Latin America Downunder Conference

Speech, E&OE, (check against delivery)

23 May 2012

It gives me great pleasure to be speaking to you today at the first-ever Latin America DownUnder conference.

Twenty years ago next month, one of my predecessors as Australian Foreign Minister, Gareth Evans, made a speech to mark the 500th anniversary of the European discovery of the New World by Christopher Columbus.

As you would expect, Gareth spent much of the speech talking about the relationships between our two continents, and he was pretty honest – acknowledging that in the past, we had really only had "minimal contact".

But he also spoke about the changes taking place in Latin America at the time.

The move away from a long period of political instability and introspection.

The move towards respecting human rights and democracy.

He talked about the "profound economic restructuring, including extensive trade liberalisation and privatisation programs", that was emerging as an antidote to the problems of the past.

He said this: "It remains to be seen whether the political and economic reforms can be carried through to the point where the massive economic and social problems of the region can begin to be solved."

Twenty years on, it is clear how far we have come from that point.

Latin America's rise

The extraordinary transformation we have seen in Latin America since 2002-3 – the emergence of major new economies, the stability of democratic structures – tell us the answer to that question.

Those sorts of questions aren't asked in the same way anymore, because they have become irrelevant.

Led by its resources sector, Latin America is emerging as a major new engine of the global economy.

In March, Brazil overtook the United Kingdom as the world's sixth-largest economy.

PricewaterhouseCoopers expects it to be the fifth-biggest economy by 2032, and the fourth-biggest by 2050.

Standard Charter is predicting those shifts to come even sooner, possibly overtaking Germany and France by 2020.

US, China, India, Brazil – good company to be in.

Chile is the world's largest copper producer.

The second-largest molybdenum producer.

Together, Australia and Brazil are the top two suppliers of iron ore in the world.

Peru the second-largest copper producer, and the eighth largest gold producer.

Argentina has the third largest shale gas reserves, after the United States and China.

On the back of high commodity prices, the region has had average annual growth of more than 4 per cent from 2006 to 2011.

And is expected to continue to grow at that rate through to 2017, despite some weakening in 2012.

There is a growing Latin middle class, and poverty has reduced.

Latin America is a big player in the global economy in 2012 – and its importance will only grow.

Australia's growing relationship with Latin America

Gareth's speech touched on that turning point in Latin America's development, but it was also seminal for Australia's relationship with the region.

It marked – honestly – an acceptance that we had underdone our relationships with Latin America to that point, and a recognition that if the hoped-for transformations came to pass, it was in Australia's interest to reach out to Latin America.

Led by our mining companies, we've been busy doing that for the past 20 years.

Australia is a great mining country.

As Geoffrey Blainey put it: "Australia's map is criss-crossed with the spidery tracks of the metal seekers".

Not just our map, but our history, and our economy.

Mining makes up about 8 per cent of our GDP.

And more than half of our export revenue.

Last year, our mining exports were worth A$176 billion – and are forecast to break the A$200 billion a year mark in the near future.

Our miners are a great domestic industry, but – unsurprisingly, given their international markets – they have led the way in developing projects overseas.

As the Australian economy has been globalised, so has our resources sector.

What began as a trickle of Australian mining projects in Latin America – largely off the back of the success of the joint venture between BHP Billiton and Rio Tinto at Escondida in Chile – has turned into a flood across the continent.

From just 20 companies only four years ago, Latin America now hosts more than 80 Australian mining and exploring companies.

In the mining equipment, technology and services sector, there were only three or four companies 15 years ago.

Now there's at least 80 in Chile alone and dozens of others across the region.

Behind mining, other industries have forged strong links.

Education is a standout, with the number of students taking up learning opportunities across the Pacific growing every year.

More than 30,000 students from Latin America were enrolled in Australian education institutions in 2011 – a figure we hope continues to grow.

Half of those come from Brazil alone, making Brazil our tenth-largest source of international students.

A changing world order

Twenty years on, the need for ever closer engagement across the Pacific has grown more important.

Australia and Latin America are both grappling with a changing world order.

Latin America is emerging as a powerhouse of the global economy.

And our region – Asia – is going through a historic transformation as well.

The pace and scale of economic, social and strategic change underway on both sides of the Pacific is of historical significance, and the global implications are profound.

Before we know it, Asia will be about a third of the global economy.

On our northern shore, Indonesia is being touted as a top ten economy in coming decades.

Malaysia, Thailand and Vietnam are liberalising their economies, unleashing their growth potential.

Japan and Korea remain significant economies on a global scale.

As Asia's middle class balloons, so does its appetite for resources, high-value added manufactured goods and high-end services.

Education levels – and down the track aspirations – are rising.

Indonesia is on track to achieve universal primary education by 2015.

These economic realities are redrawing the global map of trade and causing seismic shifts in relative economic power.

To focus on change in Asia, and on how Australia – as a nation – should respond, the Government has commissioned a White Paper on Australia in the Asian Century.

This century will see the emergence of a world in which multiple centres of power – in North America, Europe, Asia and Latin America – will compete for influence.

In the world that is emerging, our interdependence – and the profound scale of human impact on the globe – mean that our biggest challenges have to be dealt with in concert.

They are beyond the scope of influence of any one country or region.

Middle powers, as well as emerging global powers like Brazil, have a common cause.

Now is our opportunity to help shape the new world.

Asia's rise has redrawn many of the old rules about the way in which the international order works.

We have, for the first time in modern history, a major power near the apex of the global political and economic structure that is also a developing country.

Traditional North-South differences no longer apply to the same degree.

Increasingly, we will see new a convergence of interests between developed and developing countries, as we all try to adapt to the realities of the new economic power equation.

That realisation has one central implication: that engagement is even more important than it has been in the past.

On two levels – government and business.

Middle power diplomacy

When he was foreign minister, Gareth used to talk about Australia's "middle power diplomacy".

"By definition, middle powers are not powerful enough in most circumstances to impose their will, but they may be persuasive enough to have like-minded others see their point of view, and to act accordingly."1

Today, that logic is even more apparent.

If Australia pursues its diplomatic efforts energetically and with imagination, we can be more influential than our own economic or strategic weight might suggest, particularly when we build multilateral coalitions of support.

And – with the obvious exception of Brazil, which is assuming its place on the world stage that is true of some of the most dynamic countries of Latin America.

Like many Latin countries, multilateralism – that is, finding and building coalitions with like-minded countries – is a key pillar of our foreign policy.

We were actively involved in the establishment of the United Nations after the Second World War, understanding how vital that sort of body was to international security and developing a rules-based global order.

Both Latin America and Australia are actively engaged with questions of regional architecture, like Mercosur, ASEAN, and APEC.

Australia was very successful in some of the most important multilateral achievements of past decades.

The creation of the Cairns Group, through which Australia and Latin America have been active partners in pursuing agricultural trade reform on the global stage.

Together, Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Guatemala, Paraguay and Uruguay make up half the membership,

Working with Indonesia and the other ASEANs, the permanent members of the Security Council, Vietnam and factions within Cambodia on the Cambodian peace process.

Building the new architecture for the future – with the G20 bringing together key economies from every continent.

Indeed, Australia has always been a strong contributor to international peace and security, as have many of the countries of Latin America.

Over the years, we have deployed over 65,000 personnel to 50 UN and other multilateral peace and security operations.

We have over 3,000 Australians currently deployed around the world.

Brazil, Uruguay, and Argentina are all big peacekeeping contributors.

The high value we place on multilateralism is why we seek a non-permanent seat on the UN Security Council in elections to be held in October this year.

As a founding member of the United Nations and a country with a long history of involvement in international peacekeeping and peace building, we believe we have the credentials to make a valuable contribution to the work of the Security Council.

In particular, we bring a unique perspective to our role at the UN based on our history and our Asia-Pacific location.

A bridge between East and West.

A country that has, since the foundation of the UN in 1945, worked for the interests of small and medium sized countries alike.

Beyond security issues, our commitment to multilateralism springs from an understanding of how interconnected we are in the modern world.

What happens to one country affects others, even in distant regions.

22 of our 24 closest neighbours are developing countries.

We know – as they do – that the most pressing questions of our time will only be solved in concerted action.

The challenges we face – like climate change, ocean health, resource depletion, security, global financial stability, human health – can only be pursued together.

The pressing need to deal with those challenges is why, in 2012, it is even more important for Australia to work with and in Latin America.

The future of the Australia-Latin America relationship

We need closer engagement, particularly through business.

We can't rest on our traditional links with countries like the United States and the United Kingdom, based on our history.

We have to build on the strong foundations the mining sector has given us in our relationship with Latin America.

We are already partners who learn from each other.

Both our continents are sharing our expertise – and our experience – in mining.

We need to keep building our personal, government and business links.

There is much more that we can do together: on the international financial system, in multilateral efforts, in trade, and in security.

And for the global environment.

In today's fragile international financial system, we need to work together to build resilient and flexible economies.

We need to pursue our collective interest in structural and open market reforms, fighting a return to ill-considered protectionism.

Along with Argentina, Brazil and Mexico, Australia is a member of the G20, the premier international forum for addressing the key economic issues we face on the global level.

It proved its worth through the first phase of the global financial crisis.

We share an interest in ensuring the G20 succeeds as an effective institution.

Helping us manage the pitfalls in the global economy.

The G20 has made a clear commitment to avoiding reversion to protectionism – a call that Australia strongly supports.

We look to the governments of Latin America to work with us to give full effect to that commitment.

We share an interest in an open, transparent, rules-based international order that helps – not hinders – our attempts to tackle global issues.

And in shaping global architecture to accommodate new and emerging economic players.

In 2012, we have worked closely with Mexico, the current host of the G20, on shaping and implementing the G20 agenda.

We have seconded an Australian official to the Mexican Foreign Ministry to assist with G20 issues.

This relationship will continue in 2013, when Russia takes over as host, and Australia and Mexico will be involved as the immediate past and future hosts.

Australia has worked closely with Brazil, the G20's largest Latin member, on social protection, and we'll continue to do so.

And we're lifting our regional engagement, increasing the number of diplomatic missions we have in Latin America to help build on our connections.

We're about to open a new Consulate-General in Bogota, Colombia.

We re-opened our Embassy in Lima in 2010 and expanded our staff numbers in Brazilia.

We need to work closer together on trade reform that will continue to build prosperity, wealth and opportunity for our people.

The agriculture sector remains important for Latin American economies, as in Australia – and we need to continue to press for agricultural trade reform.

The Australia-Chile Free Trade Agreement, one of Australia's most liberalising FTAs recently passed its third anniversary.

Our two-way goods trade with Latin America has grown rapidly in the past four years, nearly doubling to $8.1 billion in 2011.

Our long-standing objective is to achieve a fair, market-oriented agricultural trading system.

That will reduce the barriers in export markets faced by our farmers.

It will enhance development in developing countries.

And build global food security.

We hope the Trans Pacific Partnership will be another plank in our growing trade relationship.

Peru and Chile are both involved in the TPP, with Australia – an agreement that could help tie our economies ever closer together.

And I'd like to see our two regions working closely together on environmental reform and standards.

Climate change and the health of our oceans are two of the most difficult global challenges we face this century.

But we need an environmental awareness to permeate through every level of what we do.

Latin America and Australia are both regions with strong environmental importance – just look at our extraordinary biodiversity.

We both have rich resource endowments, which we have to extract in a way that does not damage our local environments or alienate local communities.

Australia is a world leader in sustainable mining.

When done properly, mining can be a catalyst for sustainable socio-economic development.

Transparency is critical. As is sound financial and environmental management.

We strongly support developing economies endowed with resources adopting sound mining practices.

Through our Department of Resources, Energy and Tourism, and our aid program, Australia will be running sustainable mining workshops in Mexico and Peru later in 2012.

This will be an area on which we can continue to collaborate in coming decades, a place in which we can learn from each other.

Of course, sustainable development is a critical issue at moment.

We're very much looking forward to working with Brazil as hosts of the UN Conference on Sustainable Development in Rio in a few weeks' time.

Conclusion

Ladies and gentlemen, I started this speech by looking back to a time 20 years ago, when our regions were really just starting to think about how to engage with each other.

Over the intervening time, the mining industry has been a pathfinder in this respect in the relationship between our two continents.

I hope that in another 20 years' time, our successors will be able to look back at us and see that we worked to mature our relationships and understanding of each other.

That – understanding how interconnected and hard to manage our world really is – we learned how to work together on the big challenges of our time.

1. Evans and Grant, Australia's Foreign Relations, p 344

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