Australia and Asia - The Way Forward

The BJ Dalton Memorial Address by the Hon Alexander Downer, MP, Minister for Foreign Affairs, James Cook University, Townsville, 8 July 1997

I am delighted to be in Townsville to deliver the Dalton Memorial Address.

I want to thank James Cook University - particularly the School of History and Politics - and the North Queensland Branch of the Australian Institute of International Affairs for this opportunity. I am very pleased to say that my Chief of Staff - Bill Tweddell - is a graduate of James Cook University, and I am delighted that Bill's father Doug is able to be here tonight. Bill knew Brian Dalton personally and remembers him with great respect and affection.

This series of lectures honours the life and work of a world-class scholar and selfless institution-builder - Brian Dalton - the foundation professor of History at James Cook University. During the twenty years of Professor Dalton's leadership, his department gained a national and international reputation for its research on regional history, on South East Asia, and on race relations.

Although the lectures are still young, they already have a very distinguished history. I am especially pleased to note that Mrs Delia Domingo Albert, the Ambassador for the Philippines in Australia, was a Dalton Guest Speaker earlier this year.

My topic today - `Australia and Asia: The Way Forward' - could not be more timely or important. The key issue I want to focus on is economic liberalisation within the context of Australia's overall engagement with the Asia Pacific. Economic liberalisation is the Government's first priority in the region. The other three key elements of our regional policies are:

1.1 The Benefits of Economic Liberalisation

Liberalisation of trade and investment has already brought immense benefits to Australia and its regional neighbours. I want to mention some of the more important examples.

Australia has reduced tariffs and other trade barriers significantly in recent decades. This has increased competition and boosted the productivity of Australian businesses. It has widened the range of imports and made them cheaper for Australian producers and consumers. It has allowed Australia to focus on producing goods where we are the most competitive.

In monetary terms, the gains from domestic liberalisation over the last ten years are estimated to have added an average of one thousand dollars to the annual income of each Australian family.

More than that, there is abundant evidence that trade liberalisation is driving Australia's export growth. For example, as protection has fallen, Australian manufacturers have increased productivity and are making inroads into international markets. Australian exports have risen by over one-third during the last five years - a time when the liberalisation of markets has proceeded quite rapidly.

Australian producers are enjoying improved access for their products in the region and across the globe. In global terms, average tariffs on manufactures have fallen from 40 percent in the 1940s to around 4 percent now. When Uruguay Round commitments are fully implemented:

In practical terms, this means that Australian universities and colleges are making an increasingly important contribution to the training of young people in our region, from Korea to Indonesia. It means that our recreation and hospitality industry is reaping the benefits from a heavy flow of tourists and visitors from the region into Australia. It means that our insurance, financial and legal service sectors are finding exciting new opportunities for expansion across the region.

Lower tariffs in our fastest growing markets - in the Asia Pacific - will benefit Australian exporters and create more jobs for Australians. I am pleased to say that, over this decade, ASEAN has cut applied tariffs - on a trade-weighted basis - by two-thirds. In the same period, China cut its average tariff rate from 35 to 23 percent, and will reduce the rate to 15 percent by the year 2000.

The benefits of trade liberalisation are also beginning to be enjoyed by our neighbours. Freer trade in agricultural products, for example, is starting to give the people of Japan, Korea and Taiwan access to basic and luxury foods at prices they could only have dreamed of a few years ago.

APEC member countries are already moving toward the goal of free and open trade and investment. This is crucial for Australia because more than three quarters of our merchandise exports and two thirds of our services exports go to APEC economies. The APEC economies have grown by almost 8 % annually since 1973.

APEC's biggest achievement last year was to begin implementing the goals of free and open trade and investment by 2010 and 2020. Each APEC member produced an Individual Action Plan (IAP) setting out its initial steps towards the Bogor commitments. In these Individual Action Plans, member countries have made commitments to reduce further the applied rates of tariff. For example:

The figures are very impressive. Hong Kong is our ninth-largest export market (A$ 3 billion in 1996), fourth-largest source of investment (A$ 13.3 billion at 30 June 1996) and fifth-largest destination for Australian investment overseas (A$ 6.6 billion at 30 June 1996). More than 350 Australian companies are represented there, and the Australian Chamber of Commerce in Hong Kong is the largest Australian chamber overseas.

Without doubt, as I have demonstrated, Australia has a great stake in Hong Kong, and its future is a matter of very great importance to Australia. That is why I was in Hong Kong last week for the handover.

I see Australia's task as one of helping to ensure the transition process occurs in a way that will provide maximum stability and prosperity for Hong Kong. Given a smooth transition, there are good reasons to believe Hong Kong will continue to prosper, not least of which is the world-beating dynamism of the Hong Kong economy.

Of course, the benefits of trade liberalisation extend across the region, not just North and South East Asia, but the Pacific as well. The South Pacific is an important market for Australian exporters of goods and services, with exports in goods alone reaching A$ 2.1 billion in 1995/96, an increase of over 14% in one year.

Later this week in Cairns, I will be attending the inaugural meeting of South Pacific Forum Economic Ministers. One of the most important purposes of this meeting is to help the Pacific island nations harness the regional momentum for economic liberalisation by increasing their competitiveness and allowing a greater role for their private sectors as engines for economic growth.

1.2 Securing Greater Benefits in the Future

Given the many benefits that economic liberalisation generates for Australia and the Asia Pacific, the policy challenge for the future is twofold. First, to consolidate the liberalisation gains we have already made. Second, to encourage further liberalisation across the region.

There is much more progress to be made. For example, Australian manufacturers who want to export to the region still face very high tariffs in some particular sectors. Tariffs on cars can be as high as 200 per cent. Australian agricultural and food exporters still face tariffs and other barriers, such as monopoly or state importing arrangements. And our exports of legal and financial services are often obstructed by investment and regulatory barriers.

If our region is to continue to grow, and living standards to rise, governments must show the will to push out the boundaries of trade liberalisation. For its part, Australia has reduced its tariff levels to 5 per cent or less for most sectors. But liberalisation will only be fully effective if all regional economies contribute.

Better Bilateral Relations

A key step in the process of achieving liberalisation is building trust between countries and striking mutually beneficial deals. This is something we are pursuing at the bilateral level and I want to mention a few of the recent highlights.

The landmark Australia-Indonesia Development Area - or AIDA - was inaugurated successfully in May this year. AIDA represents a significant milestone in our bilateral relationship with Indonesia.

It is the first such sub-regional agreement Indonesia has entered into with any country outside of ASEAN. Importantly, AIDA is all about reducing barriers to business investment in Eastern Indonesia so as to bring development for Indonesia and create jobs for Australians.

Earlier this year, the Indonesian Foreign Minister, Ali Alatas, and I signed an historic Maritime Boundaries Agreement which concluded more than 25 years of negotiations between Australia and Indonesia. Again, beyond its importance to national security, the Agreement was also aimed at creating jobs and wealth for Australians by unlocking the potential resources of the seabed between Australia and Indonesia.

We have built on the important initial meeting with Dr Mahathir last year by delivering a new, revitalised Trade Agreement with Malaysia. This Agreement will over time bring greater access for Australian producers and benefits to Australian consumers.

Agreement was reached earlier this year that the Australian and Japanese Prime Ministers will hold an annual summit on bilateral and regional issues which 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 of doubling Australian-Thai trade, and doubling our two-way investment, by the year 2000.

We have also, importantly, redressed the longstanding neglect of South Asia through the highly successful `New Horizons' promotion with India last year and the `Year of South Asia' initiative for 1997, each of which is ultimately about promoting Australia's profile and products.

The Regional and Global Levels

At the regional level, the Government continues to give substance to its commitment to trade liberalisation by very active and constructive participation in APEC.

The recent APEC Trade Ministers meeting in Montreal - which I attended - produced several positive outcomes which maintain momentum for freer and more open trade and investment in the region. Australia made progress in its key objective of ensuring that APEC members' Individual Action Plans are improved further this year.

Ministers also agreed to an Australian proposal to accelerate the timetable for identifying sectors for early liberalisation, or what you might call the "spark plugs" for global liberalisation - following on from the push by APEC members for the WTO to agree to the establishment of the Information Technology Agreement last year. APEC Trade Ministers will continue to discuss how APEC can add value to the WTO in the year ahead.

The CER-ASEAN Free Trade Area (AFTA) linkage also plays an important regional role. I note with great satisfaction that Australian business has organised itself to become a key part of the CER-AFTA linkage.

The Government's approach to freer and more open trade and investment in the region through APEC, and globally through the WTO, reflects our conviction that liberalisation is vital for the region's - and Australia's - future. It will enable more efficient exploitation of comparative advantage in the region. It will improve resource allocation.

And, most importantly, it will improve the quality of life for millions of citizens throughout the region.

PART TWO: Enhancing Regional Security

Beyond pursuing the tangible benefits of economic liberalisation the second key element of the Government's regional policy has been the steps it has taken to improve Australia's security and the strategic environment in which we pursue our interests.

The post-Cold War era has brought challenges as well as opportunities. The regional security environment is now more fluid, complex and uncertain. A fundamental consideration for the Asia Pacific security outlook will be the evolution of relationships between the region's major powers - the United States, China, Japan, Russia and, in the longer term, India.

The future shape of the Asia Pacific's security architecture is not yet settled, but it is possible to see a pattern emerging. While it might not often be said publicly by countries in the region, there is, I think, widespread support for continuing United States' strategic engagement in the Asia Pacific. The United States has a vital role in helping to stabilise regional security. Its presence strengthens regional countries' confidence in their security - in effect helping to minimise tensions.

Bilateral and Sub-Regional

At the bilateral level, there is growing acceptance that strong, confident relationships provide the underpinning for regional stability and effective multilateral activity.

Australia has been extending its linkages throughout the Asia Pacific under the rubric of "practical bilateralism". We make practical contributions to the region's security through our formal security arrangements with Indonesia, Papua New Guinea and New Zealand.

The Government sees its alliance with the United States in the same light. Australia and the US gave new vigour to the ANZUS alliance through the Joint Declaration on Security which was announced during the Australia-US Ministerial Talks in July last year.

In addition to these linkages based on formal arrangements, Australia has a range of other strong and growing bilateral defence and security ties with South East and North East Asian countries. For example, during my visit to China in August last year, agreement was reached to expand the annual bilateral disarmament discussions to include regional security issues.

Of course, the bilateral relationships that contribute most to shaping the regional environment are those between the major powers. Australia therefore welcomed the Joint Declaration signed by President Clinton and Japanese Prime Minister Hashimoto in April last year.

It is equally important to look beyond traditional alliance relationships, and support the strengthening of other key bilateral ties, for example between the United States and China. Because, in the end, integration of all regional countries in a shared security system is the best assurance of regional stability.

At the sub-regional level, the Five Powers Defence Arrangement - which joins Australia and the United Kingdom with Singapore, New Zealand and Malaysia - provides for close cooperation.

Regional

At the regional level, the nearly four year old ASEAN Regional Forum, or ARF - the process which brings together major East Asia/Pacific countries for security dialogue and cooperation - is characterised by minimal institutionalisation and consensus decision-making.

It has an evolutionary approach to objectives and the use of both official and second track diplomacy. Observers brought up in the tradition of European statecraft sometimes question the value of the ARF because it does not seek, at this stage, to resolve conflicts and regulate security affairs.

It must be remembered, however, that unlike Europe, the Asia Pacific has no tradition of inclusive multilateral approaches to security or defence. It will take time to build trust and confidence between those ARF countries which have no tradition of discussing security concerns and approaches to national security.

Australia is working with its partners in the region to ensure that the ARF develops as a key regional process for promoting peace and stability in the East Asia/Pacific region.

PART THREE: A Humane and Principled Approach to Regional Challenges

The third key element of Australia's regional policy is a humane and principled approach to the very real human challenges flowing from changes in the region.

Australia seeks for reasons of principle and of security to uphold universal human rights and promote democratic values. In that pursuit our overriding goal is to achieve practical results. In pursuing practical results which make a difference to individual lives it is far better - and far more productive - to pursue cooperation based on mutual respect than merely to posture for a domestic audience.

China's recent agreement to our proposal for a formal and regular bilateral dialogue on human rights is a good example of this approach. It marks a substantial and very welcome new development in our bilateral relationship with China. It should provide the framework for handling differences and pursuing concrete improvements in the observance of international human rights standards in China.

During my discussions with Chinese Vice-Premier Zhu Rongji in May, we confirmed that the first meeting will be held in Beijing next month.

Other significant examples of the Government's recent action on human rights in the region include:

Australia has worked actively over the last sixteen months to build international political support for urgent, effective action to address the appalling humanitarian crisis brought about by past misuse of anti-personnel landmines. In April last year, the Minister for Defence and I announced Australia's support for a global ban on anti-personnel landmines and unilaterally suspended their operational use by the Australian Defence Force.

Since then, Australia's support for de-mining and mine victim assistance programs has more than doubled. It now stands at $18 million, making Australia a world leader in this field.

I am pleased to say that our assistance includes a $12 million de-mining program for Cambodia and Laos announced in May last year and a further $500,000 program for Laos announced only last week.

I should also say that Australia's overall aid program, which this year is worth more than $1.4 billion, represents a very significant investment in and commitment to the long term prosperity and stability of the region. It also represents the very real commitment of Australia to improving the quality of life for people from throughout our region.

It is a sign of our respect for the aspirations of the peoples of our region.

A Tolerant and Diverse Australia

When we look at our respect for the peoples of our region it is also important to look at ourselves.

Australia is passing through an historic transition from being a European outpost to becoming one of the most vital and exciting contributors to the Asia Pacific economic and security environment. That is not easy for everyone in Australia to understand as is most notably evident in the views of the Pauline Hanson led One Nation Party.

The Hanson views, in the unlikely event that they were ever to become policy, would not only isolate Australia, they would cost Australia hundreds of thousands of jobs which flow directly from our economic links with Asia and create a level of unemployment unrivalled in the post-war era.

Do not think for one moment that we could ever practise the ethically wrongheaded anti-Asian policies advocated by Ms Hanson without provoking an economic backlash from the region.

It is the truth of this conclusion, and the increasing evidence of links with extremist groups, which has led to a continued decline in One Nation's support to less than 6 % - or to put it another way, to the rejection of Hanson by 94 % of the Australian population.

That basic tolerance is, I believe, the hallmark of Australia's extraordinary success as a multicultural country.

I do not want to say Australia is perfect in every way. But we have done as well as any in the world in building a strong, diverse and extremely tolerant nation. And I think we should be faster in recognising this success which is, I believe, the true majesty of Australia.

The simple fact is that closer engagement with Asia is and must be Australia's first foreign policy priority, now and for the future.

PART FOUR: A Long Term Commitment to the Region

The fourth and final key element of our regional policy - a commitment to taking a long term approach to Asia and its future - flows directly from this fundamental view of Australia's regional destiny.

In that context the Government will soon be bringing forward a White Paper which will outline in detail how we see our role in the region's future. The White Paper sets out a fifteen year approach to dealing with the region and it recognises that building the intellectual capital of the next generation through education is vital to Australia's future and to the region's future.

This long-term vision is particularly evident in our extensive education links with our neighbours. There have been over 200,000 overseas graduates from Australian institutions since the start of the Colombo Plan and the number of foreign graduates continues to grow each year.

I cannot emphasise too much the importance of these people-to-people links in strengthening cooperative ties throughout the region over the long term.

In the building of these ties James Cook University is leading the way for other Australian institutions through its own extensive links with the region.

Conclusion

In conclusion, Australia has embraced the region successfully and comprehensively since the 1950s, and I am convinced that we will continue to do so in the future.

It is clearly in our national interest, and in the region's interests.

Dedicated and forward-looking Australians following in the footsteps of Brian Dalton, and equally committed institutions such as James Cook University and the Australian Institute of International Affairs, play an indispensable part in building Australia's understanding and appreciation of Asia.

Without your tireless efforts, the extraordinary growth in mutual understanding and trust that lies at the heart of better regional cooperation would soon wither and disappear.

I urge you to continue that vital work.

For its part, the Australian Government has developed a clear and practical approach to regional engagement based on economic liberalisation and the other key policy elements I have outlined today.

We are pursuing these policies because, for Australia, the way forward is with Asia.

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