Australia's future in the Asia-Pacific Region

Speech by the Minister for Trade, Senator Bob McMullan, at the Evatt Foundation, Sydney, 19 December 1995

It is a pleasure to be here among friends at the Evatt Foundation.

The Labor Government since 1983, in partnership with the union movement - under the Accord framework - has transformed the Australian economy from a largely inward looking economy, over-reliant on mining, agriculture and protected industries, to one that is increasingly open to the globalising world economy, and increasingly competing in new markets, where it will matter most in the next century.

I have been invited to talk to you today about "Australia's Future in the Asia Pacific Region" and I have to say that I believe the future is extremely bright.

The cornerstone of our regional policy is of course APEC. With the APEC Osaka meetings behind us, it is an opportune time to reflect on APEC's medium and long term impact including its impact on issues such as: poverty, the environment, and human rights, which the Evatt Foundation has always been so closely interested in.

I recognise that there are differing views in this audience on these issues. ( That is different from mine, perhaps....). But I want you to recognise this: We are all interested in ensuring that the living standards of the region's poorest people improve.

At the outset, I want to paint a picture of a unity of purpose between the Australian Government, the union movement, and the aid community. Our approaches are not the same, but how could they be when the Government has to perform a balancing act between policies which will help to generate wealth, and policies about its equitable distribution.

We have a unity of purpose, not approach. There are not "saints and sinners " in this story, there are different groups trying their best to achieve the best outcomes they can for their own constituency, be it For its part, the Government regards APEC as a success because of its benefits for Australia and the region. Since 1989, we have succeeded in acting as a catalyst, not only for the development of APEC, but for a great many ideas which are now firmly on the APEC agenda. In doing so, Australia is contributing strongly to the future development and stability of the region and we have seen our own role in the region increasingly recognised as a result, and this has significant benefits beyond the immediate and the economic benefits. Let me now briefly set out the basic characteristics of APEC.

The Characteristics of APEC

Our capacity to promote change through APEC has always rested on careful judgements about what is possible, taking into account the forces operating in the region and the nature of APEC. APEC is a relatively informal process which reflects the diversity of the Asia Pacific and the different ways of working of many of its members. Its fundamental principles, set out in the Seoul Declaration in 1991, emphasise: APEC has no charter which enforces contractual obligations on its members. Nor does it make legally binding decisions, or have any instrument beyond peer pressure and discussion for enforcing them. It does not work by traditional GATT-style negotiations, but by a consensus-based approach, and while APEC recognises the special status of developing members, its overriding theme is cooperation among equals.

The basic goals of APEC are set by Leaders and Ministers who meet annually around November each year. The Chair of the process was Japan in the lead-up to Osaka this year, and the Philippines -which will have the chair in 1996 - is now beginning to take a leading role in mediating contending views. This non-legalistic, consensus approach is sometimes seen as a source of weakness by those who are new to the process, but, in reality, it has proven to be a great source of strength.

The search for consensus, for example, means that all members can generally live with the result, and peer pressure is likely to draw along members who would opt out of a more formal and binding process. At the same time, APEC's characteristics limit the kinds of policies which can be usefully pursued, within it, to those with broad support. In particular, there are limits on policies which involve sensitivities for one or a number of members - you well know the sort of issues to which I refer.

APEC's Development

The period up to Osaka was, as you will be aware, one in which APEC's agenda expanded enormously to embrace not only a much broader economic and technical cooperation agenda, but an ambitious trade and investment facilitation program covering issues such as standards and customs harmonisation, and the breathtaking goal set at Bogor of achieving free and open trade and investment in the region by 2020.

At their November meeting, APEC Leaders endorsed an Action Agenda which sets out the steps which members are to take to carry APEC forward in those areas. The Action Agenda falls into two parts: one dealing with trade liberalisation and facilitation, particularly the implementation of the Bogor goal of free trade and investment, and the other dealing with APEC's program of economic and technical cooperation.

Trade Liberalisation and Facilitation

The trade liberalisation process set in train at Osaka will see APEC members now begin to prepare individual action plans which set out the steps they will take to achieve the free trade and investment goal.

These plans will be tabled at the APEC Ministerial Meeting in November 1996 with implementation beginning the following year. Individual plans will cover services and investment as well as trade in goods, although the balance among these will naturally differ for different members.

At the same time, APEC will continue to work actively on a trade facilitation agenda. Under the Osaka outcome, they will, for example: Progress on trade and investment liberalisation and facilitation will provide a strong impetus to growth in the region with the principal beneficiaries being the developing economies of APEC. The impetus should be particularly strong in those economies where high rates of protection are a major source of inefficiency.

Experience suggests that the medium and long-term result should be to deliver improved living standards to almost all sections of the APEC economies, in the form of: But it is pointless to deny there will be some adjustments to be made by some, or all, members. And sometimes those adjustments will be painful, but all economic development inevitably involves restructuring. The challenge for Governments is to assist those who are directly adversely affected by the change, through structural adjustment assistance.

We have done this in Australia in every instance where an industry had to restructure. For example, in the automotive, textile clothing and footwear industries and, just recently, in the forest industry. And, of course, in Australia we have worked with the union movement, and industry, to minimise any of the difficulties which economic change has caused particular groups. More generally, we did it through Working Nation, which provided jobs, education or training, or labour market experience for every Australian. We have also recognised the social consequences of change through our overhaul of the Social Security system, which has allowed us to target assistance more effectively to those most in need - our social safety net is the envy of all of our APEC partners, and many others besides.

A Melbourne University report released last week by the Prime Minister - "Trends in the Distribution of Cash and Non- Cash Benefits" - demonstrates conclusively the key role played by the Social Wage in reducing income inequality over the period of the Accord.

Over the period, 1981-1994, real incomes increased by nine per cent due to the impact of the Social Wage.

To step back from the domestic scene and turn to the region as a whole, the process of freeing trade and investment in APEC will be a gradual one, extending over about 15 years for developed economies and 25 years for developing economies. This gives considerable time for governments to adjust and respond to any short term problems which may arise. Our own response to these problems has been government assistance - should this also be the response for our APEC partners? Ultimately it must be up to them to make those decisions - we cannot go on an APEC Lecture Tour and tell them how to run their countries, they would not listen.

One thing we can be sure of, the old policy of indefinite protection is clearly no answer as we have discovered, and the economic success stories of our region make this clear. I would naturally like to see high growth in the developing East Asian economies accompanied by a strong emphasis on equity, and if you ask the governments of those countries they will undoubtedly, genuinely, say that they want living standards to rise, child labour to end, and for their poor people to be better off.

I see the demand of the people who live in the region for a better standard of living - and an equitable distribution of the benefits of economic growth - as supportive of the growth process, rather than in conflict with it. At the same time, recent research suggests that incomes in the rapidly growing economies of East Asia are by no means as unequal as in many other economies around the world

Research carried out by the World Bank, in preparing its study on "The East Asian Miracle", for example, ranked some 40 economies in terms of the income share of the richest and poorest 20 per cent of the population. Six of these - Korea, Taiwan, Singapore, Hong Kong, Japan, and Thailand - stood out as economies which had combined high growth with low inequality over the period covered. World Bank research suggests sharp declines in poverty, both in terms of percentage of population and in absolute numbers, as East Asian development has proceeded.

Economic and Technical Cooperation

APEC's work on economic and technical cooperation is the oldest part of APEC's activity. Prime Minister Murayama, for example, announced at Osaka that Japan would commit a total of 10 billion yen, or around US$100 million, for a fund to be established for economic and technical cooperation in the Asia Pacific.

APEC's economic and technical cooperation program is working to address the principal bottlenecks to sustained growth in the region in such areas as: It is also extending and deepening practical cooperation, and promoting economic welfare in a wide range of areas from economic forecasting to collecting statistics.

APEC's Energy Working Group, where Australia has taken a leading role, offers a good example of the work which is occurring. Energy shortages are a potentially serious bottleneck to sustainable growth in the region, and increasing energy use is of concern for environmental reasons.

The Osaka outcome provides for an APEC Energy Research Centre, to be established in 1996, which will, among other activities, help to provide energy projections for the region. Work is also proceeding on clean coal technology as a means of reducing the environmental impact of energy production and on facilitating investment in power sector infrastructure projects. This is vital for both economic and environmental reasons as coal resources will inevitably be used extensively in the future by many APEC economies.

A Bolder Agenda on Labour and the Environment?

It is sometimes suggested that Australia should go further to promote a much bolder social and environmental agenda in APEC, but we need to think carefully about how this can best be done given the known sensitivities in these areas, the characteristics of APEC as a grouping, and the balance among our objectives.

The last thing which would be useful would be to lecture our APEC partners on how to run their own industrial, social and environmental agendas. APEC is still at a formative stage of its development and has been consolidating broad support to implement the Bogor Declaration. To ensure that progress continues, sensitive issues have to be dealt with carefully and with regard for the views of members. Of course, building in consideration of environmental concerns into APEC's activities is already under way. Like other aspects of APEC's work, this is done on a consensual and cooperative basis and, like many other areas of APEC's work, much of this isn't headline grabbing, it is just getting on with the business of practical regional cooperation.

APEC's agenda on the environment was strengthened significantly at Osaka, with Leaders agreeing that the issues of population and economic growth and their relationship to demand for food, energy, and pressures on the environment should be placed on APEC's long-term agenda. This agreement, which partly reflected an initiative by Prime Minister Keating, will supplement APEC's ongoing work in this area, including in areas such as the working groups on energy, fisheries, tourism, human resources development, and marine resource conservation. Australia has been especially active in the energy and human resources development groups in promoting environmental issues.

In the area of labour, Australia has traditionally looked to the International Labour Organisation (ILO) as having the central role in strengthening adherence to internationally recognised labour standards, and we support proposals to make the ILO more effective.

The tripartite Working Party which is examining how we promote adherence to core labour standards in the Asia-Pacific is to report early in the new year. We are, of course, already active in a variety of ways Without prejudicing the findings of the Working Party - and as I have said on other occasions, including in my address to the Fair Trade Forum - there is no support for addressing labour standards inside APEC at this time and little support for doing so in the WTO. This is not to say that things will never change, but we must be realistic about what can be done in APEC, where nothing can proceed without consensus.

Conclusion

In developing policies in areas such as these, we welcome contributions from Non-Government Organisations. There is currently a range of consultative mechanisms with NGOs on Aid, Trade and the Environment, Human Rights, and with unions on the impact of trade on workers. We will continue to consult with all areas of the Australian community, including the labour movement, particularly in areas where APEC's agenda focuses on issues where it has specific expertise or interest.

Non Government Organisations in the aid area, particularly Community Aid Abroad and ACFOA, have raised with me the idea of an APEC Social and Environmental Council, which I find interesting. Whether that is the best way to advance the consultative process is an issue I am currently considering. Our aim, which I am sure we share with you, is to promote the growth of our region and a greater spirit of community and fairness within it. Advancing these goals will not be enhanced by questioning each other's motives. I repeat, there are not saints and sinners in this pursuit, only governments, groups like the Evatt Foundation, the labour movement, and others trying to do the best they can in the circumstances in which they find themselves.

My view is that we have made, through APEC, enormous progress towards this goal this year. I look forward to continuing to discuss how we might advance our common goals over the years to come.