Speech

We meet at a time of global uncertainty, shaped not just by the spread of weapons of mass destruction and the war in Iraq, but also by international terrorism and global economic weakness.

The APEC Business Forum has today given you the opportunity to discuss how the new environment is affecting Australian competitiveness, and what this might mean for our trade and investment in the Asia-Pacific region.

In particular, your discussion today - about terrorism, and the role of regional business in tackling it - is both timely and well considered. I understand that the discussion has been lively, and thought provoking.

Of course, there are a range of other trans-national issues - such as people smuggling - that affect the stability and security of the Asia-Pacific region, and which countries are working together to tackle.

Right now we are faced with a new threat in our region - that of Severe Acute Respiratory Syndrome, or SARS - with a case now confirmed in Australia.

Suspected SARS cases have been reported across the globe, and the countries most affected - China, Hong Kong, Singapore, Vietnam, and Canada - are all APEC members, and are all significant economic partners for Australia.

In line with World Health Organisation recommendations, we have issued travel bulletins recommending that Australians defer all but essential travel to these countries, and have issued advice on how best to minimise the risk of exposure.

I know that health authorities across the region are now working closely together to map and contain the spread of SARS.

SARS is a good example of the kind of threat to regional prosperity that regional governments, businesses and community organisations can face but working together we can coordinate a regional response.

I appreciate the role you are playing, through meetings such as today's, in addressing these issues.

I hope also that many of you leave tonight with a strong sense that the Australian government is building a more secure environment for doing business.

Iraq

Ladies and gentlemen

Before I go on, I should just comment on our commitment in Iraq.

Our troops - as true professionals - are performing magnificently in the allied effort to disarm Iraq of its WMD.

They carry with them the support, thoughts and prayers of all Australians, and the desire of all of us for their safe return home to our shores.

As any prudent government would, we are looking beyond the conflict in Iraq.

We are looking to a peaceful Iraq, where we can help the Iraqi people rebuild their institutions, infrastructure and economy.

We are looking to the day when Iraq, after years of political and economic isolation, can participate fully in the international economy.

We are looking to an Iraq that regains its place as a significant market in its own right, particularly for Australian goods and services.

We are working to ensure that Australian companies can participate in providing humanitarian relief, and in the rebuilding of Iraq once the conflict ends.

We are already helping to meet humanitarian needs in Iraq - by supplying 100,000 tonnes of Australian wheat as urgent food aid.

Our companies are particularly well-placed because of our expertise in agribusiness, healthcare, sanitation and water supply, as well as our track record in construction, infrastructure and institutional development.

The Government has been in close contact with the United States and United Kingdom, and with other coalition partners, on post-conflict issues in Iraq.

Austrade and the Department of Foreign Affairs and Trade are working closely with chambers of commerce and relevant industry associations about potential opportunities in Iraq.

Australia will be playing an important part in recovery, growth and eventual stability - in Iraq and throughout the Middle East region.

Tackling regional threats to prosperity

Ladies and gentlemen

A secure environment is essential for business - and hence for trade and investment - and the economic growth that assures our continued prosperity.

APEC's goals cannot be achieved in the absence of such an environment. As the pre-eminent forum for regional economic cooperation, APEC has a powerful mandate for addressing security issues that affect trade and investment.

The strong statements by APEC Leaders last year on counter-terrorism showed that APEC can address critical issues of common concern.

This deepening trend towards habits of dialogue between leaders on a broader range of issues that challenge the security and prosperity of the region is very welcome.

Certainly, the threat that terrorism poses to free, open and prosperous economies

has galvanised the regional community into action.

• APEC economies are working together to combat terrorist financing and protect critical information systems.
• They are also finding ways to keep borders open to trade and investment, but closed to terrorists.

The Secure Trade in the APEC Region (STAR) initiative to enhance border controls, air and maritime transport security, and to protect people in transit as well as cargo, will do much to protect our regional trade.

Implementing counter-terrorism policies is not cheap. But the cost should be seen as an investment - an investment that will pay dividends in reduced risk premiums, and increased trade efficiencies.

• The events in New York, Washington and Bali demonstrate that the costs of not addressing terrorism far outweigh the costs required to achieve a safer, more secure region.

It is my strong desire that government and business work together to ensure a good understanding - throughout the region - of the benefits of addressing terrorism, and the costs of not doing so.

The APEC agenda

Ladies and gentlemen

I believe that APEC is flourishing - it is refining its focus and perceiving its role more broadly than in the past.

APEC is helping create an Asia-Pacific region which is more resilient to regional and global shocks.

APEC's challenge is to ensure that regional economies stay the course of regional integration and economic openness.

• In that way, we can reach our common goal - unfettered exchange, greater prosperity and a better quality of life for our people.

Nearly all APEC members are either involved in, or are considering, how to use bilateral and regional trade initiatives - as well as multilateral avenues - for opening up export markets.

These initiatives reflect the fact that nations of the region recognise that free and open trade is the best guarantee of economic prosperity and growth.

As you well know, Australia too is active and constructive in advancing deeper regional interaction.

• Twenty years ago, Australia and New Zealand signed the Closer Economic Relations Agreement, which to this day remains the most comprehensive FTA in existence.
• We have established a closer economic partnership to better integrate Australia, New Zealand and the ten members of ASEAN - based on the very good work APEC has done on trade liberalisation and facilitation.
• We have finalised a genuinely liberalising and comprehensive Free Trade Agreement (FTA) with Singapore.
• We are negotiating a comprehensive free trade agreement with Thailand - liberalising not only trade in goods - including agriculture - and services, but also improving the climate for two-way investment.
• We are pursuing bilateral trade and economic arrangements with China and Japan - charting a future course for Australia's critically important trade and investment relationships.
• Most significantly, we have begun negotiating an FTA with the United States, Australia's most substantial economic partner.
• For Australia, a good agreement with the USA will be one which is both deep and wide.
  • An agreement where Australia gains real market access, across all sectors
  • An agreement where Australia does not sacrifice important, public policies in health, welfare, utilities and culture.
  • And an agreement which provides a real benchmark for the negotiations in the WTO, and for other trade agreements.

APEC: fostering greater economic integration

Ladies and gentlemen

The region may be experiencing great interest and activity in bilateral and sub-regional trade and investment initiatives.

But it is APEC that remains the pre-eminent forum to achieve greater regional integration.

• APEC is the only forum that covers both sides of the Pacific Ocean and includes key nations such as the United States, China, Japan, Russia and Indonesia.
• APEC is the only forum which brings together - every year - leaders from 21 Asia Pacific economies, representing a combined GDP of over US$19.5 trillion, or around 60 per cent of global income.
• And APEC remains the only forum for building and sustaining an intellectual and policy commitment to economic integration and openness in the region.

In 1994 APEC leaders agreed on a common vision of free and open trade in the Asia-Pacific region - by 2010 for developed economies, and by 2020 for developing economies.

I believe that vision remains compelling - APEC is not a forum in which we seek to negotiate trade deals, but rather a vehicle for leading and informing our collective efforts.

There is also widespread recognition within APEC that regional trade arrangements, too, can help us work towards our Bogor goals.

• We are exploring what APEC can do to ensure that sub-regional arrangements remain consistent with WTO rules and disciplines.

I was very pleased that, at their recent meeting, APEC officials welcomed Australia's approach to FTAs as entirely supportive of the Doha round, and of APEC's Bogor Goals.

I believe APEC economies have made good progress towards liberalisation. Political leadership, peer pressure and transparency - in which Australia has been a leader - have encouraged the lowering of tariffs and other trade barriers.

• APEC average tariffs have declined from 12 per cent to 8 per cent in the last five years.
• Today, over two-thirds of APEC economy imports attract tariffs of 5 per cent or less.
• It's not insignificant either that more than 150 million people in the Asia Pacific have been lifted out of poverty since APEC's establishment.

Facilitating trade - making it easier, and cheaper - also goes to the core of APEC's activities.

Reducing business costs through initiatives such as paperless trading, for example, has helped raise our collective aspirations.

• Last year our Leaders agreed to reduce transaction costs by 5 per cent in five years - an initiative which could increase APEC's GDP by an estimated US$154 billion a year.

Australia is leading the push to make trade easier for regional business through business mobility, customs standards, intellectual property rights and electronic certification initiatives.

Australia is also driving APEC's work on corporate governance, strengthening economic legal infrastructure and improving the functioning of markets.

• And economic and technical cooperation in APEC will help members to refine their policies and strengthen their systems of governance.

The Doha Round

Ladies and gentlemen

APEC has a key role in building political support for the Doha Round of global trade negotiations, particularly in the lead-up to the WTO ministerial meeting in Cancun in September.

The role APEC plays will be particularly important this year, because --unfortunately -- progress in the Doha Round remains mixed, at best.

On trade in services, I am pleased to report encouraging progress in the negotiations.

Together with many other WTO members, we submitted our initial offer on services in Geneva last week.

• Our offer, in response to considerable community interest, has been made public - reflecting our commitment to an open, transparent negotiation.
• And it does not contain any commitments on public education and health or ownership of water, or make any offer on foreign investment screening.

The next few months will see further offers submitted, and the beginnings of a real process to negotiate meaningful access for Australian service providers to our foreign markets.

Unfortunately, I can't report any real progress in the agriculture negotiations.

Once again, protectionist forces are blocking progress by refusing to engage seriously on the latest compromise efforts to break the deadlock in the negotiations.

That mandate requires that the Doha Round improves substantially market access, reduces substantially trade-distorting domestic support; and reduces - with a view to phasing out - export subsidies.

The protectionists are under-estimating the new-found power and influence of developing countries in the WTO, with their very real and direct interest in access for their products to rich country markets.

They are either ignoring - or, at their peril, failing to recognise - an inescapable negotiating and political reality:

• Without progress on agriculture, there can be no progress in the Round.

With good argument and persuasion, I believe that the nay-sayers and those dragging their feet in the negotiations will eventually come to the party.

• So I remain optimistic about the Doha Round.

But we are going to have to stay the distance in insisting on far-reaching reform of global trade rules - on which APEC will have an important role in coming months.

Competitive liberalisation

Ladies and gentlemen

Our multilateral, regional and bilateral trade initiatives are part of an over-arching strategy of what I call competitive liberalisation - the key element of the most ambitious trade agenda in Australia's history.

• It is a strategy to pursue opportunities for greater access to overseas markets - with individual countries, in our wider region, and globally.
• It is a strategy to ensure that what we do, bilaterally and regionally, complements and stimulates the multilateral trading system, and the current Doha Round of global trade negotiations, and vice versa.
• It is a strategy to achieve, in these difficult and uncertain times, greater access to overseas markets as quickly, as broadly and as deeply as possible.
• Across the Asia-Pacific region, countries are embarking on a vast enterprise of bilateral and regional free trade arrangements.
• These arrangements - where they are comprehensive in their product coverage, and where they lead the way to deep integration between economies - support the multilateral trading system.
• And we are seeing that greater liberalisation in one sector or economy can promote greater liberalisation in other sectors and economies. This is where "competitive liberalisation" can truly lead to freer trade in the region.

Conclusion

Ladies and gentlemen

Greater regional cooperation and openness offers significant benefits for all the peoples of the Asia-Pacific region.

APEC, in particular, fosters a sense of community - a community that has a shared interest in economic integration and regional stability.

It helps to develop and support the policy framework for what we all do - globally, as a region, and within our region - to advance our common cause.

Today, the political importance of such an organisation has never been more apparent, as terrorism and other serious security challenges threaten our prosperity.

We cannot afford to be complacent. Our prosperity relies on us sustaining the momentum for greater integration and openness, based on the free movement of goods, capital and people.

Difficult times cannot be allowed to cause APEC members to move away from each other - the uncertainty of terrorism and economic difficulty creates even greater need for integration and cooperation.

In conclusion, people sometimes ask me, what is the relevance today of APEC, given the new multilateral round and the spread of FTAs in the region?

I can answer confidently that APEC has never been more relevant than it is today for the prosperity of our region.

Thank you.