AUSTRALIA AND ASEAN - PARTNERS FOR THE FUTURE

Address by The Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party, Minister for Trade, to the ASEAN Symposium, Melbourne, 29 August 1997.

Introduction

Your Excellency Haryanto Dhanutirto, Indonesian Minister of Communications, Your Excellency, Mrs Delia Albert, Philippine Ambassador and Chair of the ASEAN Canberra Committee, Dr Chee Peng Lim, Director, Economic Cooperation Bureau, ASEAN Secretariat, Mr Paul Brasher, Managing Partner, Price Waterhouse, Mr Carillo Gantner, Chairman, Asialink, other distinguished guests.

I am very pleased to address so distinguished an audience to celebrate ASEAN's 30th anniversary this month. I thank Ambassador Albert and Asialink for giving me the opportunity to do so. It is fitting that we have such dignitaries present to celebrate ASEAN's achievements. For, in a single generation, these are nothing short of breathtaking.

First of all today, though, I would like to say a few words to you about the Foreign and Trade Policy White Paper released yesterday by the Foreign Minister, Mr Downer, and I.

Foreign and Trade Policy White Paper

The Foreign and Trade Policy White Paper represents a significant rearticulation and rebalancing of Australian foreign and trade policy. It outlines priorities and broad strategies which Australia will pursue as we move into the twenty-first century.

Most importantly, the White Paper underlines the pragmatic hard-
headed approach Australia now takes to its foreign and trade policy. Our key aim is to improve the security, jobs and standard of living of all Australians.

And, importantly, we will do this through a whole-of-government approach geared towards making Australia even more competitive in an increasingly globalised economy.

The White Paper also stresses once more that Australia will give the Asia Pacific and, in particular, East Asia, our highest priority. The ongoing economic rise of East Asia and the momentum of globalisation, which integrates us all the more closely with the region, will be the key influences on our policy over the next fifteen years.

Along with the major economies of the Asia-Pacific - the United States, Japan and China - ASEAN will certainly be at the forefront of our endeavours to build closer and more fruitful relationships.

And when we look at how far ASEAN has come in the space of three decades it is easy to see why.

ASEAN's Economic Achievements

Having come together in 1967, ASEAN now has a solid reputation for cohesion and stability. In particular, ASEAN's two major achievements in building regional cooperation, the ASEAN Regional Forum and the ASEAN Free Trade Area, give ASEAN an important voice in regional affairs.

Moreover, ASEAN's economies - whether you call them `tigers', `dragons' or straight out economic `miracles' - have a track record of growth which is the envy of developed nations.
Over the last decade in particular, ASEAN countries have been renowned for growth rates approaching 10 per cent per annum. As a consequence, average incomes in South-East Asian countries have increased substantially. Although poverty reduction still remains a crucial issue for the region, the numbers of people below the poverty line have fallen dramatically in a number of ASEAN countries.

We can perhaps see ASEAN's economic growth most clearly when we look at the GDP figures for Australia and ASEAN then and now.

In 1967 Australia's GDP was around 20% larger than those of the five ASEAN members combined, By 1996, however, ASEAN's combined GDP of $US714 billion was almost twice the size of Australia's GDP.

The current turbulence being experienced in Thailand and associated fluctuations in other ASEAN currencies has generated a number of headlines forecasting "the end of the miracle".

We think otherwise. Infrastructure constraints and the need to regulate financial sectors more carefully will slow down the exuberant growth we have seen in the past. But growth of between 6 and 7 per cent per annum over the next decade will still surpass that of industrialised economies. Moreover, that level of growth is likely to be more sustainable.

Australia's Developing Economic Relations with ASEAN

Australia certainly welcomes ASEAN's success.

Over the past three decades Australia has worked closely with ASEAN economies, contributing substantially to their development. Indeed, Australia's track record of involvement in the region was recognised in 1974 as we became the first country to establish formal links with ASEAN.

Initially our involvement had more of a development assistance focus. More recently, we have concentrated on facilitating the growing trade between us as well as cooperating on development projects.

Let me give you some idea of the extent to which our economic relationship has developed over the last thirty years.

In 1967 about a third of Australia's exports went to Asia, but the bulk of these went to Japan - only about 5 per cent went to ASEAN countries. Today ASEAN combined is our second most important export market after Japan, taking over 15 per cent of total merchandise exports.

And exports look set to grow even more judging by our performance in recent years - Australian merchandise exports to ASEAN have grown by almost 40% in the past five years, reaching $A11.6 billion in 1996.

Also, the composition of those exports has changed. Australian agricultural and mineral products dominated our merchandise exports in 1967, helping to fuel ASEAN economies' early growth.

Manufactures now make up 43 per cent of our merchandise exports. You will now find sophisticated Australian products throughout ASEAN.

These range from the quality wines served to APEC leaders in Manila last year through to "smart" traffic systems to help ease the gridlocks which have come with increasing prosperity.

Australia has also been importing more from ASEAN in recent years. Imports from ASEAN have risen to 10 per cent of Australia's total merchandise imports, doubling over the last decade. In fact, the increase in both imports and exports has meant that ASEAN is now our third largest trading partner overall, after the United States and the European Union.

Recently the Government contributed $US1 billion to an economic rescue package aimed at restoring Thailand's financial stability and confidence in its economic future as well as that of the region.

A few vocal critics have complained but it was the right decision.

We were very pleased to be able to assist. We regard our contribution as a long-term regional investment for Australia. Economic stability in Thailand and the region is in the best interests of Australia's sizable export and investment presence.

Our participation is a very clear example of Australia's integration with, and its wholehearted commitment to, this region.

The involvement of Australian companies in a number of ASEAN economic initiatives also illustrates this.

Australian firms are involved in projects in the Indonesia-Malaysia- Singapore and Indonesia-Malaysia-Thailand growth triangles.

The Northern Territory government has been very active in seeking to promote interaction with the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area - or BIMP EAGA.

We are also very much involved in projects in the Mekong Basin.

AFTA and the CER-AFTA linkage

I think it will be clear from what I have said that Australia is relying increasingly on the two-way relationship with ASEAN for a major part of its livelihood.

An important part of improving that economic relationship has, in recent years been the developing links between the ASEAN Free Trade Area - or AFTA - and Australia and New Zealand's own trading arrangement, known as the CER.

These links will, we expect, have a pivotal role in the further development of economic relations between Australia and ASEAN.

ASEAN has made impressive progress under AFTA to remove barriers to intra-ASEAN trade. AFTA has also, to date, proved an excellent stepping stone on the path to multilateral liberalisation.

Australia therefore encourages ASEAN members to continue to unilaterally reduce tariffs on products imported from all countries, not just from ASEAN members. The impressive efforts since 1988, which have seen tariff reductions of over two-thirds, have been an important contributing factor to ASEAN's economic vibrancy.

ASEAN should, however, take care to ensure AFTA does not develop into a closed trading bloc. This would disadvantage both Australia and ASEAN members. At present, however, I am pleased to say that it seems unlikely that AFTA will become a closed arrangement as over 80% of ASEAN trade is external.

It was former Deputy Prime Minister Supachai of Thailand, who first proposed, in Melbourne in 1993, that we should examine the scope for cooperation between AFTA and CER. Since then we have made rapid progress in putting that idea into practice.

The CER-AFTA linkage aims to reduce barriers to trade and investment between the two free-trade areas. Our respective business sectors can then fully appreciate each other's market's potential.

The concept is already receiving strong support from all of our economic and trade ministers and from the ASEAN Secretariat.

This is particularly pleasing given the many competing demands on ASEAN members as they work through the changes necessarily following on from their enlarged membership.

We are now developing the CER-AFTA linkage along four tracks.

First , the Ministerial consultations give an annual high-level focus to the linkage. Last year's Ministerial meeting in particular succeeded in broadening the agenda on cooperative action. I am pleased to say the meeting also drew the business sector much more into the process.

Second, there is the trade facilitation track. Differing international standards requirements remain a major cause of increased costs for business. We are seeking to reduce these costs through an ambitious work program on standards and conformance. Last year, Ministers signed a Memorandum of Understanding setting out areas for cooperation between our standards bodies.

I am pleased to say all major standards bodies in Australia and New Zealand are now taking part in the associated work program. Important work is also being done under this track on quarantine messaging and customs cooperation.

Third, business has thrown itself wholeheartedly into the task of developing the business relationship, with the MTIA - at the forefront in Australia. Business organisations on both sides are putting together an inventory of tariff and non-tariff barriers to trade and investment.

This I hope will contribute to eliminating or reducing trade impediments between CER and ASEAN.

Fourth, there is the think-tank track. ASEAN and CER Ministers agreed last year there was a need to broaden the wider community's understanding of the CER-AFTA linkage's potential.

Think-tanks and academic institutions are ideally equipped to play a key role in this objective. A major step forward in this process will be the conference to be held in Singapore next week, which will have as its theme "The CER-AFTA Linkage: The Way Forward".

When we meet again at the Ministerial level in Kuala Lumpur in October, we expect to adopt a further broadening of all aspects of the CER-AFTA work program.

We will also be able to consider a report on the Singapore conference which, I expect, will contain a range of options for the future.

In this context, I should mention the release two weeks ago of the MTIA report on the future of Australia's manufacturing industry. One of the report's recommendations called for the conclusion of a free-trade agreement between the CER countries and the members of AFTA. The report showed that significant sectors of Australian industry share the Government's enthusiasm for closer and deeper economic relations with ASEAN.

The eventual development of a free-trade area covering Australia, New Zealand and ASEAN is certainly one option for the future.

There is, however, still considerable work to be done to establish the costs and benefits involved. Indeed, we cannot judge at this stage whether the idea is feasible. ASEAN itself is expanding, and now confronts the challenging task of integrating nine economies of widely disparate magnitudes and differing stages of development.

I believe we should continue our profitable work on the CER-AFTA linkage in its present form, but be willing to actively explore further development of these links at an appropriate time.

Bearing that in mind, it is nevertheless clear that there is a strong desire by both sides to expand mutual trade and investment. The Government will do all it can to achieve that aim.

Conclusion

I have set out today something of the extent of our economic relationship with South-East Asia and how it has developed since the 1960s. I think it is abundantly clear from what I have said that our fortunes will remain linked with this part of the world for the foreseeable future.

While I have concentrated largely today on how important an economic partner ASEAN is for Australia it is also clear that our relationship is not confined simply to trade and investment.

The habits of regional cooperation emerging in APEC and the ARF are reinforcing bilateral ties. We also have extensive security dialogues with ASEAN countries. Moreover, the all important people-to-people links have flourished in the thirty years of ASEAN's existence.

Australians are now everywhere in South East Asia. There are thousands of expatriate Australian managers, engineers, investment bankers, doctors and educators forging bonds which integrate us even more firmly in the region's economy and society. And ASEAN students have flocked to Australia over the past decade.

I would like to leave you with the thought that Australia and ASEAN have forged a very strong bond over the last thirty years. It is a bond built up by years of cooperation and mutually profitable relations.

We recognise that our near neighbours are going to be part of the engine room of world growth for the next century.

We have set our foreign and trade policy priorities accordingly.

It is in Australia's and ASEAN's mutual interest for us to remain committed in this way.