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Australia, Germany and Europe: a new partnership: address to the Konrad Adenauer Institute, Bonn, 18 September 1996



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Australia, Germany and Europe: a new partnership: address to the Konrad Adenauer Institute, Bonn, 18 September 1996

Introduction

I am honoured to have this opportunity to address the Konrad Adenauer Institute - an institute which is at the forefront of German policy debate and one that venerates the achievements of one of Germany's greatest Chancellors and one of Europe's greatest statesmen.

Since Chancellor Adenauer led Germany out of the devastation of World War Two, Germany has been one of the most dedicated proponents of European partnership, peace and stability. The two goals for which Adenauer worked so tirelessly - European union and German reunification - have been realised to an extent hardly imaginable in the early post- war days.

Given Germany's central role in the new Europe, it is entirely appropriate that this, my first major policy statement on Australia- Europe relations since taking office, should be given in Bonn.

In today's examination of the future Australia- Europe partnership I want to focus on three key points:

First, on this, my first visit to Europe as Foreign Minister, I want to redress a perception that in recent years Australia has neglected Europe - that we have an "Asia only" policy. Australia recognises that it is in our fundamental interest to have a prosperous and stable Europe in this interdependent world. Let me emphasise that Australia sees no need to choose between its links with European and North American societies on the one hand and those with the nations of Asia on the other - indeed, in today's world these links are all mutually reinforcing.

Second, both Australia and Europe are facing great challenges in our respective regions:

. Europe is working to shape its institutions to meet the demands of the post cold- war environment;

. Australia and its Asia Pacific neighbours have a similar task in our own region

Third, both Australia and Europe also know that it is not enough to focus on our own regions alone; we realise that our economic interests and even our security can be tied up with events well beyond our immediate regions. Good foreign policy requires a global perspective in this increasingly interdependent world; and one of the implications of this is that cooperation between Australia and Europe is not just bilateral but also has a regional dimension.

Australia and Europe share a commitment to the global agenda, convinced as we are that it is essential for future security to work for an effective international system. Two topical examples of our shared philosophy in this regard are

. Australia's recent initiative at the UN General Assembly to enable adoption of a widely supported Comprehensive Test Ban Treaty;

. and Germany's recently- launched 7 point plan to eliminate anti- personnel mines

1. Australia and Europe

Australia's relations with Europe are not only long standing but also include some of our most vital economic interests and a wide and richly diverse range of cultural and people to people ties.

However, the Government is concerned that a perception has been allowed to develop that Australia's relations with Europe are being neglected. Let me say that just as Australia would urge Europe not to be Euro- centric, the Australian Government will not make the mistake of being exclusively concerned with our immediate region. It is determined to develop a modern and vital relationship with Europe.

As our Prime Minister John Howard recently said, Australia does not have to choose between its history and its geography. We can have both. Indeed, to believe such a choice should be necessary is to deny the vast opportunities open to us all in an increasingly interdependent world.

In the same way as our links with Asian countries add value to our relationship with Europe, I see our relationship with Europe contributing something important to our own region.

Australia's modern history has its roots largely in Europe.

Europe is a global pillar of stability and prosperity. Australia suffered directly this century when European conflicts became global conflicts. We therefore have a fundamental interest in Europe's successfully managing the great challenge of developing political, economic and security institutions appropriate to the changed realities of the past decade.

To focus on just one dimension of our relationship with Europe, my Department has recently completed and published the first comprehensive study on Australia's trade and investment relations with the European Union. It sets out the active agenda Australia will pursue to enhance our links with Europe.

The European Union is our largest source of and host for foreign investment, including foreign direct investment. It is our largest source of imports,s including of capital goods which are fundamental to Australia's technology base and economic growth. The EU as a whole is our second largest market for exports of both goods and services.

The commercial relationship is a strong one and, most importantly, with great potential for further growth. EU investment in Australia has given hundreds of large European companies a stake in Australia's economic future, including the extent to which the Australian economy is integrated into the Asia- Pacific region.

At the same time, the study also makes clear that there are problem areas in the trade and investment relationship which must be tackled, above all the deterioration in Australia's balance of trade with the EU - and particularly with Germany - over the last 5 years. This is a significant concern for Australia - the doubling of the trade deficit since 1990.

There are a number of reasons for this problem, including a slowdown in Europe's economic growth rates and structural problems in European industries that consume Australian raw materials. It is clear, however, that the remaining EU impediments to Australian exports are also a significant contributing factor.

For the Australian Government, improving Australia's access to Europe's agriculture and coal markets is a high priority.

The EU's Common Agricultural Policy, although subject to historic new disciplines under the Uruguay Round agreement, continues to have a prominent distorting effect on agricultural markets, and I urge all EU countries to focus creatively on further reform with a view to engaging in substantial multilateral negotiations under the WTO in 1999.

From Australia's viewpoint, Germany's coal subsidies also appear to be out of place in a highly efficient, leading industrial nation, and the Australian Government hopes they, too, will be phased out completely in the next few years.

Issues such as these highlight the importance for Australia of improving its capacity to participate in the challenges of the new Europe. We have identified strategies for the Government to pursue, in partnership with European governments, the European Commission and our business sectors. I would note that one such strategy is for Australia and the EU to conclude negotiations for a Trade and Cooperation Agreement and a Joint Political Declaration to provide an umbrella for the development of the relationship.

2. The challenges of our respective Regions

Like Australia, Germany is fully engaged with its region. Indeed, Germany is playing a leadership role in the changes in Europe, especially in the growth of the European Union through both its enlargement and its evolving institutional architecture. It is particularly significant that the integration of the new Europe includes bringing the Central and East European Countries into a prosperous and secure modern world through the European Union.

Germany is also playing a key role in the development of the post Cold War European security architecture, including the evolution of NATO, the complementary strengthening of the WEU and the OSCE and the development of special links with Russia and other CIS countries.

Australia fully understands the vision driving these efforts and welcomes the leadership role that Germany is playing in this historic enterprise. Australia also recognises, as does Germany, that the stability of the long term relationship between Russia and the other countries of Europe is one of the keys to the future of wider European and, indeed, global security.

It is not for us to offer advice or comment on the detail of the EU's agenda for continuing integration and enlargement, on your movement towards Economic and Monetary Union and your agenda for the Intergovernmental Conference. However, we hope and expect that European integration will move in directions conducive to global prosperity and stability, including through trade liberalisation.

We have observed with some concern the growth of the EU's preferential arrangements with third countries over the last two years. The EU currently has commitments to extend such arrangements to 10 Central and East European countries and to Malta, Cyprus and Turkey. It is negotiating a free trade

agreement with South Africa and with 12 Mediterranean countries. It has foreshadowed the possibility of negotiating free trade agreements with a number of countries of the Commonwealth of Independent States, including Russia and Ukraine. During my discussions in Europe, I have therefore been urging that the EU take a leading role in promoting a substantial outcome from the WTO Ministerial Meeting to be held in Singapore in December, not only so as to ensure that we do not lose the momentum to multilateral trade liberalisation but also that the integrity of the multilateral trading system is maintained.

Australia, like Germany, is also helping to shape the future in a rapidly changing international environment.

Our international perspective is now, more than ever, influenced by a unique intersection of geography and history.

Australia's geography, and the economic and political emergence of Asia, demand that closer engagement with our region must be our highest foreign policy priority.

The new Australian Government is playing a leadership role in ensuring that Australia is fully and constructively engaged in its region and in fostering the evolving Asia Pacific community, particularly through APEC, the ASEAN Regional Forum and our own regional security and economic links. Dramatic economic growth and the inevitable changes following the break- up of the Soviet Union provide both a unique opportunity - and the need - to build a new regional security architecture within the region. The pattern emerging combines bilateral and regional arrangements; Australia has security agreements with the United States, Indonesia, New Zealand, PNG, Malaysia and Singapore, as well as less formal security dialogue with Japan, Korea and China.

Europe has a longer tradition of building regional ties. This process is much newer in the Asia Pacific region, but is developing faster and more strongly than many expected.

3. Australia- Europe International Cooperation

Germany is an outward looking country which recognises its interests are not confined to its own geographic region.

You understand the importance of developing strong links with other regions, particularly Asia. Germany's "Concept on Asia" strategy clearly influenced the EU's "Asia Strategy" adopted last year as the framework for Europe's evolving engagement with Asia.

I also note positively the New Transatlantic Agenda being pursued by Europe and the United States. Foreign Minister Kinkel speaks of one of the basic priorities of German foreign policy being a Transatlantic Association. It is no coincidence that Australia and Europe recognise that a cornerstone of stability is a continued US role in both regions.

The Australian Government has as one of its priorities, the strong engagement of the United States in our Asia- Pacific region. This was a key theme of our recent Ministerial consultations with Secretary of State Christopher and Secretary of Defence Perry.

I would like to explore a further recent development shaping Australia's relations with Germany and Europe in general: that is, the convergence of Australian and European interests in the Asia Pacific region and the advancement of our respective commercial interests through regional initiatives.

The Asia Pacific is the fastest growing and most dynamic region in the world. Its share of the world's gross domestic product has more than doubled in the last twenty years. It already accounts for 56 per cent of the world's output, and it is reasonable to assume this will rise to two thirds of total world output by 2020.

For Australia, these shifts in economic power are very significant. They were driving factors in the opening up of the Australian economy in the 1970s and 1980s which was essential if we were to be in a position to be a part of the growth in the region.

That challenge has been taken up and the Australian economy is now among the least protected in the world.

Nine out of Australia's top ten trading partners are now located in the Asia Pacific region.

Almost two thirds of Australia's exports are delivered to regional countries and a growing percentage of these exports are manufactured products and skilled services, contributing to the diversification and growth of Australia's economy.

Australia's direct foreign investment in the region - particularly in Asia - continues to grow strongly.

Australia encourages European companies to look closely at Asia Pacific markets. I acknowledge the increasing engagement of European countries in the region, most recently demonstrated by the establishment of ASEM. Germany, for example, has accelerated its efforts to redirect its attention to the region. Germany is currently the most important European trading partner of virtually every country in East Asia and yet direct German investment in Asia accounts for about 1.5% of total investment abroad. The potential for growth is immense and it is in this area that there is great scope for Australia and Germany to develop new partnerships.

Australia is already playing an important role as a base for European companies looking to expand their operations in Asia.

British companies have been leading the way but the German Chamber of Commerce in Australia has recently identified over 100 German companies that are utilising Australia in this way. This number is a significant increase on the results of its earlier surveys.

These companies have recognised Australia's attractions as a location for export operations, regional headquarters, joint ventures and regional research and development operations.

Australia's workforce is well- educated. Our commercial and residential accommodation and other business overheads are cheaper in Australia than in many other regional capitals.

Australia's reliable legal system and business environment, its lifestyle, its high quality education system, increasing Asia expertise, including language skills and the benefits to be derived from Australia's first- rate telecommunications and information technology systems are strong incentives.

Australia's attractiveness to European, including German, companies will be enhanced by the economic reforms being undertaken by Australia's new Government.

The Australian Government is committed to strengthening Australia's international competitiveness by reinvigorating microeconomic reform in the labour market and in vital sectors like telecommunications, energy and transport, especially on Australia's ports.

Similarly, our macroeconomic strategy is designed to give business in Australia new incentive to strengthen trade with the countries of both Asia and Europe.

At the same time, the Australian Government will continue to promote the development of an Asia Pacific community. This is not, I should add, developing on the European model of formal treaties, highly structured institutions and preferential arrangements. It is rather on the basis of open regionalism, consensus and concerted action.

From an Australian perspective, European countries can play a creative, mutually rewarding role in Asia's development.

There is, however, an inherent potential tension in the EU's approach to trade liberalisation, through its formal preferential and hubs and spokes agreements, and the APEC approach based on unilateral but concerted MFN liberalisation. APEC developed countries have made a commitment to establish free trade and investment by the year 2010, while APEC developing countries are committed to doing so by 2020. It is by no means certain that some APEC countries will be prepared to see Europe benefiting from APEC liberalisation while at the same time Europe discriminates against them in new preferential arrangements.

Essential to the prosperity of the Asia- Pacific region is a st able regional security environment.

The new regional security architecture must inevitably take into account Asia's culture and circumstances, which are quite different from Europe's. Consensus and informality shape the development of an Asian Security framework. Europe's wealth of experience in areas such as preventive diplomacy and confidence- building measures will be of value to the region and it can contribute to Asia- Pacific security issues through dialogue processes such as the ASEAN Regional Forum and the Asia- Europe process. Importantly, the ARF was not conceived as a collective defence arrangement - security is a much more comprehensive concept than defence - and ARF's ambitions will evolve in this broader sense.

Australia appreciates the contribution that Europe makes to the global security environment. France and the UK are globally engaged powers and their interests extend to the Asia- Pacific region - France particularly in the Pacific, the UK with its involvement in Hong Kong, Brunei and the Five Power Defence Arrangement, Germany with its international economic weight and its active interest in the international security agenda, for example on disarmament/non- proliferation issues.

The EU Presidency and the Commission are present at the ARF table representing Europe's interests in the Developing Asia- Pacific security framework. The Eu is this year sponsoring jointly ARF second- track seminars on preventive diplomacy and non- proliferation. Australia and Germany are partners, with Indonesia, in the first of these projects. Australia welcomes these constructive contributions to our region's affairs.

Returning to the global perspective, Australia, like Germany, is an outward looking nation committed to developing links with the broader international community both bilaterally and multilaterally. We do not want to be a nation with a narrow view and a limited vision: we see ourselves as a significant nation

with a large number of broad global interests as well as a commitment to building prosperity and security in our own region.

A notable current manifestation of our multilateral commitment is our effort to ensure that the momentum for global trade liberalisation achieved by the Uruguay Round is maintained by the WTO Singapore Ministerial Meeting in December. Australia and many in Europe are in favour of new comprehensive negotiations by 2000, as well as the need for the 'Singapore Declaration' to reaffirm the primacy and relevance of the multilateral trading system and to set longer term policy goals for the WTO.

Australia and Germany have long cooperated closely on key non- proliferation and disarmament objectives. Our two countries worked very closely during the negotiations on the Chemical Weapons Convention, and this high level of cooperation has been repeated throughout the negotiations for a Comprehensive Test Ban Treaty. After our meeting yesterday, Foreign Minister Kinkel underlined the closeness of the bilateral dialogue on these issues.

Most recently, Germany was an early and strong supporter of Australia's successful initiative to seek adoption of a resolution by the United Nations General Assembly to open the Comprehensive Test Ban Treaty Text for signature.

Conclusion

Ladies and Gentlemen, let me conclude by saying that the transformation taking place in both our regions is not without its challenges. The net effect, however, is clearly to provide greater opportunity for cooperation between Australia and the countries of Europe.

The opportunity exists for mutual investment, greater trade, which will bring benefits to consumers in both parts of the world, security cooperation and above all else, people to people links. Indeed, whilst it is good that Governments cooperate, we should not forget that they do so to improve the lives of their citizens.

Ultimately, Germany is a key country in Australia's relations with Europe. The opportunities for cooperation are exciting. I am optimistic that it is a relationship that will prosper and grow.