Speech by theMinister for Trade, Senator Bob McMullan at the Singapore Press Club Foreign Correspondents' Association, Singapore, 31 August 1995
Introduction
I welcome this opportunity to address the Singapore Press Club and Foreign Correspondents' Association.
I want to talk today principally about the further development of APEC as a vehicle to deliver fundamental trade liberalisation across the Asia-Pacific
- and about how the way in which we, individually and collectively, respond to this challenge will be instrumental in defining the destinies of our region.
Within this context, I also want to touch briefly on AFTA/CER links and the World Trade Organisation - the WTO - since both of these processes are important contributors to the framework for the Australia/Singapore trade and economic relationship.
Singapore is, of course, a most appropriate place to be discussing such issues.
Singapore's efforts on behalf of trade liberalisation, both in the region and globally, have been admirable
- although none of us should think that we have nothing more to do in opening up our markets to goods and services.
Singapore is certainly a case study of the overwhelming economic advantages that an open economy can deliver, particularly when compared with the performance of the closed economies.
We need only compare the per capita incomes of the economies of Singapore, Hong Kong and Taiwan (all APEC members) with the per capita incomes of less open economies, or economies still at an early stage of opening their economies.
World Bank figures show that in 1991 the GNP per capita figures for Hong Kong, Singapore and Taiwan were US$13,200, $12,890 and $9,070 respectively
- at the same time, Myanmar - which has in the past pursued a 'separate' development policy which insulated and isolated its economy - had a GNP per capita of just $500 despite its much more generous resource endowment.
Σ All round the world similar contrasts can be illustrated. Outward looking economies perform better than inward looking ones. Open economies deliver stronger results for their citizens than closed ones
- this illustrates the underlying rationale of APEC - as we move towards more open economies in our region we can all benefit - not just those of us who already have relatively open economies - all of us.
Australia's view is that APEC is at a critical juncture this year
- if it is to sustain momentum and international credibility it is vital that it make fundamental decisions at the Osaka Leaders meeting which take its agenda on trade and investment liberalisation forward.
- we cannot ease up in our progress along the road to Bogor.
APEC's Prospects
APEC's rapid advance to date gives us some confidence that we can indeed move towards another very substantial outcome.
The pace of that advance is no accident.
One of the keys to APEC's success is that it enjoys strong political support at the highest level.
I am in no doubt that historians will judge the Bogor meeting hosted by President Soeharto as one of the critical turning points for our region.
Importantly, APEC's development is also consistent with the broader foreign and economic policy interests of its members
- some of the work carried out in Australia has conservatively estimated the economic gains to the region from APEC free trade, combined with implementation of the Uruguay Round, as around US$270 billion.
APEC fits equally well with East Asia's interest in continued American engagement in the region.
North America has similarly strong interests in APEC
- especially in linking its own economies more effectively with the dynamic East Asian region.
These are interests which will endure even if, as some argue, East Asia's development begins to slow from its present furious pace.
It is also important to note that APEC's development reflects trends at the broader international level.
We are in an era in which business activity is spilling over national borders, and even over the borders of the various free trade areas.
Governments in Europe and the Americas in particular have tended to respond to this phenomenon by expanding and deepening regional trading arrangements
- both within their respective regions and, potentially, between them - with the developing discussion of a proposed Trans Atlantic Free Trade Area (TAFTA).
The point for the Asia/Pacific region, for our region, is that we cannot afford to stand by and watch the growth of regionalism elsewhere in the world and allow ourselves to be left behind.
Progress Towards Osaka
The sheer breadth and scope of the Bogor Declaration has placed enormous pressure on Japan as Chair of the APEC process in the lead-up to Osaka.
But it is a challenge Japan appears to be meeting with great effectiveness. Our recent discussions with a representative group of five Senior Japanese Ministers during the Australia/Japan Ministerial Committee confirmed our confidence in the Japanese commitment to work hard with the other members of APEC to develop an Action Agenda to implement the Bogor goals.
These efforts have already produced substantial progress on the development of that Action Agenda.
When Australia, Singapore, Japan and other APEC economies sat down earlier this year to develop an approach to implement the Bogor commitment, our shared goal was to accelerate and expand the strong liberalisation trends which already exist in the Asia Pacific while enabling APEC to add value not merely to act as a cheer squad on the side.
The Action Agenda which is gaining broad support has the following four major elements:
- guiding principles
- individual action plans
- a program of collective action
- and a process of review, applying particularly to the individual action plans
The individual action plans and the program of collective action will represent the two main mechanisms to achieve the free trade and investment goal.
From Australia's point of view, the guiding principles must include
- comprehensiveness - that is, no exceptions to the coverage of the free trade and investment commitment
- comparability - that is implementation of the Bogor commitments should proceed in such a way as to ensure that all APEC members are contributing to the liberalisation process in a way that provides for balanced and proportionate contributions
- progressive implementation - that is, APEC members should begin liberalising at the same time, and do so continuously and progressively
- WTO consistency.
Within these broad principles I would like to explain very briefly the way in which we see the individual action plans and the collective action program working.
The central feature of the proposed individual action plans would be that APEC members could determine their own path to achieving the Bogor commitment provided they were consistent with the guiding principles
- we could all chart our own road to Bogor
- through their individual action plans, each APEC member would set down how and by when it intends to achieve the Bogor commitment across the various sectors and issues.
My view is that these action plans should be tabled before the 1996 APEC Leaders meeting so that there is no diminution in the trade liberalising momentum.
In tandem with the individual action plans, a range of important issues appear likely to be progressed most effectively by APEC members on the basis of a collective action agenda.
These generally include issues such as standards and customs procedures, together with rules-related areas such as competition policy and intellectual property.
While great progress has been made in developing the Action Agenda in a very short space of time, it would be wrong to suggest that there are not some significant hurdles still to be overcome.
Two significant areas which still require resolution relate to the guiding principles of comprehensiveness and comparability.
For Australia and many other APEC economies these two principles are of fundamental importance.
The principle of comprehensiveness obviously involves difficulties for some economies in APEC, in fact probably for all of us to varying degrees.
But it seems to be especially difficult for those economies with protected and politically sensitive agriculture sectors.
It is Australia's view that such sensitivities can be managed flexibly within the time frame set for achieving the free trade goal without diminishing the clarity of the comprehensiveness principle.
It is important that this should be so. The inevitable result of one APEC member seeking an exception for a sensitive sector would be that the rest of us would be tempted to take our sensitive sectors off the table. If this occurs the APEC commitment to free trade and investment would be reduced in its effectiveness for all of us
- by one member seeking such a benefit a process by which we all potentially lose would be set in train.
It is also important for those seeking to resist progress in APEC to remember that there will soon be pressure for a new multilateral round of trade negotiations. I am absolutely certain such talks will take place well before the 2010/2020 time frame for APEC liberalisation.
These negotiations mean that there will be no place to hide - the nature of the 21st Century global economy means that the process of liberalisation is inevitable.
For all these reasons, Australia remains firmly committed to the principle of comprehensiveness. And, on the basis of my talks around the region, I remain confident that by the time we reach Osaka we will have gained agreement on this key.
The principle of comparability is also fundamental.
Comparability is about ensuring that the individual action plans submitted by APEC economies are balanced - and some form of review process is important in reassuring members about this balance.
I understand that there is sensitivity amongst some members about this issue.
But comparability is important if APEC members, in taking the sometimes difficult decisions involved in further opening their economies, are to feel confident that we will all be making a major contribution to the process.
Within the domestic political process of each APEC member, we all need to be able to demonstrate to our critics that others are in fact pulling their weight
- that we are not giving away concessions for nothing or for too little in return
- I have articulated Australiaís position, which I believe is shared by many others and which goes to the heart of the case for comparability - Australia will give ënothing for nothingí.
EPG Report
It would be remiss of me at this point to not make brief comment on the third report of the APEC Eminent Persons Group which was released yesterday.
We welcome this report as it provides yet another important and useful contribution to our consideration of how to achieve the Bogor commitment.
The Report is supportive of the broad approach to implementing the Bogor commitment that I have outlined and its general endorsement should help in "selling" the approach to our wider constituencies.
- the EPG Report puts some emphasis on the need for a down payment at Osaka through a commitment to accelerate the Uruguay Round outcomes.
APEC economies are working towards a down payment at Osaka, including through deepening, broadening and accelerating the Uruguay Round commitments.
It is too early to judge how far or in what direction this process will advance before Osaka, but we will be looking closely at the ideas presented by the EPG as we proceed.
The important point to remember is that some APEC economies are already accelerating their Uruguay Round commitments in a very major way - the recent tariff cutting package by the Philippines is an important case in point.
APEC and the Multilateral Trading System
APEC clearly needs to ensure that its own liberalisation progress is developed in such a way that it can contribute to effective multilateral trade liberalisation.
In traditional areas such as tariffs, APEC's trade liberalisation will do much by itself to ensure that economies are ready to approach the next stage of global trade liberalisation.
On some of the newer issues of trade policy, APEC can act as a source of ideas, concepts, frameworks and approaches.
This is an issue in which Singapore has a strong interest, given its role as host of the inaugural WTO Ministerial Conference.
Australia believes that, at the Singapore Conference, a forward-looking approach to further strengthening of the multilateral system should be charted
- an approach which builds momentum for a new set of multilateral trade negotiations.
Conclusion - Australia and Singapore
Bilateral trade and investment relations between Singapore and Australia are very strong
- Singapore is our largest trading partner in ASEAN and seventh world wide
But as I suggested at the outset it is the two regional frameworks of AFTA/CER cooperation and APEC and the multilateral architecture of the WTO which will overwhelmingly define the shape of Singapore/Australia trade relations well into the future.
These regional and multilateral frameworks will provide the momentum for economic growth and cooperation between our two countries.
Both our countries have been active proponents for advancing regional and multilateral trade liberalisation and we have established a close pattern of cooperation in these matters.
I would particularly like to express Australia's appreciation for the very positive support Singapore has given to moving the AFTA/CER dialogue forward to the point where AFTA/CER Trade Ministers will meet for the first time in Brunei on 9†September.
The Australia/Singapore relationship forms one of the enduring mainstays of our broader policy of working constructively with the forces which are changing our region.
Σ We are travelling together down the same road - our destination was described at Bogor - our next major port of call en route will be Osaka.
Σ We are well advanced on this shared journey. Each step we take creates new opportunities for the men and women who comprise our societies today and opens even more exciting opportunities for our children.