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The white paper on foreign and trade policy: good news for Australian business

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Speech by the

M inister for Foreign Affairs The Hon. Alexander Downer MP

to the

Asia Business Connection

The White Paper on Foreign and Trade Policy: Good News for Australian Business

Parramatta, 17 September 1997

(Check Against Delivery)



The White Paper on Foreign and Trade Policy: Good News for Australian Business

Speech by the Hon Alexander Downer, MP, Minister for Foreign Affairs, to the Asia Business Connection, Parramatta, 17 September 1997.


. Rodney Lewis (President of the Asia Business Connection), Ross Cameron, Greg Larkin (President o f the Greater Western Sydney Connection), Betty Barry (President of the Greater Western Sydney Region Chamber of Commerce), Distinguished Guests

. I am delighted to have this opportunity to speak to the Asia Business Connection

- You do much more than promote trade between the Asia Pacific and the Western Sydney region - you also promote broader government, academic and cultural exchanges with the Asia Pacific

. There are four key reasons why the White Paper on Foreign and Trade Policy released by the Government last month - Australia’s first ever - should be of particular interest to the Asia Business Connection:

- First, it is a ringing declaration of Australia’s commitment to the region in which we live and trade.

- Second, it places the national interest at the heart of everything the Australian Government does in foreign and trade policy.

- Third, it recognises clearly that our capacity to create new jobs, and to raise the living standards of all Australians, depends vitally on increasing our national wealth through trade.

- And fourth, it draws on the views of a wide range of Australians, including the business community.

: The W hite Paper’s Advisory Panel had strong representation from the private sector and industry groups - the NFF, TNT, Westpac, Southcorp and the ANZ, in addition to Bruce Kean (director of many companies as well as ex-BCA Trade Committee)

. I want to focus my remarks today on what the White Paper offers Australian businesses and enterprises who are looking increasingly to the Asia Pacific for new profits and opportunities.

PART ONE : Advancing Australia’s National Interests in the Asia Pacific

. The White Paper gives Australia’s foreign and trade policy a much sharper and more results-oriented focus on Australian jobs and living standards.

- It reflects the inescapable reality that in a global economy the competitiveness of the Australian economy will be the single most important determinant of Australia’s future.

- It recognises that Australia’s economic strength is crucially linked to domestic reform measures such as a flexible labour market, more investment in research and development, better education and training systems, improved infrastructure and effective savings and tax policies.


The White Paper sets out the broad framework for Australia to meet the challenges of the global economy effectively.

- It contains elements both of change and of continuity, and represents a significant rearticulation and rebalancing of Australian foreign and trade policy.

A fundamental message of the White Paper is that Australia is committed to the Asia Pacific for the long haul, and that Australia’s highest foreign policy priority is to make a lasting contribution to the region.

- As a member of the Asia Pacific, and with one of the most East Asian-oriented economies in the world, it makes perfect sense for Australia to build on the foundations which complementary economies and geographic proximity provide.

Australian business people operating in the Greater Western Sydney region understand this reality better than most.

- On a list of Australia’s top 500 exporters, the Greater Western Sydney region has 30 percent of the top 10, 22 percent of the top 100, and 18.6 percent of the top 500.

- For the most part - at the rate of about 50 per cent - the region’s exports go to the Asia Pacific.

The White Paper demonstrates that Australia brings substantial economic, strategic and cultural assets to its regional and global engagement.

- The Australian economy is bigger in absolute size than all in the region to our north except Japan, the ROK and China. Australia has a strong skills base sustained b y : quality educational and training institutions.

- Australia has an impressive record of inventiveness and openness to new technology and innovation. In overall terms, Australia is ranked 8th in the world as a network society ‘plugged in’ to the high-tech world.

: That puts us ahead of Germany (13th overall) and Japan (16th overall).

: Of the 17 Asia Pacific economies, only the US and Canada have a higher overall rating than Australia.

- Australia’s many cultural assets include a proven capacity to change and adapt which is a feature of immigrant cultures, particularly those that value ethnic and cultural diversity.

Australia’s unique economic and cultural profile makes us particularly attractive as a conduit for business between Asia, Europe and North America.

But none of this is to suggest that Australia can afford to be complacent about its future.

- Rather, the White Paper emphasises that Australia must marshal its considerable and growing assets and bring them to bear on the prosperity and security of the world in which we live.

Globalisation and the Rise of East Asia - The Two Key Trends


. ■ The White Paper identifies globalisation and the rise of East Asia as the two most profound trends in the international environment to which Australia’s foreign and trade policies must adapt and respond over the next fifteen years.

- Globalisation offers huge opportunities for internationally competitive economies, but also brings in its wake challenges for political and economic management.

- It increases competitive pressures in markets, and makes globally-based trade rules and disciplines even more important.

. The W hite Paper’s judgement is that economic growth in industrialising Asia will continue at relatively high levels over the next fifteen years.

- W orld Bank forecasts growth for East Asia (excluding Japan) over the next decade at 6.8 percent, compared with 2.4 percent for Western Europe and North America.

. Some commentators have been critical of this judgement - they point to the recent currency and market adjustments in South-East Asia as evidence that the East Asian miracle has come to an end.

- As Foreign Minister I do not wish to comment on the direction that financial and currency markets may take in the short term.

: But the knee-jerk reactions we are seeing from some commentators underline the importance of the White Paper’s more considered, longer term approach.

. By looking at the fundamentals of the region’s economies - and where they are likely to head over a decade or more - we can identify what is really in Australia’s long term interests.

- Importantly, several of these key fundamentals are unchanged - for example, the commitment to open economies and continued de-regulation; and receptivity to inward foreign investment.

: The World Bank’s principal regional economist only recently pointed out that the countries of South East Asia are all maintaining sound fiscal positions with Malaysia, the Philippines, Singapore and Thailand all running budget surpluses last year.

. Let me say clearly that Australia’s confidence in the fundamentals of the region - and its extraordinary prospects for the next fifteen years -are unchanged by recent events.

- The fundamentals remain and I am confident that prudent policy settings will prevail.

• All of this means that the countries of Asia will become even more important to Australia as trade and investment partners, and in security terms.

- It also has implications for Australia’s relative standing in the region, and significant consequences for the broader relativities of power and influence in the Asia Pacific and beyond.

PART TWO: The Importance of Economic Liberalisation : Creating New Jobs for Australians

. The W hite Paper recognises that the sustaining force behind the Asia Pacific’s dynamism is economic liberalisation.


- Economic liberalisation is the key to a buoyant trade and investment environment.

: It encourages a more efficient allocation of resources and gives recognition to the merits of comparative advantage.

: But, above all, it is the best means of sustaining the sort of economic growth that produces new jobs and improved standards of living for citizens in every country of the region.

In Australia’s case, our industries have already made considerable progress as protection has been reduced and they have had to meet world standards.

- This graph from the W hite Paper (show Graph A) clearly demonstrates that exports have grown as protection has been reduced over the last decade or so.

Australia is continuing to press other countries to lower their trade barriers as well. In large part, this process is already under way.

- Again we can see clearly - with the help of some more illustrations from the White Paper - the extent to which our major trading partners in the Asia Pacific have reduced their tariff barriers.

: It is clearly the case in South East Asia (show Graph B), in North East Asia (show Graph C) and in the Americas (show Graph D).

But the White Paper also recognises that lowering tariffs and other trade barriers is neither easy nor uncontentious.

- The benefits of liberalisation are usually more widely spread and are often less immediately apparent than the costs of liberalisation for particular firms and industries, even though the net effect is beneficial.

- In addition, rapid technological change, structural adjustment and ongoing improvements in productivity drive a continuous process of change and turnover in employment.

The Government’s approach to further trade liberalisation is a pragmatic one, aimed at ensuring maximum gains to the Australian economy through improved resource allocation, whilst minimising the structural adjustment costs.

- The tariff reduction program over the last decade means that there has already been substantial opening in all but a very small part of the overall Australian market.

- Recent Government decisions on post-2000 assistance arrangements for the automotive and textiles, clothing and footwear industries will ensure continued progress towards the APEC objective of free and open trade, as well as supporting the development of sustainable employment in these industries and export growth.

The W hite Paper reinforces the importance of striving for further liberalisation at three levels - through Australia’s bilateral relationships, at the regional level - especially through APEC - and globally in the World Trade Organisation.

- Each level has an indispensable contribution to make to increasing Australia’s prosperity, none offers the only way ahead, and all three will be needed if Australia is to continue to improve its trade performance.


The Bilateral Level

. At the bilateral level, the Government has already had a great deal of success in building trust between countries in the region and striking mutually beneficial deals. I want to mention just three of the more recent highlights:

- The landmark Australia-Indonesia Development Area - or AIDA - was inaugurated successfully in May this year. AIDA is all about reducing barriers to business investment in Eastern Indonesia so as to bring development for Indonesia and create jobs for Australians.

- Agreement was reached earlier this year that the Australian and Japanese Prime Ministers will hold an annual summit on bilateral and regional issues. This gives us an unprecedented opportunity to work with our largest trading partner at Prime Ministerial level so as to achieve positive economic outcomes for Australian firms and workers.

- In February this year, the Government gained concrete results from the inaugural Australia-Thailand Ministerial Economic Commission meeting held in Canberra. Thai and Australian Ministers set the goal o f doubling Australian-Thai trade, and doubling our two-way investment, by the year 2000.

: A key demonstration of Australia’s commitment to this goal was the decision to participate in the $1 billion dollar currency swap as part of the IM F’s package to help the Thai economy. This was a concrete example of Australia’s commitment in action.

The Regional and Global Level

. Last year, at the regional level, APEC economies began implementing their goal of free and open trade and investment by 2010 and 2020 for industrialised and developing economies respectively.

- I believe that if APEC can push ahead successfully with its far-reaching and comprehensive agenda, it will make a very practical contribution to sustainable growth in the region.

- In the process, it will nurture a greater sense of regional community, shared values and common interests.

. Beyond APEC, the White Paper identifies as a key priority over the next five years the need for genuinely closer links between CER (Australia’s economic relations agreement with New Zealand) and the ASEAN Free Trade Area (AFTA).

- Developing closer links between AFT A and CER is about expanding our trade and investment.

- It is about looking at ways of reducing the costs of doing business, for example by taking steps to simplify our customs regulations and procedures and align our technical standards.

- It is also about encouraging closer contact between our dynamic business communities.

. More broadly, the Government will keep an open mind on options such as preferential free trade arrangements.


• - We will take the course which will bring the most substantial gains in market access in the shortest time frame.

. The White Paper also sets out Australia’s medium to long-term objectives in the World Trade Organisation.

- These include launching a further global round, extending mles and disciplines to new areas, ensuring WTO liberalisation at least matches regional arrangements, freer trade in agriculture, and opposing WTO action in areas such as labour standards.

PART THREE: Enhancing Regional Security

. The White Paper’s analysis of regional trade and investment patterns - and their wide-ranging implications for jobs in Australia - is matched by its hard-headed appraisal of the new regional security environment.

. While Australia’s strategic environment is shaped by developments in the Asia Pacific, global issues can also have significant security implications for Australia.

- The risk of global conflict has diminished considerably with the end of the Cold War, but other potential threats remain, including the proliferation of weapons of mass destruction.

. The White Paper demonstrates that Australia’s security interests should not be seen exclusively in terms of potential military threats or regional conflicts.

- Over the next fifteen years it is likely that even more attention will be paid to so-called . non-military threats such as pandemics, illegal migration, refugee flows, environmental degradation, narcotics and transnational crime.

. The White Paper’s judgement is that the United States will continue to see its best interests being served by maintaining its strategic engagement in East Asia, where it has vital security and economic interests.

. The White Paper also notes that China’s economic growth, with attendant confidence and enhanced influence, will be the most important strategic development of the next fifteen years.

- How China manages its economic growth and pursues its international objectives, and how other nations, particularly the United States and Japan, respond to China will be crucial issues over this period.

- The growth in economic and political influence of others in East Asia, notably the Republic of Korea and Indonesia, is also likely to affect the dynamics of regional security.

In the face of this evolving regional security environment, the White Paper advocates practical strategies for advancing Australia’s security interests. These strategies include:

- maintaining a strong national defence capability;

- the alliance relationship with the United States;

- expanding Australian bilateral, regional and multilateral security links - including through expanded security dialogues;


* - strengthening Asia Pacific-wide regional security institutions, of which the ASEAN Regional Forum (ARF) is the most significant; and

- working to ensure that the international regimes covering weapons of mass destruction are implemented and, where necessary, strengthened.

. I am pleased to say that the Australian Government is already making substantial progress in make all these strategies a practical reality in our foreign policy.

PART FOUR: A Tolerant and Diverse Australia

. Finally, advancing Australia’s national interests is a task for all Australians and not just their governments.

- It demands communication and consultation among governments at all levels, businesses and the community.

- If Australia’s foreign and trade policies are to succeed they must attract the understanding and support of the Australian community.

. The White Paper makes it clear that national interests cannot be pursued without regard to the values of the Australian community, including its support for fundamental human rights.

- Central to these values is an unqualified commitment to racial equality and to the elimination of racial discrimination.

. That is why the White Paper rejects racial discrimination absolutely and reaffirms Australia’s commitment to human rights and sustainable development.

- The rejection of racial discrimination is not only a moral issue.

- It is fundamental to Australia’s acceptance by, and engagement with, the region where its vital security and economic interests lie.

. Australia’s accelerating engagement with the region is perhaps most clearly reflected in the growing people-to-people links being established by business men and women, academics and students, including the fine work done by groups such as the Asia Business Connection.

- These are the people-to-people ties which perhaps have the most enduring effects, flowing as they do across national borders and down through the generations.

- They are absolutely crucial to our understanding of Asia in a new century likely to be defined by the increased influence of Asian powers.

. The W hite Paper is a repudiation of the views of those who believe that Australia’s future lies in an inward-looking and isolationist posture.

- Australia’s historic transition from being a European outpost to becoming one of the most innovative and constructive members o f the Asia Pacific region is one which presents great opportunities, and most Australians recognise that.

- Australia - as home to people of some 130 nationalities - is a remarkably tolerant and diverse country with a growing web of relationships across the Asia Pacific.


. ' The reality is that the narrow-minded, inward-looking views of Ms Hanson and her supporters represent a small segment of Australian opinion - only about 5 per cent of the population.

- To put it another way, 95 per cent of Australians reject views which are completely out o f step with Australia’s contemporary reality.


. In conclusion, the White Paper gives Australia’s foreign and trade policy the clear-headed direction and sharp focus it needs for the 21st century.

- It charts Australia’s regional future for the next fifteen years.

- It will help ensure that the Government’s foreign and trade policies are closely integrated to maximise the exciting new export opportunities that are opening up in the Asia Pacific for Australian businesses and enterprises.

- It defines nothing less than a ‘jobs foreign and trade policy’ for Australia.

- And it recommends the strategies which will help Australia blaze a more prosperous and secure path well into the new millennium.

. That is why it deserves the strong support of organisations such as the Asia Business Connection

- The White Paper is all about taking Australia’s extensive regional engagement to a higher and more mutually profitable level.