I welcome the opportunity today to take up this invitation and address a forum which has made such a powerful and substantial contribution to generating an understanding in the US on issues relating to Asia.
As the title of my address suggests, I propose to range a little more broadly on the significance and potential of APEC, to go beyond simply Australian perspectives.
Certainly, the continuing development of APEC into a vehicle to deliver fundamental trade liberalisation across the Asia-Pacific area is of the highest priority to Australia it forms not only a cornerstone of Australian trade policy but, in a much broader sense, gives expression to Australia's deepening engagement with Asia.
But APEC is, obviously, much more than simply a vehicle for Australian policy and aspirations
indeed, it is much more than a vehicle for any single country's policy and aspirations.
The Seattle meeting of APEC Leaders in November 1993 was recognition that APEC has the potential to deliver economic benefits across and for each of its member economies.
It is become increasingly apparent that, in economic terms, just as the nineteenth century was the European Century and the twentieth century was the American or Atlantic Century, the twenty-first century is dawning as the Pacific Century.
It projected that Indonesia, South Korea, Thailand and Taiwan would join the ranks of the top 10 by that time.
Similarly, experts at an OECD/ Asian Development Bank forum in early July appear to have concluded that the EU, US and Japan would lose a good deal of their dominance in world trade over the next 10-15 years :with rising roles for China, India and Indonesia.
Whatever the validity of the specifics of these projections, the key point is that a massive shift in the relative power of economies in our region is underway
APEC has the potential to be a unifying force across the most dynamic economies of the world
- for the benefit of its individual economies - including the US
- for the benefit of the region
- and for the benefit of the world as a whole.
Like any ambitious and worthwhile exercise, however, it will undoubtedly have its fair share of frustration and the occasional disappointment
- it is, after all, an undertaking that involves 18 very diverse economies, with a wide range of views and, in a number of aspects, divergent, sometimes competing interests.
But the Bogor meeting of APEC Leaders last year clearly demonstrated that, with ambition underpinned by goodwill and vision, remarkable results can be achieved
- President Soeharto "showed the way" as it were
: we need to be flexible
: we need to be pragmatic
: but most of all, we need to understand our common interest in an open trading system and focus our attention on the work of achieving that goal.
Under President Soeharto's leadership, the meeting of APEC leaders in Bogor in November 1994 transformed APEC from a forum for regional dialogue and cooperation to one which has a mandate to achieve free trade and investment by 2010 for developed economies and by 2020 for developing countries.
It's easy enough to be sceptical about this undertaking
- in my own country, it has been frustrating to observe the misunderstandings and misinformation about APEC issues which have emerged from Opposition politicians and some media and academic commentators.
Here in the US I know there is no shortage of naysayers and sceptics, either.
But many in this audience who have followed and analysed Asian affairs for a long time will recall that the sceptics once said that Asia-Pacific was too historically, culturally and politically diverse for a body such as APEC to even get off the ground.
They were wrong.
Similarly there were those who doubted that Indonesia could or would engineer a major trade liberalisation breakthrough in APEC at the Bogor meeting.
They were wrong, too.
It is true, however, that it will take time before we see tangible trade and investment liberalisation flowing directly from APEC processes.
But it is important to realise that APEC is already delivering results which are not at all inconsequential in terms of their contribution to regional cohesion and long term structural economic change
- in its role in collecting, disseminating and analysing economic and trade-related information so that business and policy-makers can gain a more accurate picture of developments
- in its rapidly developing program of trade facilitation in areas such as standards and conformance, customs procedures, and in developing a progressive investment framework
- by building on and accelerating the already strong trend toward further liberalisation in the region
- and APEC can also make an important contribution to the initiation of serious discussion of a new multilateral trade round.
The manner in which APEC is addressing these tasks is quite characteristic of the way in which it operates.
The divisive questions of APEC's institutional future and whether it should evolve into a preferential trading arrangement have been put to one side.
Rather, economies are discussing a framework under which APEC economies would move to implement Bogor pragmatically on the basis of a mix of collective and individual actions
- under the individual action plans, economies would free up trade and investment on the basis of some broad common guidelines
- more substantial common agreements would apply where there is more scope or need for collective action, and particularly in areas like standards and customs harmonisation.
Australian and US interest in APEC's free trade agenda is obviously driven by economic self interest
- Australia and the US are already relatively open economies, with low tariff barriers
- therefore, every step down the road towards free trade in the region brings potential benefit in the form of greater market access to the dynamic economies of Asia.
But trade liberalisation is also very much in the interests of Asian economies
- a World Bank study last year concluded that global income in the year 2000 would be about $100 billion greater than now expected if East Asian countries were to cut their trade barriers to goods from the rest of the world by 50 per cent
- importantly, major beneficiaries of such further trade liberalisation would include China and the six ASEAN countries.
And many countries of the region recognise this potential.
Recently, major liberalisation packages have been introduced in Indonesia, Thailand and Malaysia and I am confident one is imminent in the Philippines.
APEC, and the Bogor commitment in particular, reinforces the focus for and provides shape and pattern for these countries to pursue liberalisation programs
- that is, these countries are pursuing liberalisation of their own accord
: liberalisation is not being imposed on a reluctant region.
It also strengthens the hand of those within the various administrations of the region who are supporting open trading arrangements in the face of resistance from the dinosaurs of protectionism.
What APEC Means for the United States
The United States is inevitably a major Pacific power by virtue of its geography and history
- moreover, its enduring interests in this region appear to me to be very close to those of Australia
- like Australia, the US has a profound stake in building an effective regional order in the Pacific
- and like Australia, it has a strong economic stake in open commerce in the region.
The magnitude of the US stake in the Asia-Pacific in raw economic terms is abundantly clear.
US exports to the newly industrialising and developing economies of Asia are now about US$80 billion
- a little bigger than US exports to Latin America
- and about 75 per cent of those to the European Union. However, if US exports grow at their historical rates, exports to developing Asia by 2010, when the initial phase of implementing the Bogor undertaking is complete, will have grown enormously in relative significance
- to be more than one third bigger than those to Latin America
- and over one and a half times US exports to the EU.
All of this creates a fundamental US interest in APEC along very similar lines to our own.
The US differs from Australia on two basic counts, however.
The first, in the fact that its respective roles as Atlantic, American and Pacific power make for a more difficult task in balancing priorities.
The second difference is that, as the world's pre-eminent economy, the US perceives opportunities to influence events in the region by unilateral means
- rather than by the more careful approach of building coalitions and alliances that we in Australia are obliged to adopt.
On the first point, let me say that I see no fundamental disharmony between an active approach on APEC and on other areas of US trade policy
- it is certainly true that the US trade policy agenda appears crowded at the moment, with APEC, NAFTA, the Free Trade Area of the Americas and the beginning of discussion of a Trans Atlantic Free Trade Agreement
- but it is important that the US remain engaged in each area and that it seek to draw together the themes of its interactions with each area in a way which reinforces the multilateral trading system
- moreover, progress in each area can work to the advantage of other initiatives
: the FTAA and APEC, for example, can certainly act as a positive influence on each other, encouraging more rapid progress towards liberalisation than if either had been operating alone.
On the second point - the issue of unilateral action - I must tell you frankly that I believe the US needs to look again at its approach.
In my view, the US stands to benefit more from approaches which seek to modify policies in a less adversarial fashion
- for example, through the constructive, cooperative framework which APEC offers
- rather than in a way in which the targets of its actions simply respond to the pressure of a major power.
Outcomes that are achieved by agreement tend to be much more lasting and effective than those imposed on reluctant "partners".
Through APEC, the US has a positive alternative for bringing about change in the region
- an alternative which is working more and more effectively.
Of course, there are those, who deride the number of meetings it holds and the minute attention which is given to the wording of communiques
- but, for all that, APEC allows a complicated process of consultation to go on.
At the end of the day, economies generally recognise that, more and more each year, the interest of each lies in greater cooperation
- the fact that each economy has equal standing means that the result is generally one which each can live with and implement in a way that has some prospect of enduring
: that is, outcomes are agreed rather than imposed.
As trust and cooperation grows among those who attend its meetings, the prospects for constructive decisions are also growing
- countries which are normally silent in the WTO context speak out in APEC and they do so in the knowledge that a strong effort will be made to take their views on board.
The APEC process is showing dividends, even in areas as sensitive for regional economies as investment, and competition policy
: where else are these economies engaged in dialogue on such issues?
There are clear signs of a more accommodating spirit and a greater readiness to look for mutual gains through cooperation.
Bogor is clear evidence of this and is indicative of a significant change which has occurred in Indonesia's approach to regional cooperation.
Japan's attitude has also shifted markedly in the lead-up to Osaka, with clear indications of its preparedness to take a leadership role in achieving regional trade liberalisation
- this positive spirit has been reflected in discussions among officials planning for Osaka, particularly at the most recent meeting in Sapporo.
It is important that serious analysts in the US not overlook these developments
: from my discussions in Washington in the last couple of days, I know the Administration is sensitive to them.
It is also important that the US is not left behind in steps towards greater cooperation in the region
- if we could project ourselves forward 10 years and look back, there is no doubt that we would observe a fundamental transition taking place towards a much more cohesive region across a wide spectrum of issues
: and we would notice that APEC is playing an instrumental role in this transition.
Greater regional co-operation will develop irrespective of the role of the US
- but it is without question that the active involvement of, and leadership by, the US will produce outcomes which are of much greater benefit for all of us in the region.
Conclusion
The central message I have offered today, as a representative of a middle power and a country with strong political, economic and cultural ties with Asia as well as the US, is that APEC is in the long term interests of the US and that it can produce commercial and strategic gains for the US, as well as the world economy.
APEC therefore merits broad support within the American community.
I do recognise that decision-making is more diffuse in the US and that the diffusion of power which has arisen from American concepts of liberty and government can make consistency and coherence less easy than in a Westminster system.
The US needs to understand that the Asian members of APEC need to show results from their commitment to APEC as well
- more will be achieved in the way of enduring benefits by cooperative processes towards agreed goals than by unilateral action that seeks to impose changes on reluctant players.
These are frank messages.
Let me reiterate that I offer them as a friend who recognises what the United States has contributed to our region
- and as one who would very much welcome a much stronger commitment of the US to APEC
- of the kind which President Clinton provided in Seattle in 1993.
I urge all of you to play a part in developing this commitment
- but as a matter of intelligent self-interest which can also serve the global interest.