Remarks at Trade and Investment Forum
Transcript, E&OE
Mexico
10 April 2010
(Introduction made by Gerardo RUIZ MATEOS, Secretary of the Economy)
MR CREAN: Thank you very much Gerardo for those very warm words of welcome, it's a great pleasure to be here, my first visit to Mexico. I am sure it will not be the last, because when you look at the potential of this country and the strength of the relationship to date, there is enormous opportunity going forward.
We have had the opportunity in the Joint Trade Investment Commission that preceded this meeting to have some real constructive bilateral exchanges. Exchanges as to how we can strengthen the bilateral relationship, but also how together as countries that share common values in terms of multilateralism and the region, how we can work a lot more closely to promote our common objectives in those fields.
In terms of the framework that we talked about, Gerardo has already mentioned the MOU on cooperation in mining that we signed earlier today. Later today we will also be signing an Air Services Agreement that has the potential to open up the air links between the two countries which will obviously be important from the commercial, as well as tourism, and education perspectives.
The reason it is important to engage with the business community, and we both share this view, is that it is one thing for governments to get the framework right and to try to strengthen it, and to therefore have strong Government to Government connections, but really what is going to drive the commercial relationship is the business to business connection. Our task, it seems to me, for both groups -governments and business- is to understand each others' objectives a lot better so that we join those dots a lot more effectively so that we have got an interaction as governments to business, to understand what your objectives are, and what you perceive to be the opportunities, and from those opportunities what are the barriers that we in turn need to address.
We have been informed earlier today about the opportunities that exist in this country. Automotive is one very interesting point, and I am going to Metalsa tomorrow up in Monterrey because they do have investment in Australia, but when you think of the automotive industry, it has been turned on its head as a result of the global financial crisis.
The truth is what the world is going to be looking for is a cleaner car, a lighter car, and a smarter car, and that is going to require a lot more interaction through global supply chains, not just trying to do it all within one country.
The opportunity that presents itself with the capability of both Australia and Mexico in the automotive field, in our view, is enormous. So that is an area in which we look forward to seeing the opportunities as we go forward.
Mining too is another great area of opportunity. If you think of the challenges that confront all of us, it is about energy security as well as for those countries that have resources, how efficiently they can extract them and market them to other countries. Australia has a long reputation in this field. The strength of our mining industry isn't just in the fact that we have huge deposits of resources. We are the most efficient in the world in extracting them. We understand the sensitive issues, the land-related issues, the dealing with indigenous communities.
We also have a very strong commitment to land rehabilitation and environmental concern.
It's not just in the natural resources that we are strong either. It's also the question of renewable energy, and Australia, like Mexico, has this commitment in terms of its renewable energy targets. So the opportunity is resource-based, but it's taking the resource base beyond it to challenge and respond to meet the challenge of resource security.
The other areas that have been mentioned in the fields of infrastructure and financial services are interesting in their own right, because the truth of it these days is that trade no longer is just about trade in goods. Increasingly it's about services and investment opportunities, and so this opens up new challenges to governments, so far as the trade negotiations are concerned.
It is not just tariff barriers that we need to address, it is the non-tariff barriers as well. It is the behind-the-border related issues if we are to facilitate greater movement of good and services.
The final point that will I leave you with is this: Australia is the only developed country in the world to have avoided the recession last year. In part it was because our stimulus measures worked effectively and are still working through.
But there are two more fundamental reasons why Australia weathered the storm better that any other developed country in the world. Firstly, we understood the importance of structural reform and making our economy competitive.
There is not much point opening up markets if you are not competitive enough to take advantage of them.
So trade liberalisation is one to mention, one pillar of economic advancement. The second pillar is structural reform that improves the country's competitiveness.
So I welcome very much the commitment of President Calderon here to look at what can make the Mexican economy even more competitive going forward. We have much information to share in that regard so we look forward to that area of cooperation as well.
But the second factor that Australia put in place again over twenty years ago along with the structural reform was our understanding of the importance of Asia to our economic future. We didn't just rely on the traditional markets of the US and the EC. Increasingly out trade is much more focused on Asia, and that has been a godsend to us. People think we weathered the economic storm just because of China. China was an important part of the reason, but it wasn't the only part, because East Asia and ASEAN are countries with which we have got increasingly strong growth in trade.
We have recently concluded a Free Trade Agreement with ASEAN, a grouping of nations with a combined population of some 600 million people. This is huge market opportunity for us. And if we can strengthen the bilateral links between Mexico and Australia, we provide that gateway in turn to facilitate trade opportunities for Mexico, which I know is increasingly focused on that area of activity.
So all in all I think there are huge opportunities going forward. We can put the framework together, but what we do urge the business communities of the respective countries to do is for themselves to engage much more actively together, to identify the opportunities, to strengthen the case for the commercial relationships because that is what will drive the endeavour and the commitment at government level to strengthen the frameworks.
Thank you for the opportunity to be here with you today, and Gerardo again, for the hosting of not just this forum, but of the visit. I am looking forward to my four days here, but most importantly I am looking forward to the strengthened economic relationship in goods, in services and investment between Australia and Mexico. Thank you.
Q&A Session
QUESTION (Neil Dávila): For me it is very important that you mention the strategy that Australia took in Asia. We know that China produced 13.5 million vehicles last year, surpassing the United States, and 2 million of them were made by General Motors. This is why we think that the strategy of Australia being there kept them away from the crisis as General Motors did. My question is: how can we both build a strategy in the important sectors to go together and be the triangle of operation? Thank you.
MR CREAN: I agree with you about the opportunity for both of our countries to target third markets in the areas of our strengths. And again to use the example of automotive because you have used, I visited and I took the Commerce Minister with me from Australia last year to China after one of my earlier visits. China is not only the largest automotive manufacturer these days, it is the largest automotive market. It does not have the full range of capability to produce a car and that's why you have seen a lot of joint ventures. You have mentioned the GM activity. What China is now moving to is seeking to produce its own car, but it realises it hasn't got the full capability.
Countries like ours that do have those capabilities, it seems to me have a huge opportunity to position themselves within the supply chain. That is important to that matter. And that's why we have been placing a lot of emphasis in our dealings with China, not just trying to get an FTA concluded, but in looking at the commercial realities region by region.
So, China is a huge market. Japan is still potentially our largest market — don't forget the Japanese market. And in the case of Japan it knows it has got limitations in terms of its domestic market. It too is looking for third-market entry.
Korea is another case in point, and don't forget India of course. And then you have got the ASEAN group that I talked about. So, what we are really seeking to do is to position ourselves in the fastest growing markets in the world. They will be growing for a considerable time to come. We are well-placed in that regard, and I think that it is in Mexico's interest to understand the opportunities, perhaps, that can be opened up through the strengthening of our own bilateral relationship.
QUESTION (Donald Smallwood): How much is agriculture really included in the bilateral arrangements between Australia and Mexico? They are both large producers of food and sometimes there are non-tariff barriers, and I think some of them are probably not as necessary as they may be made up to be. How much effort is being made to see if there's any way we can share not only the products, but also technology in agriculture?
MR CREAN: Agriculture still figures very prominently in the bilateral relationship and we had a good discussion about it this morning and I am meeting the Agriculture Minister later today. We will discuss it in more detail.
Australia, since, well, since we came back into office we have made a very clear point that in terms of the quarantine arrangements, they will be based on science, not the politics, and we have been very strong in that regard. There are a number of issues outstanding between our two countries. In relation to all of those, we are still awaiting information back. Our authorities have sought the relevant information and are waiting for it to come back to take the issues forward.
On the broader questions that you raised I also agree with you about the opportunities in technology and production practices. I mentioned in my address that the challenge of all countries is energy security, and another of the great challenges, quite frankly, is food security.
We talked at length today about the opportunities in the dairy industry. The opportunity for not just the transfer of the product, but of the technology and the services that improves the productive capacity within Mexico, for example.
Australia is one of the most productive of the agricultural nations. It doesn't have any subsidies to speak of, and we try to export, well, we export a lot of our surplus, and we'd like to export more, and that comes back to the trade barriers question. But it seems to me as all of us are dealing with this problem of climate change, dramatic climatic conditions, the drought, etc, the issues of water management, improving land productivity, embracing new technology, and encouraging a climate for investment so that what we are not just moving is the goods, but the more productive expansion I suppose within a country, that is the other area of activity that we have been talking about. But it is very strongly in the mix.
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