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Monday, 15 October 1973
Page: 2062

Dr J F CAIRNS (Lalor) (Minister for Overseas Trade) - by leave - As honourable mem bers will be aware, I have recently returned from a series of trade discussions in Japan, in the Republic of Korea, in the Democratic People's Republic of Korea and in the People's Republic of China. In view of the importance of the various matters that were raised in these discussions, I am reporting to the House on the outcome of these talks. My prime purpose in Tokyo was to lead the Australian delegation to the Ministerial meeting of General Agreement on Tariffs and Trade countries, the main function of which was to launch the latest round of multi-lateral trade negotiations. This conference, in which over 100 countries participated, is perhaps the most important meeting on international trade matters since the Havana and Bretton Woods conferences at the end of the Second World War. Australia is a major trading nation and much of its development and its growth in real income has come about because of its increased participation in the world export and import trade. We, as a Government, have accepted, as our predecessors accepted at Havana and at Bretton Woods, a commitment to a more liberal system of world trade, not simply to benefit our own standards of living but to benefit those of peoples in all countries of the world.

Australia has expressed concern in the past at the continued persistence of a wide range of tariff and non-tariff barriers in international trade and at the slow rate of growth of trade, particularly with respect to agricultural commodities and to those commodities of importance to developing countries. As far as the developing countries are concerned, past trade and aid policies have done little to improve their relative position and we will need to look more realistically at the major issues that are presented by the imbalance of economic power associated with the large scale, highly organised, usually non-competing enterprise system which characterises the developed countries and which operates to the disadvantage of the economically weak economies and less well organised and more highly competitive enterprises of the developing world. Australia's own actions in reducing tariffs unilaterally were commented upon very favourably by a number of delegates in their statements at the conference including that of Mr Schultz, the United States Secretary of the Treasury. It is clear that our actions on trade liberalisation and with respect to developing country preferences have demonstrated in a very real way to developed and developing countries alike, and more realistically than endless amounts of rhetoric, our acceptance of our responsibility as a member of the international trading community. Indeed, this Government has done more in this respect than any other Australian Government and perhaps as much as all our predecessors together.

As a country for whom agricultural exports remain of basic importance, the reduction of barriers, particularly non-tariff barriers, to agricultural exports is an important objective in the negotiations - and I made it clear that we would need to see real progress made in liberalising trade in these commodities if we were to accept further obligations. Of course, part of the present world inflationary pressures which stem from high food prices, and which are being substantially reflected in price increases in our own domestic economy, can be sheeted home to the past restrictive import policies for foodstuffs of the major industrialised countries. In the case of agriculture and for many industrial commodities of a traditional nature, I pointed to the difficulty for all countries of making further progress in liberalising trade unless a much more realistic approach, indeed a much more humane approach, was taken to the social and political, as well as the economic, problems arising from the adjustment processes brought into play by the freeing of trade. The total inequity of a laissez-faire approach to such adjustment has been recognised in Australia and we have rejected it. In my statement to the GATT conference, I emphasised that in association with the liberalising of trade there was a need - a critical need - for effective systems to attain and maintain proper income levels for workers and for the development of adequate institutions to assist the transfer of resources to more productive uses. Without such institutions and arrangements, resistance to change would not only be strong but it would be justified, since the benefits of change would be shared by all but the costs would be borne by only a few, usually by those least able to bear these costs. The Minister from Sweden joined me in the presentation of this argument at the GATT Conference. We both received expressions of appreciation from the representatives of many delegations for so doing. This is what has happened in the past in Australia and is still happening in most countries - we rely too much upon the market and too much upon the laissez-faire approach. If this situation persists, it will be increasingly difficult to liberalise world trade.

I was particularly pleased that this fundamental point was taken up by Ministers of countries representing all political and economic groupings. I was also encouraged both in the discussions in the meetings and in talks I had during the course of the meeting with Trade Ministers from other countries by the apparent sense of willingness to face up to the fundamental issues of a more liberal and a more equitable world trading economy. I came away from the GATT conference feeling optimistic about this and appreciating the realism of the approach of so many nations to the question. While in Tokyo, I had also an extensive series of discussions with Japanese government and business leaders. I was interested in the similarities and the complementaries of the Japanese and Australian economies. Of course, there are also major differences. Australia, like Japan, is committed to some restructuring of its economy, but they are different economies and have different structures. Japan's economy is moving in the direction of further development of, and dependence upon, its human resources and upon high technology production. This is partly an inevitable consequence of the pattern of economic growth; but it is also a result of the determination of a very active Japanese community to see that government and industry leaders adopt a genuine social or community responsibility arid limit industrial intensification and pollution. The significant thing in Japan is that government and industry leaders have conceded this to the Japanese people and have accepted the need to modify purely economic criteria as the standard and measure of what is done and adopt a policy to improve the quality of life by a genuine internationalisation of the Japanese economy.

Australia's economic growth will continue for some time to be based more substantially upon its natural resources and on the conversion of these resources to processed materials and finished goods. It seems clear to me that as Japan moves out of the processing and production stages in certain fields, there will be increased opportunities for Australia to move in and replace that production with our exports. This will help our development. It will help our standard of living. It might also help Japan to avoid further difficulties with her trade balance as well as ease her critical environmental problems. It was significant that as I left Tokyo a Trade Development Council Mission from Australia organised in cooperation with my Department, was arriving to further develop trade contacts. This development of the Japanese economy into an international context can be in the national interests of Australia. Japan has, and must continue to have, a big part in the economic development of Australia, but this must be accommodated to a number of Australian requirements. First, there is a need to prevent pollution, conserve our resources and protect the environment even in the most remote areas of Australia. We will not import pollution into Australia, nor will we dispose of our resources too fast or to the highest short term bidder, nor will we erode our environment and transform it into holes, cuts and gashes. Second, the Australian Government will exercise a more significant role. The Australian Government from time to time elected, is the most effective voice of the Australian people and sometimes the only one they have. Consequently, it must exercise powers in this vital area. Our resources are the foundation of our future. They cannot be left only in the hands of multi-national corporations or even Australian corporations and to reflect little more than the voice of a few shareholders. Third, although developed countries like Japan and large countries like China will be very important in the future, Australia must not be concerned with them alone.

We must be concerned to see that the small, the poorer - the developing countries - are treated fairly and are not denied access to the fuels and minerals that we export and which they will need for their development, but, which, to a significant extent, they are denied access. Again, if this is to be done, the Australian Government must play a part not only in influencing the flow of investment but in influencing the flow of exports too, because overseas investment does not only result in control of the industry in Australia, but it results in control of the flow of exports too. The multi-national corporations do not just buy a piece of Australia; they buy control of our exports as well. In general terms, 'the relationship between overseas investment and exports can be beneficial to Australia in helping to secure market outlets and so helping to plan a more orderly production pattern. It can also have disadvantages for the reasons I have given and it is a proper role for Government to play that it should influence the balance of these benefits and disadvantages in its investment and export policies.

There was a very considerable interest on the part of both government and business leaders in Japan in the new policies of the Australian Government with respect to overseas investment. I might add that there was considerable understanding generally of the whole range of our export policies and a recognition that at this stage of the development of new policies over a range of fields it is not possible or reasonable to expect that the full details of all these policies would have been worked out. Investment policy is one such example on which there was a very clear and ready acceptance by the Japanese leaders to whom I spoke that we would need further time before we could spell out in full our policies. The broad principles are, of course, clear. There is no difference of opinion or confusion whatsoever about the broad principles except that which is created by unthinking critics or by our political opponents.

The Australian Government recognises the value of foreign investment and technology in assisting development, but it would wish to see a higher level of Australian ownership, both by Australian companies and the Australian public, and by the Australian Government through the Australian Industry Development Corporation, especially in uranium, oil, natural gas and coal. I, for my part, indicated that we recognised that much of the concern by the Japanese to seek substantial investment participation in Australia was as a means of ensuring their security in the supply of agricultural, industrial and mineral raw materials. I see this concern for assurances with respect to the supply of raw materials as a legitimate concern on the part of the Japanese and one which this Government is -prepared to cooperate fully in helping to meet since we are similarly interested in long term assurances of market opportunities for our exports for the reasons that I gave in answering questions today. We would apply the same principle to other countries. Our common interests in assured commodity trade can be met in a number of possible ways, such as through existing private long term contracts, government backed long term bilateral agreements or multilateral commodity arrangements; through some combination of these or by other mutually beneficial methods, including, of course, investment from overseas.

We have to recognise more formally the great interdependence of economies like the Japanese and the Australian and, indeed, the complementarity of these economies which, for our part, will reflect itself in economic development in Australia which is related to the opportunities in Japan, often involving a flow of Japanese technology to this country. The Prime Minister (Mr Whitlam) has said, and it was a view that I myself put whilst in Tokyo, that we can see benefit in the broad principles of the growing and mutually advantageous political, economic and cultural relationship between the 2 countries being expressed in a new and broader treaty arrangement such as a treaty of friendship and Cooperation. I also expressed my view, and this is quite separate and distinct from the treaty of friendship and co-operation, that we would need to review the existing trade agreement with Japan since, while it has served us well in the past, in the future it will need to reflect more closely the growth and development of the trading inter-relationships between our 2 countries.

Whilst in Japan, I discussed with both the Nissan and Toyota motor vehicle companies the decision which the Government recently made concerning its policy aims for the motor vehicle industry in Australia. I made it quite clear that any company, including the Japanese companies, which conformed with the Government's policy criteria would be very welcome to engage in the manufacture of motor vehicles in Australia. Both companies assured me that they were anxious to co-operate in this way, even to matters of detail, with the Australian Government and to achieve their aim of establishing motor vehicle manufacturing facilities in Australia.

Mr Reynolds - In a decentralised way?

Dr J F CAIRNS - Yes, whatever the requirements we have laid down, such as the reference to decentralisation, the Japanese companies were far more willing and ready to co-operate with those requirements than any others to which I have spoken.

Turning now to my visit to the Republic of Korea, I led the Australian delegation to the bilateral trade discussions provided for under the trade agreement between Australia and the Republic of Korea. I was able to explain to the President of the Republic, Prime Minister and Ministers of that country the benefits which we would expect that country to gain from the trade liberalisation measures that we had taken, including the 25 per cent tariff cut and the preference scheme for developing countries. As a result, it can be expected that trade between our 2 countries, and in both directions, would continue to grow, but in ways the Governments of both countries - the

Republic of Korea and our own - will watch, supervising that development and ensuring that it takes place in the interests of both countries.

There was a very clear expression of a desire on the part of their Ministers for a further expansion of contractual arrangements for the supply of raw materials, particularly such items as iron ore, coking coal - for which contracts already exist - and for non-ferrous metals such as manganese, as well as agricultural commodities such as sugar. Following on these talks, the Republic of Korea proposes to send to Australia in the near future a resources study mission for discussions with appropriate Government departments, marketing agencies and business enterprises.

Considerable interest was also expressed in the possibilities of Australian investment in the Republic of Korea and I expressed the Government's view that we would welcome investment by Australian companies in that country as we do in every country, subject only to our wish that it should represent joint venture projects and should recognise the national objectives and economic planning priorities of the Republic of Korea. Some discussion was also held on the desirability of updating the existing trade agreement with a view to the inclusion of specific provisions for investment, as well as changing its emphasis in the light of the growth in our trade and the new policies of this Government, and this will be followed up in subsequent discussion at the official level.

The visit to the Democratic People's Republic of Korea was a particularly important one, I think, as the first visit by an Australian Minister ever to that country and as the first ever official Australian mission. I visited North Korea at the invitation of Minister Kye Ung Tae, Minister for Foreign Trade, whose invitation I was pleased to accept as a means of developing contacts with that country and to explain the policies of the new Australian Government. Most directly, of course, I was there as Minister for Overseas Trade with the aim of furthering our contacts through the expansion in two-way trade. I was able to talk to the Prime Minister and the 2 deputy Prime Ministers responsible respectively for economic and foreign affairs, as well as to Minister Kye and each of these Ministers put to me his views on the problem of the reunification of Korea.

There is no doubt that the relations between the North and the South in Korea are an acute and difficult problem. I expressed the

Australian Government's view, as I had in the Republic of Korea, that Australia stood for a policy of mutual respect and was opposed to outside interference in the affairs of other countries. I said that we supported the reunification of Korea by peaceful means without confrontation and saw the value of a continuing dialogue between the 2 governments with a many sided interchange between the North and the South in the political, military, diplomatic, economic and cultural fields. I pointed out the harm done in the whole world of international relations by confrontation in Korea and indicated the connection between it and the 'cold war' which had poisoned the world for so long. I found the leaders of the governments both in the south and north of Korea were concerned to keep the 'dialogue' between them going on and to keep their relations at a political level. This is in the interests of international trade as well as in the interests of peaceful and friendly international relations.

In the detailed discussions on trade matters with the Ministers of the Democratic People's Republic of Korea, we considered the question of trade representation in our 2 countries. While in Australia earlier this year the DPRK Trade Delegation- had requested approval for the establishment of a trade office in Australia. I was able to indicate to the DPRK that we were agreeable to the establishment of such an office, but that in the absence of full diplomatic relations between the two countries it would not be possible to accord diplomatic immunity and associated privileges to their representatives. For this reason, the DPRK has indicated its unwillingness to establish a trade office until such status and privileges are available. This, of course, would be possible only if full diplomatic relations were established between us. I can understand the position of the Government of the Democratic People's Republic of Korea; in its position I probably would take a similar attitude.

At the same time, I would have liked to see a DPRK trade office established in Australia as a ready means of developing our trade. Nevertheless, Minister Kye - and I are both of the view that trade between our 2 countries, which is presently very small, can in any case be expanded significantly. The DPRK has expressed interest in long term contracts for what they call lumpy iron ore and some other minerals, as well as in purchases of wheat. For its own part it has a highly developed metallurgical and machine tool industry and would be able to supply to Australia a wide range of machinery, high grade steels, railway rolling stock, engines both diesel and electric, building materials and manufactured goods. A sale of some machine tools recently was made by the DPRK to Australia.

The key to the realisation of this mutual trade potential is the development of trade contacts with the DPRK, as it is with every other country. In the absence of a DPRK trade office in Australia, this contact must remain somewhat remote. The emphasis in this contact will have to be, for the time being, largely at the business level and I am at present having examined the best means of encouraging such contact. It was necessary, in order to travel to the Democratic People's Republic of Korea, to pass through China where I was able to renew contacts, particularly with the Chinese Minister for Foreign Trade, Minister Poi Hsiang-kuo, and with the Foreign Minister, Chi Peng Fei. It is particularly pleasing to me .to see the way that trade with China has developed this year. Representatives of Broken Hill Pty Co. Ltd were in Peking during my stay. An Australian Wheat Board mission was expected shortly after and the Chinese Minister for Foreign Trade expressed his satisfaction at the way the twoway contacts were developing over a range of commodities. All Australian officials and others in China have witnessed in recent weeks and months the increasing willingness of the Chinese to assist Australians in everything they are trying to do and the extremely friendly relations that they exhibit towards Australians at every level.

As I announced last week, real progress has been made towards finalising a 3-year long term wheat agreement with the Chinese and indeed agreement has already been reached with the Chinese on the signing of this agreement. This will be the first time that Australia has negotiated such an agreement with China and it is an historic step in the development of trade relations between our 2 countries. It represents the largest amount of wheat ever sold by Australia at the one time to any country.

Whilst overseas, I saw Prince Norodom Sihanouk. With him and with others both in South and North Korea and with the Chinese Foreign Minister, I had discussions about the relations of their countries with other countries. This was done with the approval of the Prime Minister (Mr Whitlam). I have reported to the Prime Minister on these discussions, but it would not be appropriate for me at the present time to state any details.

In all the countries that I have visited and in my contacts with Ministers from other countries, I found an appreciation of and a lively interest in the policies of the Australian Government. Ministers at all levels in the countries I have visited, including and especially South Korea, expressed their approval of the stand taken by the present Australian Government and exhibited their view of the very great potential Australia has to broaden and deepen its relations with countries on both sides of the old Iron Curtain or cold war divisions that this in fact represents. They saw a significant role for Australia to play, especially in that field. There is no doubt that Australia's standing in the trading world of today is higher than it has been before and provides a solid basis for continued growth and development of our trade and of the standards of living of all people, especially those in the Pacific and Asian area and in the developing countries. I present the following paper:

Minister for Overseas Trade - Trade DiscussionsMinisterial Statement, 15 October, 1973.

Motion (by Mr Daly) proposed:

That the House take note of the paper.

Mr Street -I should like to seek the assurance of the Leader of the House that there will be adequate opportunity to debate this statement. It is an extremely important statement involving many aspects of Australian trade and Australia's foreign relations. Before seeking the adjournment of the debate-

Mr DEPUTY SPEAKER (Mr Lucock)Order!I remind the honourable member that at the moment the only motion before the House is that the House take note of the paper.

Mr Daly - Mr Deputy Speaker, I do not know what 'adequate' is but there will be a debate on the statement at a later stage.

Debate (on motion by Mr Street) adjourned.

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