JULIE BISHOP: Thank you for that very kind introduction, Excellencies, friends of Australia and friends of the United Kingdom.
I am delighted to be here at King’s College today. Indeed, this is my first visit and hopefully it will be a timely visit because just three months ago Australia released a Foreign Policy White Paper – the first since 2003. Indeed, the last was delivered by none other than Alexander Downer, when he was Australia’s Foreign Minister. Indeed, the longest serving foreign minister of Australia, he likes to remind me!
Our 2017 White Paper clearly articulates the interests, priorities and values which will guide our international engagement and international efforts over the next decade and beyond.
This is important given the challenges – and opportunities that lie ahead.
Australia is optimistic although not complacent about the future.
We have lived through periods of greater global uncertainty and conflict than the present time.
The powerful nationalism which gave rise to the dangerous rivalries between European powers prior to the First World War have subsided.
The violent and expansionist ideologies which took root in the Interwar years no longer have legitimacy in our polity.
While there has been an increase in the number of wars this century – particularly civil wars - as compared with the second half of the 20th century, these have been smaller in scale and the number of deaths from war has been declining since the 1970s.
There has been a rise in the activity of non-state actors like terrorist groups. However, we have not experienced great power conflict for several generations.
A global focus on trade, economic liberalisation and development means that we have enjoyed unprecedented gains in prosperity and in poverty alleviation, especially in our Indo-Pacific region – the countries situated in the Indian Ocean and the Asia-Pacific.
In 1980, an estimated 44 per cent of the population still lived in absolute poverty defined by the World Bank standard as living on US$1.90 a day or less.
By 2000, this figure fell to about 30 per cent.
It is now less than 10 per cent.
On the back of technological advances, the world is more connected and interdependent than has ever been the case in human history.
The majority of people can connect from the palm of their hand with others around the world.
However, this contemporary period of global growth brings new challenges.
In the 1800s, industrial revolutions in what we now call the advanced and fully industrialised economies of Europe, North America and Northeast Asia led to what economists refer to as the Great Divergence.
From 1820 to 1990, a handful of now advanced economies broke away from the pack and increased their share of global GDP from 20 per cent to 70 per cent.
Over the past almost 2 decades, the economic rise of large developing countries such as China, India and Brazil means they are catching up in terms of share of global GDP even if they remain far behind in GDP per capita terms – giving rise to an era which can now be referred as the Great Convergence.
Rapid changes in the distribution of economic weight will bring change and have geo-strategic ramifications.
Dr Henry Kissinger wrote in his 2014 book World Order that we are at a moment in history when “chaos threatens side by side with unprecedented interdependence.”
Uncertainty and disruption do not necessarily lead to chaos.
However, rapid changes in economic power need to be successfully managed – or the gains of the last few decades could slow or even be reversed.
In many respects, our Foreign Policy White Paper recognises that we must actively manage the consequences of success to ensure that we can continue to benefit from those opportunities.
While Australia’s interests are undoubtedly global, we have identified the Indo-Pacific as our region of priority, and to keep it peaceful and prosperous at a time of change. For good reason.
According to the Stockholm International Peace Research Institute, 5 of the top ten countries with the largest military budgets are in the Indo-Pacific: the United States, China, Russia, India and South Korea – all, with the exception of Russia, are amongst Australia’s top ten trading partners.
It is worth noting that five of these Indo-Pacific nations have ongoing and significant territorial or maritime disputes with their neighbours.
Six of world’s nine nuclear weapons nations are in our region.
The stakes are indeed high. However there is no desire for conflict among the nations of the Indo- Pacific, with only North Korea directly threatening others with military strikes.
On the economic front, the Indo-Pacific has a way to go.
In the first five decades after the Second World War, middle class consumers in what we now refer to as the Group of Seven industrialised countries were the primary drivers of demand and therefore economic growth in the world.
Although the G7 nations remain leading centres of final consumption in the global economy, the major sources of growth in global consumption are now coming from large developing countries predominantly in the Indo-Pacific.
With large populations, it means we are living through the most rapid expansion of the middle class in human history.
It took 150 years from the Industrial Revolution onward in Europe for the world to reach a middle class of some one billion people – achieving this milestone in the mid-1980s.
Current estimates are that about half of the global middle class, of some 3 billion people live in the Indo-Pacific and by 2030 when that middle class reaches 5 billion people, it is forecast that two-thirds will be living in our region.
So, in a region where there are unsettled territorial disputes and pre-existing rivalries dating back decades, even centuries, peace and stability cannot be taken for granted.
The rise of China has been the most marked development in our region with its economic power, one of the great success stories of recent history.
With its rapidly advancing economy, which is already the second largest in the world, and with the largest military budget in Asia, much attention is naturally focused on China.
Our relationship with China is one of our most important, and it is a crucial economic power and partner to our region and the world.
It is vital that China plays a constructive role, commensurate with its standing.
China has additional responsibilities as a permanent member of the Security Council in terms of safeguarding international peace and security – as does the United Kingdom.
With greater power and wealth comes a responsibility to protect and strengthen the very system which supported that rise.
As articulated in our White Paper, we have elevated defending, promoting and strengthening the international rules based order as our highest priority.
The importance of the international rules-based order – that network of alliances, treaties, institutions and conventions under international law that has evolved since the Second World War - cannot be overstated.
In the main, the rules-based order is not facing the same direct assault as during periods of the Cold War – even if the policies of pariah countries such as North Korea are in direct defiance of it.
However we must ensure that nations do not fall for the temptation of ignoring international law and rules for narrow advantage and short-term gain.
The rules-based order will quickly fray if it is perceived that advantage can be gained by flouting it or working around it.
We are particularly focused on the Indo-Pacific as we seek to defend and strengthen the existing order to enable the continued economic rise of individual countries, and the region as a whole.
We should never forget that the rules-based order came into existence after the horrors of World War II, because there was a collective will to ensure that there would not be a Third World War – we needed to create order from chaos.
The order is designed to regulate behaviour and rivalries of and between States, and ensure countries compete fairly and in a way that does not threaten others or destabilise their region or the world.
It seeks to protect the rights of small and large countries by establishing norms of behaviour that lead to cooperation and dispute resolution through dialogue.
The nature of its institutions places limitations on the extent to which countries use their economic or military power to impose unfair agreements on less powerful nations.
It is important that Australia work with other like-minded countries to ensure that there are strong incentives for all to abide by the rules based order – and strong disincentives for those considering or pursuing the alternative.
There is a compelling incentive for all nations to support the rules.
The maintenance of peace and stability is vital to support sustainable economic growth and trade.
The security architecture in Europe is predominantly defined by the North Atlantic Treaty Organisation: a collective security or defence commitment in which an attack on one member is considered an attack against all members.
The Indo-Pacific is vastly different.
Security architecture and commitments are based on bilateral arrangements between the United States and its alliance and security partners.
Unlike NATO, the extent of the American commitment to each ally is not uniform and many commitments are not formalised in writing.
Moreover, the bilateral agreements between the US and its regional allies are not matched by separate bilateral alliances between the allies.
Institutions such as ASEAN – the Association of Southeast Asian Nations – do not impose obligations or commitments on its members who are free to negotiate their own arrangements with other countries.
The rich development of multilateral economic institutions and agreements in the Indo-Pacific stand in contrast to the sparse multilateral security arrangements in place – meaning that greater economic interdependence will not guarantee an increase in security cooperation between all economies.
In some cases, greater economic interdependence has been accompanied by worsening security relations between certain countries.
This is why Australia recognises that in this environment, the rules-based order takes on even greater importance.
May I suggest that in this context, the weight and voice of the United Kingdom is vital, for the UK is:
- one of the chief underwriters of the international rules based order;
- a Permanent Member of the United Nations Security Council;
- the foundation nation of the Commonwealth;
- a dominant global economic and financial centre;
- a leading military and nuclear power with formidable projection capabilities; and
- a leading source of capital and technology transfer into developing countries in the region.
In our region, Australia and the United Kingdom are members of the 1971 Five Power Defence Arrangements with Malaysia, Singapore and New Zealand.
Members are obligated to consult with each other in the event of an external attack against Malaysia or Singapore – not a collective security agreement as such.
As a global trading nation, the UK has the same strong interest in free and open access to regional and global maritime commons as any other nation.
It is also important to note the changes to the geo-strategic environment are occurring alongside a global conversation with respect to whether the decades’ long trend of economic liberalisation will continue or retreat.
History has proven that protectionism is the pathway to economic decline and decay, however that has not prevented populist leaders beating that drum.
Australia is an open export oriented market economy. We have broken a world record – we are entering our 27th consecutive year of uninterrupted economic growth – no other advanced economy can match that record.
I believe that future opportunities for Australia and other nations will depend on the extent to which:
- advanced economies continue to champion and defend an open economic order;
- developing countries continue to liberalise their economies - and dismantle behind the border restrictions in particular;
- countries are able to resist using economic tools in a coercive or unfair way to achieve narrow strategic and political objectives;
- populations within countries believe that they stand to gain from further liberalisation.
It is a positive reflection on Australia’s political climate that we remained a strong supporter of the Trans-Pacific Partnership after the United States indicated its intention to withdraw.
We are committed to what is now the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or TPP-11 which includes Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
The TPP-11 entrenches a set of rules and high standards for economic liberalisation which address ‘behind the border’ obstacles and protections.
With the consent of existing members, it is open to new members willing to abide by the rules, standards and spirit of the agreement. And I welcome the recent remarks by Secretary Liam Fox regarding interest in TPP-11.
This high quality liberalising outcome serves as a model to which we will aspire in our own future bilateral free trade agreement we hope to pursue with the United Kingdom.
Our two countries have endured and achieved much separately and together.
The United Kingdom and Australia continue to share a common purpose and speak with one voice on important matters.
However, I believe that it is now more important than ever that as like-minded nations we join in promoting, defending and upholding the rules based order – including together in the Indo-Pacific.
I make special mention of the Commonwealth, which continues to be a beacon for many nations.
The Commonwealth Charter enshrines a commitment to democracy, human rights, the rule of law, gender equality, tolerance, sustainable development and good governance, among many other fine principles.
These have attracted the interest of nations who were not part of the British Empire.
We should welcome new members who are committed to the principles and values of this institution that continues to play a very important role in global affairs.
In the pre and post Brexit world, there are opportunities for Australia and the UK to reinvigorate our historically close relationship:
- a free trade agreement, when the circumstances are right;
- greater co-operation in the Indo-Pacific – mindful that 19 Indo-Pacific nations are members of the Commonwealth;
- opportunities to enhance joint engagement for development assistance in the Pacific where 11 Pacific Island nations are members of the Commonwealth; and
- more broadly to work together to enhance peace and prosperity under the international rules based order.
Long may our partnership endure.
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