Australia and the United States in the 21st Century

The Banyan Tree Leadership Forum, Center for Strategic and International Studies, Washington, DC

Speech, E&OE, (check against delivery)

22 November 2013

I am absolutely delighted to be here at the Center for Strategic and International Studies, in your brand new premises — a stunning building - in the heart of Washington DC, conveniently located across the road from the Australian Embassy.

Your proud history of providing fifty years of non-partisan assessments and policy advice, including on Australia’s immediate neighbourhood — what I’ll call the Indian Ocean Asia Pacific (Indo-Pacific) — makes yours a natural venue for an address by a visiting Australian Foreign Minister.

The Alliance

Coming to Washington within a few weeks of being appointed Foreign Minister, I am reminded of my distinguished predecessors who paved the way in developing Australia’s relations with the United States.

One eminent figure who comes to mind is Sir Percy Spender. Appointed as Minister for External Affairs in Sir Robert Menzies’ 1949 government, Sir Percy was Minister for only sixteen months (now that’s not actually why he springs to my mind!). He subsequently became Australia’s Ambassador to the United States, then Vice President of the UN General Assembly, with his career culminating as the President of the International Court of Justice.

However, in his short time as Minister, Sir Percy left a lasting legacy — finalising with the US envoy, John Foster Dulles, the terms of the Australia — New Zealand — United States Treaty — ANZUS, and representing Australia at the treaty signing ceremony in San Francisco, on 1 September 1951.

His views on Asia and the United States were influenced by a visit to Southeast Asia in 1950, when he became convinced of the need for a Pacific Pact.

Spender believed that engagement with the United States was crucial, and that a Pacific Pact without the United States would be a meaningless gesture.

I believe his perspective remains current to this day.

Governments in Australia from both sides of politics have come and gone since Sir Percy Spender’s days, yet in successive parliaments and governments — as busy and bruising as Australian political affairs can be — there is an unequivocal bipartisan consensus about the importance of the United States’ regional and global role.

And the central, vitally important truth which underpins Australia’s foreign policy remains the ANZUS Treaty.

The principles of the Alliance hold firm despite changes of government.

And the strength of our relationship should never depend upon the particular party in government.

So the Australian Government changed hands in a general election last September, and I assure you that the new Government is fully committed to the Alliance and to working as closely as possible with the United States.

It remains fundamental to how we in Australia perceive our own security and foreign policy outlook.

But it is not just a treaty that brings our two nations together. It is our history that binds us.

We have fought together. We have died together.

From the trenches of the First World War to Afghanistan’s valleys, from Korea and Vietnam to the Gulf, Australians and Americans have stood together and given their lives in every single major conflict of the past one hundred years.

We started to find out about each other in the First World War, the centenary of which we begin commemorating next year. The first fight in which American troops were engaged alongside Australians was at Hamel in Northern France, under our General Monash on 4 July, Independence Day 1918.

But it was during the depths of the Second World War that our enduring bonds were forged.

Australia and the Pacific theatre were a very long way from what was centrally occupying the thoughts of the Allied commanders — North Africa and Europe.

But critical elements of the US military determined Australia should be a focal point of the Pacific fightback.

In March 1943, 70 years ago, the US 7th Fleet was formed in Brisbane to meet the threats in the Pacific. Many Royal Australian Navy vessels came under the US fleet and the overall leadership of General Douglas MacArthur. One million American servicemen and women passed through Australia. However, it was not until 1944 that General MacArthur commanded more Americans than Australians.

As Australia and the United States stood together to defend the Pacific, we formed a partnership in a time of crisis and challenge that endures.

On 14 September 2001, just three days after that fateful day, Australia invoked the terms of the ANZUS Treaty for the first and only time. We were with you in your darkest hour.

The Australia-United States Alliance, tested by time and events, remains the indispensable feature of Australia’s strategic and security arrangements.

Our ties have not been determined solely by conflict and challenge.

Our paths have been shaped by similar legacies and narratives.

In each other's story we see a reflection of our own pasts.

Ancient cultures, from an ancient time. Migrants, who crossed continents and oceans for a new life.

From all parts of the globe, people have come to our countries to search for a brighter future for their children.

Each new arrival adding diversity and vibrancy that makes our nations dynamic and innovative.

And as new world countries, we believe that regardless of who you are or what your background is, everyone deserves a fair go, and an opportunity to succeed.

It has bestowed on both our countries a global outlook and shared values.

We believe in democracy, in the rule of law, and the fundamental freedoms.

A liberal international order backed by strong institutions to underpin stability.

And a commitment to an open, rules-based system of trade, to drive economic growth, enterprise and to provide job opportunities.

Our belief in these values has been pivotal to our ability to confront shared global challenges over the last century, from two World Wars, the threat of Communism, financial crises to terrorist attacks.

Changing Indo-Pacific region

Our Alliance should not be considered just in the context of the past or what we have achieved.

It should be viewed through the lens of future opportunities and challenges.

The Alliance will hold us in good stead as we face the changing nature of the regional and international landscape.

The gradual emergence of the Indo-Pacific region as an economic, political and strategic centre in its own right, will be one of the most significant developments of this century.

This region stretches our traditional focus on East Asia to embrace India. It links two magnificent oceans, the Indian and the Pacific. And it reflects the fact that the big strategic challenges of this century are likely to be maritime.

History will have no bigger arena this century than the Indo-Pacific.

Already, the region — including the ASEAN countries, China, India, Japan, South Korea and Australia — accounts for a third of global GDP.

By 2020, it could account for around one-third of global trade.

The emergence of the Indo-Pacific’s middle class is stunning and is expected to mushroom to 2.5 billion people by 2025 — 60 per cent of the globe’s middle class, up from 20 per cent in 2013. The Asian story today is about exports. Tomorrow, it will be about consumption and investment.

But population growth in the short term will be checked as the Asian population ages and hits a demographic ceiling.

China expects its population to peak at about 1.5 billion in the 2030s before a predicted demographic decline. Japan is facing a similar problem.

Meanwhile, by the middle of the century India will become the most populous nation in the world.

Continued economic growth and higher standards of living will put increased pressure on resources. Infrastructure is already inadequate, and is in turn creating barriers to growth.

Demand for energy will grow. In the Indo-Pacific region, demand is anticipated to grow by around 40 per cent by 2020.

Wealthier populations are also demanding more and better food. They will need more water too. As populations become wealthier, they will demand higher environmental standards.

And the rapid economic transformation has created a new dynamic: rising ambitions and rising tensions.

New dynamics create uncertainty and with it comes risk.

The region already contains long-running potential flashpoints — Kashmir, the Taiwan Strait and the Korean Peninsula.

Territorial disputes have emerged, which could stoke nationalist tendencies and drive political and foreign policy outcomes.

And as new powers emerge, new balances of power and influence are being forged. China is an emerging global power, as is India — the world’s mega-democracy — and Indonesia, the world’s largest Muslim democracy. New dimensions of technology and national wealth are being created.

By 2020, Asia’s share of global military spending will have grown to nearly one quarter.

Militaries throughout Asia have sought to modernise and continued economic growth will encourage the acquisition of higher technology military systems.

So for Australia, engagement with the Indo-Pacific is not just determined by geographical proximity.

Our engagement with the Indo-Pacific for the future is about a region of global significance in its own right.

We are living through a period of history when a country's capacity to adapt and respond sensibly to rapid change will determine its prospects for many years to come.

These are exciting, but demanding, times.

The stakes are high and will test the strategic maturity, restraint and adaptability of all nations.

It calls for innovation and vision.

Australia approaches our changing region clear eyed and with a sense of optimism.

We reject the notion that the future is pre-determined, in that we do not see conflict as an inevitable result of changing strategic relativities.

We do not view regional politics through the prism of a zero sum game.

What we do see is a region of remarkable promise, and we have an opportunity to help shape its future.

An opportunity to calibrate our collective diplomatic and strategic assets to ensure that in this century our region will be peaceful and prosperous.

To promote a web of stability to allow the engines of economic growth and trade to continue to lift millions of people out of poverty.

To provide continued opportunities for the new middle classes.

To promote an international order where the rights and responsibilities of all nations are protected and upheld.

Responding creatively to these realities, and fulfilling our potential in the world's most dynamic economic region, constitutes the foremost challenges of Australian foreign policy — maximising economic opportunity, minimising strategic risks.

The US rebalance

So it is against this background that we see no more important strategic decision in recent years than that outlined in President Obama’s speech in Canberra in November 2011.

President Obama made clear that the United States would play a larger, long-term role in shaping this region and its future, by upholding core principles, through close partnerships with allies and friends. Not only on the bilateral front, but also with trilateral and quadrilateral arrangements and more, the United States and Australia will be active in connecting our partners.

I was pleased to meet National Security Adviser Susan Rice yesterday and to compliment her on her speech this week about the US rebalance as a cornerstone of the Obama Administration’s foreign policy.

Dr Rice expressed clearly and unequivocally that no matter how many hot spots emerge elsewhere, the United States will continue to deepen its commitment to our region.

There is no doubt President Obama will be very welcome when he returns to Asia in April, as the rebalance is vitally important.

It is the logical continuation of an American perspective that has been trending gradually towards Asia for nearly two centuries.

It is a continuation of the US commitment that assisted Japan and Korea emerge from the ashes of the Second World War.

A commitment that has seen the US Navy guarantee safe passage of maritime trade which has underpinned regional trade and economic growth.

A regional presence that has provided a vital check on North Korean provocations and nuclear proliferation.

A security commitment that has allowed countries in Asia to prosper and grow.

That commitment is as important now as it has ever been.

It might be impolite for a foreign minister to opine about the national interest of another nation, particularly while travelling in that country.

But I think I’m on pretty firm ground in saying this:

US engagement in our region now is more in the American national interest than it has ever been in the past.

And in my meetings with regional leaders, they want to see more US leadership and not less.

And let me be clear about this. Australia wants the United States to remain engaged with and committed to our region.

AUSMIN

It will be the partnerships and cooperation we forge or enhance now that will help shape the region’s future.

That is why I am here in Washington with my colleague, the Minister for Defence, Senator David Johnston, for the annual bilateral talks known as AUSMIN.

With our counterparts Secretary of State John Kerry and Secretary of Defense Chuck Hagel, we spoke of how to further our enduring strategic partnership, bilaterally, regionally and in multilateral arenas. We shared insights and perspectives.

You know, one of the most impressive things about the Alliance has been our two nations’ ability to adapt how we use it to meet the changing security challenges we both face.

Bilaterally, we have continued to strengthen our military cooperation and interoperability over several decades.

The strength of the United States also lies in its network of alliances and partners around the world.

And the Australian Government is mindful of the need to play its part within the US security umbrella. And we will restore defence expenditure to two per cent of GDP, which we believe represents Australia doing its part.

The Minister for Defence and I expressed our strong commitment to the implementation of the US force posture initiatives in northern Australia, announced by President Obama in November 2011.

That was a change we welcomed in Opposition, and continue to support in Government.

The force posture involves rotational US Marine Corps deployments and increased rotation of US Air Force aircraft in northern Australia.

Over coming years, we expect substantial progress towards rotations of around 2,500 US Marine Corps personnel and equipment.

Last Wednesday, we signed a Statement of Principles with the United States, which provides a common vision for implementing the force posture initiatives. We will commence negotiations on a binding agreement to support future cooperation.

We are also committed to ensuring our bilateral cooperation through this force posture achieves the goal of increased linkages with other countries in the region — through combined training, humanitarian assistance and disaster relief exercises, and multilateral engagement in the broader Indo-Pacific region.

We have pledged to strengthen and regularise our biennial Talisman Sabre exercises. Involving around 28,000 personnel, it is Australia’s — and the United States’ — largest bilateral exercise.

The scenario tests high-end military coordination, but also incorporates a significant civilian component to test disaster and humanitarian response readiness.

We have seen recently in the response to the Philippines’ typhoon, how our cooperation prepares us to move quickly to help our neighbours in times of crisis.

Australia is one of only two countries to share a Defence Trade Cooperation Treaty with the United States — making sure our military forces can work together effectively.

The United States and Australia’s history of close cooperation in space was deepened this week with our signing of a Memorandum of Understanding governing the arrangements for the relocation and the joint operation of a highly-advanced US space surveillance telescope to Western Australia.

Our shared intelligence cooperation has enhanced our security and counter terrorism capability — and has saved lives.

Our Alliance will continue to adapt and change, and move into new spheres and new frontiers as we work together to enhance security in the Indo-Pacific region.

Trans Pacific Partnership

Our commitment to achieving regional security will shape the form and content of our strategic partnership.

Our Government is committed to what we term ‘economic diplomacy’ — using our foreign policy assets to promote productivity, prosperity and growth — at home and in our region.

And it is our shared belief in free trade and open markets that guides our cooperation with the United States in regional trade negotiations as exemplified in our efforts on the Trans-Pacific Partnership (TPP).

I welcome the United States’ leadership in setting an ambitious timeframe and agenda for TPP negotiations. With membership currently covering some 40 per cent of global GDP, it is right that we hold ambitious outcomes for the TPP.

Like the United States, Australia can see the huge potential benefits of liberalising trade among such significant players in the global economy.

The TPP has the potential to deliver a major boost to trade and investment in the region that is already driving global growth and trade.

The region can use more openness, transparency and lower tariff barriers to propel economic growth.

When signed, the TPP stands to be a vital building block in establishing and confirming the rules-based regional and international trade order.

We understand what the TPP means to the United States. A high-quality agreement with an open accession clause has the potential to take the initiative on trade rules and become the primary overarching trade agreement for the region. It will give expression to an economic grouping that will drive regional trade.

And the United States’ competitors are not standing still. The United States has been losing ground on trade market share in Asia. And the TPP is certainly not the only game in town — a range of other trade initiatives are gaining momentum in the region.

So this is a big and ambitious undertaking. Finalising an agreement will require some tough decisions by all parties.

But the bottom line is simple. The United States, just as it plays a fundamental role in regional stability, also needs to be in the game on regional trade, and only the TPP includes the United States.

To any sceptics, I simply state that the region cannot afford for the United States not to be part of regional trade arrangements. And this opportunity cannot be missed by the United States because it will determine the capacity of this nation to profit from the consumption and investment boom that we will see in Asia — without this, I suggest, it will be a struggle.

Entrenching regional architecture

But the TPP is only one aspect of how the future of the Indo-Pacific region will be defined.

As the region becomes more confident, as cooperation becomes more pressing, as transnational issues emerge, structures will develop to stop conflict and to agree on rules and cooperative patterns of behaviour.

The Indo-Pacific region is far from a European Union. A federal-type arrangement will not emerge given the divergent interests and values, histories and cultures.

But what is emerging is a loose web of overlapping institutions that is encouraging habits of cooperation and dialogue across the region on issues ranging from trade and economic cooperation, environment and climate change, other trans-national challenges.

We will need to develop bodies that facilitate cooperation when times are good, but also solve problems when times are tough.

We must encourage the development of a genuine and comprehensive sense of community whose habitual operating principle is cooperation.

The danger in not acting is that we run the risk of succumbing to the perception that future conflict within our region is somehow inevitable.

And in this endeavour, we value our close cooperation with the United States.

In the 18-member East Asia Summit (EAS), we both see a grouping that has the potential to emerge as the region’s premier leaders’ forum.

One that can help foster a stable strategic environment, support the rules-based order and economic growth.

With the US included, the East Asia Summit has the right membership and mandate to address region-wide political, strategic and economic issues. And the Howard Government rightly considered gaining membership to the EAS back in 2005 as a big foreign policy win.

Our cooperation in the EAS builds on our long cooperation through APEC, of which we are both founding members.

Where our priorities align, we work closely with the United States, an active and influential member, in reinvigorating APEC’s agenda.

Like the United States, Australia places high priority on APEC’s free and open trade and investment agenda, including moves to cut red tape and regulation.

We are both very active in the ASEAN Regional Forum — a grouping that Secretary Kerry says is going to have a key role in preventive diplomacy.

And in the recently renamed Indian Ocean Rim Association (IORA), the United States has joined as a dialogue partner. Australia will chair IORA for the next two years, and we are committed to making IORA an essential piece of Indian Ocean regional architecture, with its focus on maritime security, trade, investment, fisheries management, disaster relief and scientific and research collaboration.

Beyond the region, the United States and Australia, based on our shared interests and values, work together in the full range of international institutions.

We continue to work closely on United Nations Security Council issues, including North Korea, Afghanistan, Syria, Iran and Africa.

We welcomed the United States’ strong support for Australia’s September Security Council presidency, including our resolution on the illicit trade and misuse of small arms and light weapons.

We look forward to working with the United States during our G20 host year in 2014, to produce practical outcomes which will generate investment, create jobs, and develop vital global infrastructure.

Australia and the United States — Betting on each other

Jeffrey Bleich was an outstanding ambassador for the United States in our country, and his farewell speech last September summed up rather neatly the nature of our ties. He said: In hard times we bet on each other, we met our challenges head-on, we came out stronger.

We will continue to bet on each other. And the bets are significant.

The United States is by far and away the greatest foreign investor in Australia amounting to around $630 billion in our country. That’s six times the US investment in China.

Your investment is developing the critical infrastructure for our gas fields, building our agricultural sector and enhancing our financial integration into global markets.

And the United States is the most important destination for Australian investment, amounting to $430 billion, 20 times our investment in China.

Almost 10,000 Australian companies are doing business in the United States. And we do it because the market is secure, and the legal protection world’s best practice.

So in terms of both trade and investment, the United States is our most significant economic partner.

The United States, the nation that has produced over 300 Nobel Laureates, is the go-to place if you have a new idea or a new product, and we have lots of both.

Earlier this year I attended the Australian American Leadership Dialogue at Stanford, and we had a presentation from five of the best and brightest young people working in Silicon Valley as software engineers, in venture capital, in start-ups and the like. After hearing of their success, we were asked to guess what they had in common — apart from being precociously young and successful: they all had a degree from an Australian university.

Our best and brightest continue to collaborate with US counterparts.

The United States remains Australia’s number one international partner in terms of joint publications in areas as diverse as astronomy, molecular biology and particle physics. Australia was the United States’ eighth ranked international partner.

Our educational links are strong, flowing naturally I would suggest from Australia having the largest number of top 100 universities in the world after the United States and the United Kingdom. One of my most memorable experiences was in 1996 when I attended the Harvard Business School, completing an Advanced Management Program. And that whole experience of studying overseas and in the United States inspired my thinking in introducing a policy for a scholarship program to start next year for Australian students to study at universities in our region and undertake internships with businesses operating in host countries. It’s been dubbed Australia’s New Colombo Plan — and we hope it will be a signature policy of the new government.

With more than 800 formal agreements in place between our universities, our education and research ties are on a solid platform.

The visa arrangements provided by the Australia-United States Free Trade Agreement, which we signed in 2005, means that you will only see more Australians visiting and working in the United States. More Aussies.

From music and the arts, to science and business, through to sport and popular culture, our extensive people-to-people links across the range of human endeavours will draw us closer together in years ahead.

Conclusion

The transformation of the Indo-Pacific region over the recent decades has been a watershed in the evolution of Australian foreign policy.

Our economic interests are inextricably tied with the region. Our businesses, our institutions, our people will need to place great effort into understanding and responding to the significant shift that is occurring.

We must comprehend how the rise of the middle class in the Indo-Pacific region will transform the relationships between the region and the rest of the world.

Expanded forms of economic regionalism and sub-regionalism among Indo-Pacific countries is building, and is set to continue.

Australia will need to meet the regional challenges of the future, with the flexibility to adapt to changing circumstances but with pride in our history and in our values.

In that context, Sir Percy Spender’s insights from 1950 still ring true 63 years on.

As he told the House of Representatives of the Australian Parliament in March 1950:

I have emphasized how essential it is for Australia to maintain the closest links with the United States of America for vital security reasons … I am confident that, on the great issues affecting the maintenance of peace and security in this area, Australia and the United States can act in concert to our mutual advantage and the advantage of other countries concerned.

So as we grasp the changes in our neighbourhood and rise to meet the regional challenges, we need a United States that is active and engaged. A United States that works with partners, and does what it says it will do.

There is no substitute for the United States.

Australia looks forward to working with you as you continue to provide the pivotal support for regional peace and security that has underpinned our region's growing prosperity over 70 years. Ladies and gentlemen, I firmly believe that the best days of the Australia-US relationship lie ahead of us.

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