Speech at the APEC Logistics Symposium, Singapore
16 May 2009
APEC'S Building Blocks
Good morning Minister Lim and distinguished guests.
On behalf of the Australian Government, I'd like to start by saying how proud we are to co-sponsor with Singapore this APEC Symposium.
We warmly welcome Singapore's focus for APEC 2009 on logistics.
I'm also very pleased to be here in Singapore this weekend to contribute to the discussion on a very important issue for all member economies.
Why do I say it's important?
Let me suggest that it's because the issue we will discuss today comes with its very own jargon. And I don't mean any disrespect to the many experts gathered here today.
But phrases like: "supply chain connectivity"; "logistics" and "choke points" sound like many of you may be involved in military-style operations!
This is not that far from the truth; after all, the business of logistics first arose in the military.
So it's no surprise that it probably takes the insight of a military strategist and tactician to manage and co-ordinate the demand and supply of goods and services in today's global economy.
Let's face it: moving goods and services from the producer to the consumer is hard work. Doing this faster and more efficiently across borders is even harder.
That's why efficient supply chains and global trade go hand-in-hand.
Today, there is no question of the positive benefits to economies—and to people's living standards—of expanding world trade.
So the challenge to us at this Symposium is to work out how to expand trade through better supply chains. In the midst of this global recession, APEC economies can make a valuable contribution to economic recovery.
So let me contribute three brief points this morning on how we can do this: first, is that trade is part of the solution; second, that connecting supply chains reinforces trade and growth; and third, that APEC is more important than ever.
Trade matters
World trade has been has been hit hard by the global recession.
No doubt many of you in this room have seen the bleak forecasts made by the World Trade Organization predicting global exports will drop by 9 per cent this year.
Australia forecasts that global trade flows could shrink by 11 per cent this year. If realised, this will be the sharpest fall in world trade in the post-war period.
For export-reliant economies in the Asia-Pacific, this downturn is being felt very hard. Jobs have been lost and incomes have fallen.
There are probably fewer places in Asia than Singapore that appreciate the importance of trade to national prosperity.
Which is why the collapse in global trade flows during this global recession has been very worrying.
Under these tough circumstances, many APEC economies have felt the pressure of calls for protectionism. And I acknowledge that it has been hard to contain these protectionist pressures.
But what gives Australia confidence is that the world still has in place a rules-based system that curbs the worst protectionist tendencies: it is the WTO and there are effective disciplines within that system against protectionism.
G20 Leaders renewed their commitment to concluding the WTO's Doha Development Round.
A successful conclusion to the Doha Round would make a strong contribution to the global economic recovery – which is why we need forge ahead now with this important endeavour.
There are several informal opportunities in the weeks ahead for political engagement on Doha.
We're very pleased that Indonesia has decided to host a meeting of the Cairns Group in early June in Bali, which should provide a key opportunity to build political momentum in the talks.
We're also very pleased that the new US Trade Representative, Ron Kirk is scheduled to attend as a Special Guest, which will provide a good opportunity to engage the US Administration on the Round. Given the importance of reaching out to others, the Group has invited a number of other Special Guests, including from the EC, China and Japan to attend the meeting.
Then later in June, Trade Ministers will meet for OECD meetings in Paris, providing another opportunity for discussions at the political level, ahead of the G8 Summit in Italy in July.
These meetings will provide some important opportunities to progress talks on Doha at the political level.
We have strong guidance from G20 Leaders. They have reaffirmed that they will not repeat the historic mistakes of protectionism. And they pledged to notify the WTO of any domestic measures that negatively impact trade and investment.
In this respect, I would also like to commend the Government of Singapore for its principled stand against trade protectionism. As the Chair of APEC this year, Australia commends Singapore's efforts to marshal the political will in this region against protectionism.
Trade is not to blame for the worldwide recession but it can be part of the solution.
Evidence shows that an increase in the ratio of trade to Gross Domestic Product by just 1 percentage point can raise income per person by up to 2 per cent.
On the upside, when economies do recover, there is every chance that trade can rebound just as fast as it fell.
The Australian Government is doing our part to bolster the international community's effort to support recovery.
We are implementing a Nation Building and Jobs plan, injecting fiscal stimulus into our economy—in line with the efforts in the G20 and among APEC countries.
At the G20 Summit, we joined with other countries in efforts to reform the international financial architecture.
We pledged to ensure that the International Monetary Fund has the resources to maintain stability and support recovery in the global economy.
And I'm pleased to report that in Australia's national Budget delivered this week we have delivered on this promise.
Alongside the world's largest economies, we all agreed to treble the resources available to the IMF from US$250 billion to US$750 billion to help tackle the global recession.
So I'm pleased to report Australia's contribution will be by way of a US$7.0 billion contingent loan to the IMF—an amount consistent with our global economic weight.
Australia's economic recovery, like many of the region's economies, will rely heavily on a return to growth in the global economy. That's why it is vital we do our share to foster recovery in the global economy.
And while it is early days, there are some encouraging signs in our own region--particularly some recent data for China.
There's no doubt that China will be the world's fastest growing economy this year and most likely next year.
In first quarter year on year, car sales in China were up 6 per cent, to a record 1.1 million vehicle sales in March alone. Retail sales were up 16 per cent and fixed asset investment up 29 per cent.
This is all consistent with solid—and improving—macro economic conditions in China which suggests that recovery may not to be too far away.
Looking ahead at 2010, Australia forecasts key Asian economies to be among those showing positive signs of growth.
- China, growing at 8 per cent;
- Hong Kong, South Korea, Singapore and Taiwan growing at 2 ¾ per cent;
- Indonesia, Malaysia, the Philippines, Thailand and Vietnam growing at 2 ½ per cent;
- And India growing at 4 ¾ per cent.
These figures will provide sound platforms for growth in 2011 and beyond.
Following such a rebound in our region we all hope to see fresh growth in jobs and rising incomes.
Connecting supply chains
So what is the link between trade, supply chains and growth?
According to a new independent study commissioned by Australia's Department of Foreign Affairs and Trade in the lead up to this Symposium, the link goes something like this:
- With better supply chains, prices in inland markets and ports are more comparable;
- Better supply chains lead to more competition and price stability;
- Better supply chains lower inventory and insurance costs for business;
- And better supply chains lead to more consumer choice.
Taken all together, these efficiency gains lead to greater productivity, which in turn drives economic growth.
In Australia's case, the study found that a modest 10 per cent productivity improvement in logistics "behind-the border" could be as large as 4.7 billion U.S dollars.
And across APEC economies as a whole improving logistics across borders could result in similarly strong gains.
I won't go into more detail about the numbers here because they will form a key part of presentations during this Symposium.
But it's fair to say that, at the moment, the performance of logistics varies widely across APEC economies.
What is clear is that logistics reform is emerging as a key issue when APEC economies look at ways to boost their development and trade performance.
That's why this year Singapore, as the 2009 host of APEC, has identified logistics reform as a crucial step towards the APEC goal of facilitating more trade.
Because reforming logistics promotes genuine regional integration through increased trade facilitation and better linkages between APEC member economies.
These efforts will require close cooperation between APEC and the APEC Business Advisory Council, or ABAC as it's known.
Let me acknowledge the ABAC members who are with us today—in particular Australian ABAC representative Mr. Lindsay Fox, who is making a significant contribution to efforts to adopt a best practice model in road transport in the APEC region.
I would like to encourage all participants at this Symposium to contribute ideas. Draw on the measures that have worked in your respective economies because they can contribute to a more efficient and prosperous APEC region.
APEC's role
Which brings me to my final point this morning—and that is that APEC is very well placed to advance the discussion on this emerging issue.
Many of APEC's better known successes have been in trade facilitation. APEC enables member economies to consider new and innovative policies to address shared problems.
These policy suggestions are not mandatory; in APEC, economies listen to the other member economic and then take up what they think best fits their circumstances. It is both a collaborative and responsive grouping.
Last week, for example, APEC Transport Ministers made progress to enhance the connectivity between various transportation systems.
They acknowledged the importance of integrated road and rail to bring goods to and from ports and to tackle congestion and environmental sustainability issues.
For a region that covers 40 per cent of the world's population and many of the world's most dynamic economies, accelerating regional economic integration and trade liberalisation remains vital—especially in this global downturn.
Economies can use APEC to set priorities, share lessons and develop action plans—for example on harmonising customs standards or identifying logistical bottlenecks.
If we are able to build better logistics across APEC, I am confident that strong action and constructive reform will drive stronger levels of economic growth and higher living standards across the APEC region.
The Australian Government strongly believes APEC can achieve these goals through collective action.
So in closing, whether your discussion is about "supply chain connectivity" or "integrated transport hubs", I wish you well in your deliberations over the next two days and look forward to seeing the results.
Thank you.