2 September 2009
Australia and India: Pursuing a Common Cause
Address to the Confederation of Indian Industry, New Delhi
Thank you Dhruv M Sawhney for your warm welcome, Nelson Fernandez, Uruguay’s Vice Minister of Foreign Affairs, Ladies and Gentlemen.
I welcome the chance to speak to his forum here and I come to India for a very important meeting that starts tomorrow.
India is hosting a meeting of 39 Trade Ministers that will help determine whether we can close the deal on the Doha Round. Concluding the Doha Round has gained huge support in the wake of the financial crisis. Why has it gained such support? I believe because of the self-truth that trade is an economic stimulus and a strengthened rules based system is the best insurance against an outbreak of protectionism.
Historically world trade has grown three times faster than world output and each time there has been a successful conclusion of a trade liberalisation round there has been a lift in world output. There is no point calling for coordination of domestic fiscal stimulus packages unless we are going to work on the multiplier. That is why world leaders see conclusion of Doha as crucial to the global economic stimulus agenda.
We are close but we are not there.
I believe there is a new significant political momentum for Doha that can be traced back to the meeting of the Cairns Group in Bali in June, which I chaired.
After Bali, there was a meeting of Trade Ministers in Paris in late June and a meeting of APEC Trade Ministers in Singapore in July that built on the momentum generated at Bali.
What is crucial to the new political will for concluding Doha is the engagement of two key players - India and the United States.
World leaders at the G20 summit in April in London this year set a target for conclusion of 2010 and Trade Ministers have been given a mandate to oversee negotiations. We need to have progress to report to G20 leaders when they meet later in the month. Not only has there been the injection of new political leadership into negotiations, but the offer of India to host this ministerial meeting here in New Delhi is critical. It is a concrete reaffirmation of India's commitment to re-engage on Doha. This is vital as we are now in the end game of Doha negotiations. What we need to do now is intensify negotiations across all areas – based on the existing texts.
The Ministerial meeting in July last year succeeded in solving 80% of the outstanding modalities issues. But of course there’s still 20% to go – and these are mostly hard political issues. There are a range of meeting configurations – bilateral and plurilateral - that are working to break-through on these remaining issues. But the reality is that most of the outstanding issues will only be resolved with political input.
That’s why an iterative process is needed – a process involving senior officials, across the full range of negotiating issues, and coupled with ongoing ministerial input.
Let’s also not forget that the Doha Round covers a vast range of trading sectors. Agriculture and industrial products tend to get all the media. But there are real gains for many countries, including India, in other areas such as services and trade facilitation. That’s why we need our officials to be prepared to negotiate across the spectrum of Doha areas.
And the benefits of concluding Doha are great. The respected Petersen Institute in Washington last month released a comprehensive study into the benefits of concluding Doha.
The Petersen Institute found that conclusion of the Doha Round could deliver as much as US $ 300 billion to US$ 700 billion per year GDP growth to the world economy. That is huge impact with great on-going benefits for all nations from greater trade flows.
Importantly, the report found that benefits would flow to developed and developing countries and would boost services. For India, this could equate to a boost of almost 2 per cent of GDP growth or in dollar figures a boost of US $22.4 billion annually to the Indian economy. The report concluded that a 10% reduction by major economies to services barriers would increase global exports by at least US$56 billion annually and GDP by US$100 billion annually.
One of my messages today is that people in this room - business leaders - have a key role to play. To engage and commit politicians to strive for conclusion so we can deliver on Doha.
Today I have been asked to talk about Doha but I will also talk about the bilateral relationship between Australia and India as the two are inextricably linked. Doha must come first as it provides a much more solid platform on which to advance.
We are also working together at the regional level where I believe where are pursuing a common cause.
An example of this was last month in Bangkok where India and Australia worked together for convergence in Asia. We both share a vision and pushed for track one status of an examination of a new Free Trade Are spanning the 10 countries of South-East Asia known as ASEAN plus India, Japan, China, South Korea, New Zealand and Australia.
This East Asia Summit-wide, or ASEAN+6, would cover some 3 billion people and have a collective GDP of US$14.1 trillion.
We both supported that proposal very strongly in Bangkok and we succeeded with it – another example of the India-Australia partnership at work.
Building the Bilateral
The relationship between Australia and India has so much potential. At the government-to-government level, links between our two nations are increasing rapidly.
The Australian Government believes it is time to raise the level of the relationship to become a strategic partnership – benefiting both nations and the region.
That is why we have the concrete commitment from the Australian Government on so many levels across government.
Our Deputy Prime Minister Julia Gillard is here in India now, Treasurer Wayne Swan will visit New Delhi next Monday for economic talks and Prime Minister Kevin Rudd plans to visit India before the end of the year.
In total, eight Australian ministers are expected to visit India in 2009 and nine Indian Ministers have visited Australia in the past 18 months. This is unprecedented engagement.
As Trade Minister, this is my second visit to India and also the second time I have delivered a speech to the Confederation of Indian Industry. I liked it so much the first time I wanted to come back.
But seriously, my first visit came less than eight weeks after our election victory in late 2007 and it was followed by a very successful visit to Australia by former Commerce Minister Kamal Nath.
These two visits convinced me of the untapped potential of the Australia-India trade relationship.
India is Australia’s fastest growing major two-way trading partner but it is coming off a low base – particularly considering the complimentary nature of our economies.
In 2008, trade between India and Australia increased 43 per cent, compared to the levels of 2007, to reach $18.9 billion. The trade in services between the two nations grew 44 per cent to be worth almost $3 billion. India stands as Australia’s eighth largest two-way trading partner the trade links can be much greater. In my opinion, there is a need for stronger business engagement not just through the chambers, but also at the chief executive officer level. Indian business leaders should “Look East,” to the fastest growing region in the world - the Asia-Pacific
And Indian business should especially, look to Australia – the fastest growing developed country in the world in the past year. We have much to offer.
India is a fast-growing and diversified economy with an acknowledged infrastructure deficit. Foremost among its challenges are those of meeting the growing food and energy needs of its people.
Australia is a huge resource-rich country with a relatively small domestic market of just 22 million people, but a number of compelling comparative advantages.
Australia knows how to do business with Asia. Our strongly growing trade and investment links with Asia clearly reflects this. There are the ingredients for much closer for much closer cooperation which is already starting to happen.
Of course education services is another area, where there is great cooperation between the two nations - but also an area where there have been acknowledged problems.
Australia has a proud reputation as a supplier of high quality education to 490,000 students from other countries.
We welcome the fact almost 100,000 young people from India are in Australia studying at our institutions.
Research shows that foreign students in Australia overwhelmingly have a positive experience.
You will be aware Australia is committed to the safety of all foreign students and Prime Minister Kevin Rudd has taken a personal interest in this matter. He has condemned the cowardly attacks on young Indians.
The Australian Government is working with Australian State and Territory governments with measures that will provide reassurance to Indian families with children studying in Australia.
In addition, the Federal Government is improving regulations and requiring all tertiary education and training providers to re-register under new tighter criteria.
Let's be clear we are offering a quality education in a safe environment. The quality of our education is what we are promoting, not the visa attached to it. For this to succeed we also need the cooperation of the Indian Government. We are working with the Indian Government to ensure the marketing of Australian education by Indian education agents is of the highest quality and clients get what they pay for. This will require cooperation at both ends. Australia is a welcoming country and has benefited from the contribution of millions of people from around the world.
Finally in terms of the bilateral relationship, there is a joint Free Trade Agreement feasibility study – which commenced in August 2007. We are in the final stages of concluding this feasibility study and I intend returning next month to India discuss the next steps, based on that conclusions of the study.
In conclusion, Australia and India need to think big about how our bilateral relationship and how our strategic partnership should evolve and develop over the next decade. I am here in India on this visit to help advance the Doha Round, but there is much more at play.
Australia and India do have a common cause.
And our relationship can deliver benefits for both countries, the region and the world.