosperity to asia and also has

been tremendously effective for the united states as well. bringing prosperity, opportunity, and it is linked us in a pacific community that has been in the best strategic interest of the united states. over the course of this campaign, fundamental issues associated with that role have been called into question. will we support the continuation of the nonproliferation regime or encourage nations to break out of that. how will we treat our treasured an trusted allies. japan, south korea, and others. how will we engage with china. will we take a purposeful approach or will we cut deals on the side. these are the issues that frankly animate discussions across asia, and in addition to the tone, tenor of this campaign, the questions that will remain, even after the resolution of this unfortunate political contest, will

continue. and i believe personally that the best person to address those issues is secretary clinton. hopefully president elect clinton, in which a person who has more experience, more time on the ground, more time with senior leaders and diplomats in asia than any person to run for the highest offers will be able to reassure the commitment that we seek to play in asia going forward with the recognition that the lion share of the history of the 21st century will be written there. that's just the down payment on what i hope will be a deeper discussion on specific issues. thank you. >> thank you. mr. chairman. >> great, thank you. it is great to be with you today. i wasn't sure exactly what pie friend, mr. manzullo was going to say. i was one of those individuals that has made what many believe to have been a successful

transition from the world of business to the world of politics. people are, you know, questioning, you know, can someone from the business world actually move into politics and be successful. and what we have seen is that, yeah, that can happen. because many of the values, many of the practices that you learn in leadership in the private sector are very, very transferrable politics. politics and business are very, very different. they're different worlds. but the skills that you need to be successful in business are very similar to the types of skills that you need to be successful in politics. you know, as i got ready for this session, one of the things that seems that everybody has been talking about is that just about all of our friends and allies in asia recognize that the policies that we've had in

place for a number of years, a collaborative process, process that we've developed together, jointly, that it hasn't warped. they haven't been successful. a number of people, whether it is japan, korea or other places, who are looking at the situation, said it is time to go back and start from ground zero. do a full assessment of what our strategy needs to be to confront the challenges that are out there. it doesn't mean to go to ground zero and challenge the relationships or the friendships that we have in asia. but how we coordinate and work with our friends and our allies to recognize what the challenges are, and how we can develop a successful strategy to confront those. because the strategies that we've had in place, frankly, have not been successful. so it will be a collaborative

approach. it is a practice that we use in business all the time. it is a practice that i've used. it is a practice that donald trump has used. has used very, very effectively. to bring people together and to develop a consensus and to move a strategy forward. we recognize that, and i just wrote a book on libya, where we confounded a lot of strategies that you should have integrated into a foreign policy. we turned our head over heels. we'll probably gret inet into t well. our objective from the trump campaign standpoint, from president trump, is to recognize that the strategies that we've had in place on some of the key issues have not worked very effectively. that we need to work with our friends in the region, to

develop new strategies to move forward and that it has to be developed in a collaborative framework and perhaps most importantly, is that we need to develop those strategies in a collaborative manner, not only overseas, but perhaps most importantly, here in the united states. because foreign policy is hard, it is difficult. there are no easy answers. no quick fixes to the issues, and the challenges that we face. we need to develop a strategy that has bipartisan support, and that is sustainable. we cannot be in a position where we've recently been in where our friends and allies look to the united states and elections become the topic of discussion

because the fear is that with the change in administration, that our foreign policy will take a dramatically different course. foreign policy, it is hard. to move a ship and move it in the right direction, and foreign policy takes a long time. so you need to develop policies that you may have adjustments between administrations, but you will not see major differences that people worry about on foreign policy. there has to be something sustainable if we're actually -- if america is going to continue to be effective on the international stage. we have to be a trusted and relied upon ally, because we are

predictable in how we will work and where we want to move in the future. so with that, looking forward to whatever questions you may have, but it is great to be at kei. thank you. >> thank you. >> let's start getting into specifics and start with trade, i think. the problem in singapore suggested credibility and dependablety are on the line, the tpp. at this point, neither candidate is prepared to support the tpp. are there changes that could be made to it to save it? >> thanks. first of all, just as a general observation about the making a policy toward asia, the greatest aspect of foreign policy toward the asia pacific region is that it has been bipartisan. and republican and democratic administrations working together based on some common assumptions about the importance of alliances, the importance of our economic engagement, the durability of our defense

commitments and the like shared goals in a constructive, careful responsible engagement in china, that has an matinmated for 40 y. i think it is important to note, i don't know of a foreign policy that works on asia that has endorsed mr. trump. in fact, most of them, many of the people that have served so effectively in previous administrations, have in fact either suggested that they will not participate in this election, or that they will support secretary clinton. so the hope in my perspective will be that we will have a continuation of bipartisan goals and objectives, and i would suggest that some of the things that donald trump is suggesting is very much out of the mainstream and would in fact risk exactly the kinds of things that congressman hoekstra has suggested he wants to avoid.

look, on the trade and economic piece, i think there is an undeniable recognition that there has to be a commercial component to the pivot or the rebalance to asia. asians look to the united states to play a variety roles. collection of things includes freedom of navigation, peaceful resolution of disputes, strong defense commitment, but at the core of it is a recognition that the united states is an active optimistic player in the reregional dynamics of the commerce of the region. the united states still today is the largest investor in asia. tpp is primarily about are the terms of trade going forward. i do not need to tell you that secretary clinton has been very clear that she cannot accept the trade agreement, tpp, as it is currently been negotiated. at the same time, though, she

also recognizes that some form of commercial engagement will be necessary going forward. my own personal view is that the united states has to be prepared to engage across the board. we have to be engaged strong defense players, we have to have a commercial component, build new institutions, make sure we're not reaching out just to our partners, but new partners, like vietnam and indonesia, in addition to our strong partnerships in japan, south korea, australia and the like. it is a tall order. but i do believe that the united states is up to the task. and it is also the case that frankly most of the innovation, most of the places where the united states will need to export our goods and services to the rising middle classes will be in asia. >> thank you. >> the -- the shot at mr. trump,

you know, really isn't -- really isn't necessary or essential. he is not going to threaten or challenge the relationships of our allies. under the clinton and obama administration, you've seen it happen. where friends have been left hanging. it is not going to happen in a trump administration. in regards to tpp, the disappointing thing here is we've gone through an administration, and i think, you know, our friends and allies probably have an expectation that after they've negotiated with the united states for a number of years, and signed an agreement that they're going to take back to their respective legislatures or whatever approval process they go

through, with the expectation, high expectation that they've all negotiated in good faith, and that has been a collaborative process between the branch of government that's been negotiating, and the branch of government that will have to vote to implement here in the united states. and yeah, it is disappointing. it is a mark against american credibility with our friends who rely on us that we've gone through this long negotiation process and hammered out all of these things, and that this administration won't even get a vote in congress on approving it before it leaves office.

and that as it is going out the door, that the two major parties and the candidates representing those two major parties have both disavowed the trade agreement. and so what everyone knows is tpp, the way it was negotiated, is not going to be voted on by congress. will not be approved by the united states. but will have to result ifn a nw round of negotiations. yeah, that is disappointing. you would hope as this process had moved forward, that there would have been much more collaboration between the executive branch and congress so that, you know, the -- you wouldn't get to this point where it says, oh, by the way, here is

an agreement, and the congress looks at it, and the representatives of both political parties look at it and say oh, wait a minute, we can't buy into this. as a matter of fact, you're not going to get a vote. when i'm lelkted president, we're going back to the negotiation table. that's a terrible place to and ab a terrible place to be. it didn't have to happen this way, if there would have been more collar ration betweboratio legislative branch as these negotiations were being negotiated. it is disappointing. >> both candidates have expressed concerns about china, either on trade policy or about security. so how should the u.s. work with allies to manage china's rise? i guess specifically, should japan and south korea have more of a role to play on the south china sea issue? >> thank you, mark. so china represents for the united states and the countries of the region really an

unprecedented challenge. we, going forward, are going to have areas where we have profound issues of disagreement, areas like cyber security. issues related to dumping of certain materials in u.s. markets. territorial issues like the south china sea, the relationship with neighbors and the like. and frankly, a substantial investment in the military. an overall more assesstrtive poy that we've seen in years past. at the same time, the inner-dependence is perhaps greater than any other two states in international economic system. and our destiny is to try to figure out ways that we can work together, and to deal constructively with those challenges. but also, have them offset by

areas of cooperation. we work remarkably well together on a number of issues for very specific national reasons. the united states and china work together in 2007-20008 in the aftermath of probably the worst financial crisis in our lifetime for sure to help take steps to rebalance the global economy. its controversial, but the fact remains that iran deal was negotiated largely through the application of substantial international pressure, negotiated again largely between the united states and china. we have seen the maintenance of peace and stability along the straight. we've been able to work as the united states engaged in china on a process that made clear our interests there and how much we wanted to see china allow that

process to play out. i think we've him perfect, but necessary communication on the korean peninsula. i know mark will get to that as we go forward. in truth, this is what korean peninsula. in truth, this is what it is like to deal with a rising power. it's going to demand more and more of our time and attention. i think i would just tell you that i think going forward there's going to be friction in the relationship. that friction is almost a given, and in fact the absence of friction in certain circumstances probably means that someone's not doing their job. the key is going to be to recognize that this balanced relationship of cooperation in some areas of competition is going to be our destiny going forward, and we have to manage carefully and skillfully through these waters going forward. >> i think the -- i don't disagree with that. that's standard, you know,

foreign policy as to how we're going to move forward on these types of issues. i think the issue that gets a lot of attention is how mr. trump talks about trade and trade obviously is a key opponent with china. in what we're going to be focusing on with trade is again a very complicated issue, but one that needs constant reassessment to make sure that it's working for all of the parties involved. you know, it's kind of amazing that i was there and congressman manzullo was there when nafta passed congress in the early 90s. and in the business world, you're constantly going back and evaluating the relationships with customers, vendors, people that you may be in partnership

with. you're always reevaluating the relationship, but isn't it kind of amazing after a trade agreement that's been in effect over 20-plus years between the united states, canada, and mexico there's really not been an ongoing assessment of every three years, of every five year, of every seven years, of how's this working? is it working the way that we intended it to work? is mexico benefitting the way it thought it would work? is canada benefitting the way it thought it would benefit? is the united states benefitting and gaining the rewards it thought this would get from these trade agreements? and if it's not, then how do we go back and reassess and adjust those trade agreements to make sure it is closer to the objective goals and partnerships? whether it's doing it with nafta

or our relationship with china or our relationship with korea, it's going to be on a timetable to make sure these agreements and protocols are working for each of the parties involved and that they are fair to each of the parties involved. and if there are parts of it there are broken, those will be addressed and hopefully fixed through a collaborative process. >> thank you. let's move on to security. i'll reverse the order and put this question to hoekstra first. one of the issues that's come up during the campaign has been the secure relationship between the u.s. and south korea. should south korea develop its own full range ability to defend itself against a potential north korean attack or should the south korean military remain integrated in a combined force with u.s. forces? >> this is one where i talked about earlier where there are so many people in asia looking for

a reassessment to go back to find out how not only that relationship, but how other relationships change and adapt on the new reality that north korea has a nuclear weapon and the new reality that says sanctions are going to be much less effective moving forward because with the iranian deal we have empowered one of north korea's key allies. you take a look at the leverage. there's been so many changes that's happened, but one of the -- china has always been identified as a lovers point on what happens in north korea. another place that was identified where you potentially had leverage over north korea was the relationship and what we did with iran because iran is not only a key trade partner with north korea, but they have been with syria. they have been consistent partners in ballistic missile

develop and nuclear program development. and with this trade agreement -- excuse me, with this new iranian agreement, what do you have? you have now unleashed a newly unleashed economic powerhouse with iran. they receive $400 million for releasing some hostages. they release another $1.3 billion in terms of accumulated interest, but then the bigger things are you unfreeze and the numbers all over the map in terms of how much money actually benefits iran, but the numbers are staggering. somewhere in the area of 56, $66 billion to as high as $150 billion of unfrozen assets that are now at the disposal of iran to determine how they will use it. and even just last week, an

easing on the restrictions that the united states had put in place in terms of iranian banking and financial transactions. that's the framework that we're now dealing with that is going to significantly enhance iran's capability as an economic powerhouse. and you don't deal with asia in isolation. you deal with what's going on in other parts of the world, and the agreement with iran is going to provide north korea with more options. so how do we structure that relationship with south korea with a new reality that has developed over the last eight to 12 months? that's why there's this sense of frustration and angst in asia about how we move forward. it's also the recognition that one of the people that has helped prop up the regime in north korea, iran, is now a much

more powerful and financial powerhouse than what it was 12 short months ago. you take that new reality, you sit down and you develop the strategies as we move forward. >> so thanks. to the specific question about how to conceptualize the relationship between the united states and south korea going forward, let me say i know of no other bilateral relationship that has prospered or ascended so much under both the bush administration and the obama administration. a variety of initiatives associated with global korea has korea has taken on more responsibilities globally. the key is to sustain that momentum and work list going forward. now on the security side, mark, to be honest, is a combination

of the two. we want to continue steps to integrate the united states closely into the alliance on the korean peninsula for the maintenance and stability on the korean peninsula because we're still facing a deeply provocative regime in korea. south korea is seeking to play a larger role on its own in international peacekeeping and other circumstances, which i think we should support. so it's a combination of partnership and also a degree of independence and maturity in terms of foreign policy and national security. where i would draw the line is when we talk about what's worked and not worked in asia, my suggest would be the nonproliferation regime, cleary north korea is an outlier here, but is an outlier in which all the other countries are determined to find the best manner to deal. but to ensure other countries do

not reconsider their nuclear choices requires a strong, steady capable american foreign deployed role. i think what we have done during this campaign frankly is raise questions about this nonproliferation regime, which i believe is the greatest success of the foreign policy of the united states and of the region going forward. if one country decides to go down this line, it will set off a chain reaction that i believe will have very negative consequences for the region as a whole. the issue i would say -- and you'll get to this, mark -- about north korea is we talk a lot about sanctions. there were those who have suggested we have tried sanctions and they've been unsuccessful. i would take a slightly different view. i think there are more serious, more sustained sanctions that the united states, japan, south korea, and china can take that

will make a real difference on the durability and the decision making in north korea. and i believe what is necessary going forward is a substantial internal relook between the united states and south korea and a quiet dialogue with chinese friends about what's expected in terms of putting and applying much more significant pressure, financial pressure and the like, on the regime in north korea to make clear that the provocative actions that they have taken cannot be allowed, and we have to roll back north korea's capabilities to allow the maintenance of peace own stability in the asia-pacific region. >> we'll circle back to north korea in a bit. let me follow up with you about the u.s.-south korea relationship. would secretary clinton want to re-examine the burden sharing between the u.s.