Speech
To the Asia Society
New York City, Thursday 3 October 2002
Australian Engagement: A New Era of Openness
Thank you for your kind words of welcome.
It is indeed an honour to address the Asia Society.
Ladies and gentlemen
Australians and Americans share a strong affinity.
We share similar values - values based in a sense of individual worth
and expression tempered by responsibility to family, community and
country.
We share similar ideals - democratic ideals and opportunities which
today are expressed in two of the world's oldest liberal democracies.
And we share similar traditions - traditions developed by a largely
immigrant, new world experience, pioneering spirit running strong
in our cultures.
Our shared experiences in Asia - especially the sacrifice of Australians
and Americans fighting alongside our Asian allies in many of last
century's conflicts - have laid the foundations for our extensive
engagement in the region today.
The bond between our two countries was expressed in our deeply held
sense of horror at the events of September 11 last year - where many
Australians also lost their lives, and from which we all lost a measure
of security and wellbeing.
Now we share a renewed dedication in reasserting the value of our
democratic ideals, and of liberal capitalism.
We are actively engaged in the war on terrorism, with Australian
troops fighting alongside Americans in Afghanistan.
And we are part of the international effort to confront the danger
posed by Iraq's Weapons of Mass Destruction program.
It is our responsibility to address major threats to international
security, and we will work with the United States to that end.
Australia also contributes to global stability and prosperity by
maintaining a robust economy . through our continued engagement with
Asia . with developing countries through-out the world . and by taking
a lead role in support of trade liberalisation in the WTO.
In addition we are negotiating Free Trade Agreements with Singapore
and Thailand, and pursuing trade and economic agreements with Japan
and China.
And today I want to focus on our most important bilateral trade priority
- an FTA with the United States. As well as bringing important economic
benefits to each side, an FTA has the potential to provide the sort
of formal infrastructure to our economic and trade partnership that
we already have in our strategic one.
The Australian economy
As a result of seven years of reform, Australia continues to enjoy
a quite extraordinary economic performance.
In its latest Economic Outlook, the OECD provides a very positive
assessment, with an outlook for strong economic growth, moderate inflation
and falling unemployment.
Ladies and Gentleman, Australia's economic growth rate markedly exceeds
that of any of the world's major developed economies.
Our GDP increased 0.6 percent in the June quarter, and 3.8 percent
through the year to the end of June this year.
And the OECD now forecasts GDP growth of 4 percent in 2003.
Inflation
Inflation is low. Our consumer price index rose just 2.8 percent
over the year to the June quarter 2002.
And the Reserve Bank of Australia predicts that inflation will remain
within the 2-3 percent inflation target band.
Unemployment
Unemployment has steadily fallen - to around 6.2 percent and trending
down - the best result since the late 1980s.
Indeed, over a million new jobs - in a workforce of some 10
million - have been created since the coalition Government came to
office in 1996.
Public sector debt
Since the Government came to power in 1996, the ratio of federal
government net debt to GDP has fallen from over 19 percent to an expected
4.6 percent this financial year - a repayment of some $61 billion
of public debt.
Interest rates
Interest rates in Australia are at historically low levels, enabling
strong business investment and resulting industry competitiveness.
The official reserve bank cash rate has fallen from 7.5 percent in
early 1996, to the current rate of 4.75 percent.
Productivity growth
A pick up in productivity growth has also propelled Australia's economic
performance.
In October 2000 the US Federal Reserve Bulletin singled Australia
out as one of the few economies to have lifted productivity growth
in the second half of the 1990s.
In fact, it showed that Australian productivity growth rates were
higher than rates recorded in the G7 countries over the period.
That record continues. Productivity grew by 4.4 percent through
the year to the March quarter 2002. And the forecast is for continued
strong performance.
Reform
Ladies and gentlemen
In its recent annual assessment of the Australian economy, the IMF
Executive Directors welcomed this "impressive performance of the economy"
and "attributed this success to the authorities' skilful economic
management".
In fact, only this week in Washington, Australia's Reserve Bank Governor
Ian Macfarlane, was named central bank governor of the year by Euromoney.
Much of our economic success can be attributed to an on-going reform
process that began almost 20 years ago.
Microeconomic reforms at the federal and state level during the 1980s
began the process of opening the Australian economy after decades
of inward-looking policies:
They included:
- Floating the
Australian dollar and opening Australian capital markets;
- Privatising
government-owned enterprises;
- Beginning labour
market reform; and
- Reducing tariffs
and non-tariff barriers.
The coalition Government has continued and broadened the scope of
reform since coming to office almost seven years ago.
We have undertaken further significant labour market reform.
We have reformed business taxes and indirect taxes to give Australia
a modern, internationally competitive taxation system.
We reduced the corporate tax rate from 36% to 30% and halved the
capital gains tax under specific conditions.
We have modernised Australia's system of corporate governance, in
particular strengthening the role of the independent accounting standard
setter.
We have established a framework for independent monetary policy setting
by the Reserve Bank.
Combined with our responsible fiscal policy, these reforms have helped
create and maintain an attractive domestic investment environment.
AT Kearney's 2002 Global Foreign Direct Investment (FDI) Confidence
Index ranks Australia in the top ten of the world's most desirable
destinations for foreign investment capital.
The report states that a sound macroeconomic environment, tax reforms
and mergers and acquisitions (M&A) activity in the primary sector
have all supported Australia's top ten ranking.
International competitiveness
The dividend from shrewd economic management and reform has been
improved international competitiveness.
Today, Australia is ranked 5th in the world in terms of
growth competitiveness - jumping 6 places in just a year.
This improvement contrasts to most of Australia's Asia- Pacific neighbours,
with Singapore, Hong Kong and Japan all slipping in the rankings.
The World Economic Forum's Global Competitiveness Report 2001
describes Australia's performance as "remarkable".
Doing Business in Asia
Ladies and gentlemen
Now, more than ever before, Australia offers investors a safe haven
of potential and opportunity in the Asian region.
Not only is Australia an attractive investment destination itself
- it is also an ideal location to base operations serving the Asia
Pacific region.
We are an industrialised, liberal, western democracy, with mature
institutions, respect for the rule of law and the protection of private
property rights.
We are the sixth oldest uninterrupted democracy, recognised the world
over for our political stability, our economic success and social
cohesion.
Australia enjoys excellent and close bilateral relations with countries
in East Asia. The fact that 600,000 Australians speak Asian languages
itself tells us much about the depth of understanding of the region,
and expertise in Asian affairs in Australia.
So too does the long-established success of well-known Australian-based
companies like Lend Lease, National Australia Bank, Qantas and QBE
Insurance in Asian markets.
These companies are assisted by Australia being one of the largest
and strongest economic bases in the region, because Australia is an
export-oriented economy, and because last year our exports increased
8 percent.
Many US-based companies - household names here in New York City -
have recognised the value of investing in Australia and basing their
headquarters for regional operations.
They include IBM, Unisys, American Express, Citibank and Western
Union. Indeed, US firms in Australia, including Coca Cola, GM, Ford,
Campbells, Philip Morris, NRG Energy, Duke Energy and Con-agra, employ
nearly 300,000 people.
Those companies are enjoying success in Australia - and therefore
in East Asia - because there are no imposts on foreign firms seeking
credit or loan facilities.
And there are no restrictions on capital flows, profit remittances,
capital repatriation, transfer of royalties or trade-related payments.
Which means that you can remit your capital and profits freely and
easily.
Long term economic prosperity in the Asia-Pacific
Ladies and gentlemen
Australia's long term prosperity is directly linked with the prosperity
of the Asian region.
North Asia - Japan, Korea and China - accounts for 35 percent of
our total trade. And South East Asia accounts for 14 percent of our
total trade.
Our prosperity - and that of the region - relies on us sustaining
the momentum for trade liberalisation and open economies.
Open-ness is a pre-condition for reducing poverty, creating wealth
and sustainable development.
It is not a cure all - but it must be part of a range of policies
for successful economic, political and social governance.
But where it has been successfully applied - together with transparent
and accountable governance - there is no question about the benefits.
No one pretends that this is easy. It is difficult enough in our
own countries, where our institutions are mature and the political
environment inherently stable.
But the success of East Asian countries - such as Korea and Malaysia
- in lifting millions of people out of poverty by creating new markets
for them to thrive and prosper, cannot be denied.
The challenge before us is to continue the momentum so successfully
generated in East Asia and elsewhere since the 1960s - especially
given the doubts and hesitancy that have crept into the public mind
since the economic and financial crises of the late 1990s.
That's why Australia's overall trade strategy is to pursue opportunities
at the multilateral, regional and bilateral levels.
Those opportunities must complement each other - and ultimately must
support the global trade negotiations now under way at the World Trade
Organisation.
In the Asia-Pacific, therefore, our strategy is simple.
It is to support the vision set by APEC leaders at Bogor in 1994
for free trade by 2010, for developed countries, and by 2020, for
developing countries.
It is about encouraging progress toward that goal, so that the momentum
is maintained, and so that the benefits remain clear to everybody.
That is why we continue our work in APEC - on transactions costs
. on governance . on non-tariff barriers . and on trade and investment
facilitation.
That is why we have established a closer economic partnership to
better integrate Australia, New Zealand and the ten members of ASEAN.
That is why we are negotiating bilateral agreements with Singapore
and Thailand that will free trade and investment, and provide a platform
for developing the kind of integration we have with New Zealand.
And that is why we have agreed to negotiate bilateral economic agreements
with China and Japan, and to explore better economic ties with South
Korea.
A Free Trade Agreement with the United States
It is also why we have proposed a Free Trade Agreement with the United
States.
I am very pleased that the proposal has gained support on both sides
of the Pacific, including within the US Administration and Congress,
and of course from the Australian and US business communities.
I don't need to tell you that it also has the strong support of the
Australian government - an FTA with the United States is now a major
policy objective.
An FTA would fulfil extensive commercial as well as long term strategic
interests for Australia, and for the United States.
I am much encouraged by the recent passage of Trade Promotion Authority
in the United States Congress.
And we are delighted by the announcement two weeks ago by the Administration
that an FTA with Australia is a high priority for the United States.
A number of arguments for an FTA have been put forward on both sides
of the Pacific.
I believe they are compelling.
First of all, of course, there would be the straightforward economic
gains from reducing remaining barriers to trade between us.
Second, there would be a very significant 'head turning' effect from
an FTA in attracting investment, with subsequent gains in employment
and productivity.
Third, an FTA would result in greater business integration, as Australian
and US companies realise synergies in innovation, research and development,
material sourcing, product development, marketing and - especially
- in information technology.
Fourth, an FTA could be an important factor in what Bob Zoellick
has coined "competitive liberalisation", whereby an FTA has an important
'demonstration effect', ratcheting up other trade negotiations, in
particular at the WTO.
There is an important opportunity here to 'raise the bar', if you
will, not just bilaterally, but regionally and multilaterally - especially
for the global trade negotiations at the WTO.
Of course, a proposal for something as important as a Free Trade
Agreement between us deserves vigorous and thorough debate - a contest
that has begun both in Australia and here in the United States.
I welcome that debate. Indeed, I see it as a strong sign that the
proposal has real legs.
Why Australia ...?
One might ask why an FTA with Australia should be a priority
for the United States.
Well, for starters, we are a significant and dynamic economy in our
own right - the fifteenth largest in the world.
Of all the FTAs the United States is currently negotiating, or is
proposing to negotiate, Australia is by far the single largest - and
certainly the most advanced - economy.
In fact, Australia's economy is bigger than the combined GDP of the
two countries the Administration is negotiating bilateral FTAs with
- Chile and Singapore - and the ten other countries it has just listed
as priorities for negotiating FTAs with.
[Morocco, the members of the Southern Africa Customs Union (5),
and four central American countries - Guatemala, Nicaragua, Honduras,
and El Salvador].
We also are not an insignificant player in the United States. Australia
ranks 15th as an export market for US goods, and 11th
as an export market for US services.
Australian companies are the eighth largest foreign owner of US assets,
employing around 85,000 American workers.
They are leaders in broadcasting, mining, shopping malls, real estate
management, construction, building materials and steel manufacturing.
Not only is Australia a significant and advanced economy in its own
right - it is also a strategic economy vis-ą-vis the Asia-Pacific
region.
We are the fourth largest economy in East Asia, and heavily enmeshed
in the future growth of the region through our role as a leading supplier
of primary goods - minerals and agriculture, in particular - and associated
services.
The same qualities that makes us attractive for US companies to invest
and base their regional headquarters in Australia also make an FTA
with Australia a strategic asset for the United States.
In short, what we offer is the prospect of a high quality agreement
with a dependable and mature partner strategically located in the
world's fastest growing region.
It is an offer judged too good to refuse by the US Administration,
the US Congress and US business.
I look forward to the opportunity to launch formal negotiations in
the very near future.
The multilateral agenda
Ladies and gentlemen
As you know, a new round of global trade negotiations was launched
at Doha in November 2001, with 1 January 2005 set as the deadline
for concluding the negotiations.
Australia is fully committed to the WTO negotiations, as the best
way of pursuing global trade liberalisation.
We want significant improvements in market access - in agriculture,
services and industrial products - as quickly and productively as
possible.
I expect the Doha round will be more complex than its predecessors.
There is a broad agenda, and we have an ambitious deadline.
As well, the number of countries negotiating has almost doubled.
There were just 86 GATT members at the start of the Uruguay Round.
There are now 144 WTO members - including China - all with their
own interests.
Of course, it is important that the global negotiations underpin
and inform what we do in the region, and with individual countries.
The relationship between these activities is symbiotic.
If, for example, there are things that we can do bilaterally - more
quickly, and with greater effect - that will help drive the multilateral
agenda, then so much the better.
The FTA proposal is just one example of how we can do just that.
Australia and the United States must lead the world in ensuring a
successful Doha Round.
We must do this recognising the concerns - and the potential influence
- of developing countries in global trade negotiations.
No longer is the GATT/WTO system a club for rich countries.
Those concerns go beyond the need to reform agriculture - on which
Australia will be an aggressive and active leader.
They focus on frustration that developed countries have failed to
implement their obligations to dismantle barriers to products in which
developing countries have a traditional competitive advantage.
And they extend to issues such as access to medicines to address
pressing public health issues such as HIV/AIDS, and intellectual property
rights in areas such as indigenous knowledge.
We should see these concerns as opportunities - opportunities to
bridge gaps and build strategic alliances with developing countries
on critical issues in the Doha Round.
They are the reasons I will be hosting a meeting of trade ministers
from 25 WTO member states - the invitees include the United States,
the European Union, Japan, and key developing countries such as Korea,
Thailand, Malaysia, Singapore, India and China in the Asian region,
as well as Mexico and Egypt.
I believe that the so-called "mini-ministerial" in Sydney is also
in our domestic interests.
What we do to address developing country concerns in the Doha Round
will also help address the concerns of those who worry about the impacts
of globalisation - and ameliorate the influence of those who oppose
it outright.
I am hoping that our endeavours can also inform the sceptics in our
constituencies of the huge benefits that can accrue from openness
. and therefore of the value of liberal capitalism and democratic
institutions.
I hope and trust that you can join me in that journey.
Local Date:
Saturday, 22-Nov-2008 10:12:08 EST
