The Hon. Mark Vaile, MP
The Hon. Mark Vaile, MP
FORMER MINISTER FOR TRADE

Speech

Australian Minister for Trade, Mark Vaile

to the Australia-Japan Conference Dinner, Sydney, 29 April 2001

(Check against delivery)

Australia and Japan: Looking Back, Looking Forward

Introduction

Excellencies; distinguished guests; ladies and gentlemen. It is a great pleasure to address such an outstanding group of people from Australia and Japan.

At the outset, I want to thank the Australia-Japan Foundation for its generous support of this Conference. I also want to register our Government's deep appreciation of the contributions of BHP, the Meat and Livestock Corporation, QANTAS, Santos, Southcorp, Telstra, WMC and the NSW Government, who have made this Conference possible. And I thank the Japanese Government for sharing our vision for this Conference and for helping to make it a reality.

Tonight I would like to reflect on the achievements of the Australia-Japan relationship, and contribute to the Conference deliberations by suggesting some markers for the road ahead.

Looking back - a strong foundation

The recent ABC program by Paul Kelly marking the centenary of Australian Federation reminded us of the pivotal role played by Sir John McEwen in laying the foundations for Australia-Japan relations after the war. At the time of the Australia-Japan Commerce Agreement of 1957, "Black Jack McEwen" was (like me) Minister for Trade and deputy leader of the Country Party - now the National Party.

Some in the Australian Parliament and in the Australian community were unsure about the proposed agreement, coming not long after the San Francisco Peace Treaty of 1951 and Japan's accession to the GATT in 1955. McEwen was assertive in challenging those who thought mistakenly that Australia could rely on "great and powerful friends" for our trading future. Quite simply, he foresaw the long-term economic importance of Japan to Australia, to our region, and to the world.

His reasoning won the day and the Commerce Agreement was signed, providing a stable and increasingly open trading environment between the two countries. Over the following two decades, it underwrote the crucial contribution Australia and Japan have made to each other's post-war prosperity. Japan required the energy and food products that Australia produced relatively efficiently, while Australia required the world-class manufactured goods that Japan produced.

Japan has been Australia's largest export market for over thirty years, and is likely to remain so for the foreseeable future. Given the steady stream of bad economic news out of Japan, the casual observer could be forgiven for thinking that Japan is of diminishing importance to Australia. Nothing could be further from the truth. Despite the last decade's low growth in Japan, Australia's exports to Japan grew by an astounding 65 percent.

Last year, Australia provided goods and services to Japan worth $25.5 billion - a quarter more than was sold to the whole of Europe, a quarter more than was sold to all of ASEAN and two-thirds more than was sold to the United States.

That equates to about 4 per cent of Australia's GDP or $1,300 for every Australian. Exports to Japan support about 380,000 Australian jobs.

Diverse ties

But, of course, trade is only part of what underpins the Australia-Japan relationship. Business exchanges were institutionalised in the early 1960s. Hugh Morgan, the current Chair of the Australia-Japan Business Cooperation Committee, joins us tonight, and I also warmly welcome Murofushi-san, the Vice-Chairman of the Japan-Australia Business Cooperation Committee, and the Japanese Co-Chair of this Conference.

At the political level, the Australia-Japan Ministerial Committee was established in 1971 by another predecessor of mine, Doug Anthony. And 1976 saw the creation of the Australia Japan Foundation and the Basic Treaty of Friendship and Cooperation - expressions of our shared desire for deeper political, economic and cultural ties.

It is a pleasure to be able celebrate tonight, with AJF Chairman Jerry Ellis, the 25th anniversary of the Australia Japan Foundation, and its resounding success. Japanese is now common in Australian school curricula. Whereas in the mid 1970s there were less than 1000 Australians studying the language, now there are 10,000 Australians studying Japanese at the tertiary level alone. The AJF's Discovering Australia Teachers Kit is in more than 11,000 junior high schools in Japan. And each year, about 400 young Australians, supported by the Japanese Government, live and work in Japan for a year on the JET program.

Also amongst the guests tonight is Professor Peter Drysdale, whose dedication to education about the Japanese economy and ties with Australia - through the Australia-Japan Research Centre - has made him something of a "living treasure" in bilateral relations.

Peter was instrumental in charting the regional dimension of the Australia-Japan relationship that has been such a feature of the 1980s and 1990s. Australia and Japan can feel proud of our contribution to a sense of regional community. We were key partners in the founding of APEC in the late 1980s and we still work closely to keep the APEC agenda dynamic and forward-looking. Another important aspect of Australia's cooperative effort with Japan lies in our support for other countries in the region. For example, Japan and Australia were the only two countries to contribute to all three IMF rescue packages to Indonesia, Korea and Thailand at the time of the East Asian financial crisis.

Our common alliances with the United States are an important part of the story of Australia and Japan's shared security interests. We cooperated closely as peacekeepers in Cambodia. A little known fact is Japan's generous and crucial contribution to help fund the multinational force in East Timor (INTERFET) which was led by Australia. And we enjoy a growing defence relationship with regular consultations and exchanges.

Looking forward

Perhaps because our relationship has been so successful and is so strong, it is possible that we may miss opportunities to develop it further.

We need to be alert to the changing environment in which we operate, and to ensure the right frameworks and policy settings are in place for our countries to prosper. With this in mind, both Governments have commissioned parallel studies on the economic changes taking place in Australia and Japan, and how we might make the most of them. Professor Motoshige Itoh joins us tonight as leader of the Japanese study team. And I am very pleased tonight to launch the Australian report, Strengthening Australia-Japan Economic Relations, by Professor Gordon de Brouwer and Dr Tony Warren.

This report underscores Japan's continuing importance to Australia. As the world's second largest economy, Japan's annual consumption dwarfs that of ASEAN or China. Every year, each Japanese consumer has about US$32,000 to spend on goods and services. This compares with around US$3,400 in an economy such as Malaysia, or US$800 in China.

A key message of the Strengthening Economic Relations study is that regulatory reform and developments in information and communications technology are drivers of rapid change in Japan and Australia. These changes have reinforced traditional complementarities - the mainstay of the relationship in the areas of agriculture, minerals and energy trade. They are strong and will remain strong. But a new set of complementarities (in areas like software, communications, financial services, health and medical services and biotechnology) is opening up.

The report identifies many Australian firms that have seized the opportunities resulting from these changes. AMP, alert to the deregulation of the financial sector in Japan, is one these companies, and Spike Cyberworks - in the information technology field - is another.

But the report also shows that many Australian firms don't see fully the breadth of opportunities in Japan or find it difficult to realise them. This seems to be a two-way problem, since many Japanese firms have the same trouble with Australia.

Government has a key role to play in helping to ensure that the full potential of the Australia-Japan commercial relationship is realised.

One of the report's key recommendations is for a new Australia-Japan Trade and Investment Facilitation Agreement - a "TIFA". A TIFA would enhance dialogue and cooperation in areas like biotechnology, energy and resources, financial and other professional services, information technology, competition, consumer and privacy policies, e-government, food standards, and mobility of business people. It would address many of issues of concern to businesses in both countries. It would update the commercial framework of the relationship, and would be an appropriate next step towards deeper integration of our two economies.

The report's specific recommendations in areas such as communications, health care, and education throw out a challenge to both Governments. I have written to my Australian Ministerial colleagues highlighting the need for a whole-of-government response to the report, and I will be following up with them after this Conference.

There are some things, I am pleased to say, we can do right now in helping to fill some of the information gaps which the report identifies. I have asked Austrade to work with JETRO to see if we can develop and publicise a fully bilingual website listing all Australian and Japanese firms in ICT and biotechnology, with chat-room infrastructure to encourage interaction. Austrade will also give higher priority to providing information on new and emerging gateways in Japan's markets, and increase its efforts to help Australian firms establish themselves in Japan.

The report is also very clear in saying that a great many of the challenges we must address lie squarely in the realm of business.

Australian firms are encouraged to take a fresh look at the commercial possibilities in Japan and to deepen relationships with Japanese counterparts - for example, through increased staff exchanges. Business is encouraged to strengthen its representative groups in new areas of economic activity; for example, by setting up a Japan ICT Exchange for Australian firms, based on the Silicon Valley IT Exchange. These recommendations need to be addressed seriously.

I hope to meet with Japanese Ministerial colleagues shortly to discuss an appropriate means to address the report's recommendations, including the TIFA proposal. One idea might be to enlist an Experts' Group drawn from our two countries to work on the way forward.

Conclusion

Tonight, I have outlined some possible new directions for Australia-Japan economic relations. Professor Itoh will shortly provide a Japanese perspective.

The Australian Government stands ready to play a leading role and officials from my Department will be working closely with Japanese colleagues on our shared agenda. But we can't act alone. The business communities of Australia and Japan must also rise to the challenge.

While the economic dimension of the relationship is vitally important, our job - and your roles - at this Conference is a broader one. The concept of this Conference is unique. You are all specialists in your fields. Some of you will have had involvement in Australia-Japan relations - but for many this will be a new opportunity. I encourage you to bring your expertise, experience and a fresh perspective to the Conference to come up with new and different ideas about how to advance bilateral relations between Australia and Japan. We hope that you are able to use the Conference to enrich your contacts with Japan and Australia.

Good luck with your deliberations. I look forward very much to seeing the recommendations that come out of your discussions.


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