Television Interview, CNBC International

SUBJECTS: Shangri-La Dialogue; Australia-US relationship; AUKUS; Defence spending; Australia-France relationship. 

LIN LIN, HOST: Minister, great to have you here. Thank you for joining CNBC. 

RICHARD MARLES, DEPUTY PRIME MINISTER: Great to be back. 

LIN: I wanted to ask you just about some of the meetings that you're having here, including your US and Japanese counterparts. Can you give us a sense of what will be discussed or has already been discussed? 

MARLES: Well, I think all of us are very much focused on how we can be working together to provide the collective security of the Indo‑Pacific, to make sure there is balance in the region, that there is stability in region and ultimately that the region is underpinned by the values that we all share of democracy and the rule of law. I've met with my counterpart, Secretary Hegseth this morning. Certainly, that was a really positive meeting, building on our first meeting in Washington in February this year. And we feel very optimistic about the focus that America is bringing to the Indo‑Pacific, about the opportunity of working with America to provide that stability and security in this region. 

LIN: Let's talk about that relationship with the United States, more specifically, in relation to AUKUS Pillar I, which is the nuclear sub partnership. Is that on track?

MARLES: It is on track and we spoke about that today, as we did back in February. We're working very closely together to see that all of these milestones reached. That we see the establishment of the Submarine Rotation Force – West which is an HMAS Stirling, south of Perth, which will see US Virginia class submarines rotate through there, operate from there in the next couple of years. What has underpinned that, or what that will underpin that is an increased number of visits from US submarines to Perth and that is occurring. We're also seeing a lot of Australians who, both in a sustainment and maintenance sense are working in Pearl Harbor to gain skills. Our submariners are on Virginia class submarines gaining skills. So it is all happening. And there are certainly challenges, we're not sanguine about them, but fundamentally, progress is being made.

LIN: As a trend, for some time now, we have seen defence spending rise. My understanding is that Pentagon officials have urged Australia to lift spending to as much as 3% of GDP. Is that realistic given all of the competing options and priorities domestically?

MARLES: Well I mean, you put the question the right way, that public money is hard fought, and it should be hard fought. And there are a lot of competing demands on public money. But that said, we have engaged in the biggest increase in defence spending in the history of peacetime Australia that has significantly lifted our defence spending and our defence capability. We want to engage in a conversation with the United States and with the region about how we can meet this strategic moment and calibrate our defence spending to that. So this is a conversation we're up for, that we're very willing to have with America. We understand where America is coming from in the way in which they seek to have this conversation, but we have already seen significant increases in defence spending in Australia. 

LIN: French President Emmanuel Macron is here. He will give the keynote speech. Just a few years ago where there was, of course, that anger with Australia backing out of that submarine contract with France. In your mind, has that relationship now been fully repaired? 

MARLES: Yeah. I mean, look, our relationship with France is in very good order. France is a really important country to Australia. France is a Pacific nation. And if you include maritime borders, the biggest maritime border that France has- the biggest border that France has with any country is with Australia. That's New Caledonia, of course, to the immediate east of Australia. We work closely with France in terms of providing for security within the Pacific– amongst Pacific Islands and in the Pacific region– and we have cooperated with France more broadly. I'm meeting my French counterpart, Sébastien Lecornu later this afternoon, I'm really looking forward to meeting with him. He's a person I've had a lot to deal with over the last three years, and it is actually a relationship which is going from strength-to-strength.

LIN: If I could just squeeze in a quick question in relation to trade, is Australia engaging with the US on talks in relation to that baseline, 10%- the sectorial tariffs as well? And what are some learnings, perhaps, in terms of that agreement that was reached between the US and the UK as well for Australia?

MARLES: Well, we are continuing to provide advocacy to the United States around trade. We know that we are at the lowest level with a 10% tariff, but we would obviously like– we would support having an open trading system. We are a trading nation, and a growing prosperity of our national income is derived from trade. And so we have been advocates around the world for a very long period of time for having lower tariffs and a more open trading system. And we continue to be that. We think that's obviously in the interest of Australia, but in the interest of the global economy, and we continue to make that case to the United States.

LIN: Minister, I'm afraid we are out of time, as always, it is a pleasure to speak with you and have a great Shangri-La Dialogue as well. 

ENDS