Australia's Foreign Minister Bob Carr is in East Timor on a two day visit, meeting senior leaders including President Taur Matan Ruak and Prime Minister Xanana Gusmao.

The visit comes as Australia prepares to withdraw the last of its troops from the small half-island nation – more than a decade after East Timor's independence from Indonesia.

Presenter: Liam Cochrane

Speaker: Senator Bob Carr, Australian Foreign Minister

Carr: I've been struck by how relaxed the leadership is about the wind down of our forces and they understand as we do that it's a matter of moving to a new relationship or a relationship that's going to be governed by a defence cooperation program, by assistance with policing, but without that presence that has been a feature of the last ten years.

The draw down of the Australian-led international stabilisation force simply marks a new phase in our bilateral relationship and I'm very heartened by the way the leadership of Timor Leste has responded to this and very confident.

Cochrane: Well, a big part of that bilateral relationship is Australia's aid program to East Timor. You met with Emilia Pires last month in Canberra to discuss the new deal that East Timor wants in terms of the way it receives aid from Australia. How will that new deal change the way aid is provided?

Carr: They'll focus on capacity-building and support of education, skills and jobs and I'm going out today to inspect a couple of projects that will highlight that. I'm going to be speaking to graduates of Timor Leste, and I want to see how the skills that we helped them acquire as a benefit of the country. And one feature of the country's development from post-conflict, fragile status is their embracement of labour exchanges with Australia, with the seasonal worker program. It's still small, but I think Australian employers will see the advantage of recruiting and training workers from Timor. They've already been 12 Timorese workers completing placements in the hospitality sector in Broome, in northwest Australia and talking to their ambassador to Canberra, it's got a tremendous capacity to grow.

Cochrane: Do you think that number should be raised significantly, more than the 12 that have already taken part?

Carr: Oh, yes, dramatically and it's employer driven. The Ambassador is seeking out Australian employers and saying we can fill labour shortages with keen workers from Timor Leste and I think that's got great potential and it's at embryonic stages right now, but I think the potential is great.

Cochrane: The drive to create jobs within its own country is a big part of the ongoing dispute over the Greater Sunrise natural gas reserves off the coast of East Timor and between Australia. That site remains undeveloped as Woodside Australia and the East Timorese government still can't agree on how to process the LNG. The times running out here. The treaty expires in February. Is Australia prepared to walk away from this project?

Carr: Well, we're committed to working with the government to achieve a positive outcome. We're pleased to see the government of Timor Leste, the joint venture, stepping up their engagements since the election earlier this year. I know progress can appear slow at times, but there are complex issues to work through.

Cochrane: And has that been part of the agenda of your trip at the moment?

Carr: No, I couldn't say it is. It hasn't been raised with me, I haven't raised it, that's something between the government and the joint venture.

Cochrane: And just finally on East Timor. It's a new very new country in terms of the global community, it's also very keen to join ASEAN. Do you think it's too soon for such a small sort of vulnerable nation to join this regional bloc or does Australia support that bid?

Carr: We support their bid to join ASEAN. It's a matter for the government of Timor Leste how they want to present that bid to the 10-nation ASEAN grouping. For example, would they seek to achieve it over a say a five or seven year time table, do they want they kind or road map. But they've been very encouraged by the response from ASEAN members, but it might be a matter of accommodating any ASEAN concerns about the capacity of this young country by seeing that membership is achieved in stages, over a time frame.

There's another international membership that I discussed very happily with the government of Timor Leste and that's membership of the Commonwealth of Nations.

The Commonwealth is evolving into a community of democracies quite quickly when you look at the progress of the Commonwealth charter. I think this is something very worthy of the consideration of Timor Leste, bear in mind that Rwanda without a British heritage is now an active member of the Commonwealth. Mozambique out of the lusophone community is a member of the Commonwealth and it's entirely appropriate for Timor Leste to consider whether as an island state, a post-conflict state, a state that's moving to middle income status. It sees an amplification of its international engagement being achieved partly through membership of the Commonwealth.

Cochrane: Well, what would Timor gain from joining the Commonwealth?

Carr: It would be joining an international forum where the votes and the views of a small island state count as much as the vote and the views of India or Nigeria or the United Kingdom.

I chaired a recent meeting of Commonwealth Foreign Ministers and I noticed states like Solomon Islands and Seychelles and I made a calculation. It seemed that it would be 54 Commonwealth nations, about 25 could be described as small island states. This would be the only Forum in the world where small island states would have a consideration equal to those of very, very populous nations.

Cochrane: And what was the reaction from thEast Timorese officials that you spoke to about this idea of joining the Commonwealth?

Carr: They've got to consider it. It's something that's flickering on the screen of their considerations and I think it's got some inherent value and we would be very honoured to advise them on the steps towards Commonwealth membership, But, for Timor Leste, it is an opportunity to engage at low cost, the demands of ASEAN membership are pretty considerable for a small nation, in terms of attendance of the hundreds of meetings each year, through which ASEAN coordinates policies, shares information, provides consultation. The demands of the Commonwealth are much lower, but it would placEast Timor Leste in a very interesting forum and they'd be no conflict between that and membership with ASEAN, given that Brunei, Singapore and Malaysia are members of the Commonwealth.

[The second part of the transcript covered on Sri Lanka and abridged - JB.]