Address to Asia Society, San Francisco

  • Speech, check against delivery

It is a great pleasure to be back in San Francisco – a truly remarkable city that I thoroughly enjoy visiting, and one that naturally looks to the Pacific as a frontier of opportunity.

Everyone here knows Australia and the United States are the very best of mates and share a unique bond.

Our two nations have a lot in common – we are proud stable democracies and nations who recognise just how important economic openness and respect for the rule of law are to prosperity.

Since I arrived in the US a few days ago, I have been thrilled to see the events underway, led by our embassy in Washington, to mark the 100th anniversary of our troops fighting alongside each other on the Western Front, during the First World War.

You may not know Australia is the only country in the world who has fought alongside the United States in every major conflict in the last 100 years.

Our shared military heritage speaks volumes about the cultural, economic and geopolitical bonds between our people, and our countries.

We have a proud tradition of helping each other out – as mates do – whether on the Western Front, in the mountains of Afghanistan or even here in the forests of California, where Australian fire fighters have come to the aid of Californians as recently as October 2017.

Perhaps not as well understood as our military relationship, though, is just how deeply our economic links run.

Since our bilateral free trade agreement – the Australia-United States Free Trade Agreement (AUSFTA) – came into effect in 2005, the economic bond between our countries has grown significantly.

Australia and the United States continue to enjoy a rich economic partnership that is broadly based and full of potential.

We are proud to see Australian companies employ thousands of American workers here in the United States.

In the manufacturing sector, for example, US-Aussie shipbuilder AUSTAL employs 4,000 Americans in Alabama, and packaging firm VISY announced in May last year it will employ an additional 5,000 Americans.

Australia's CSL Behring, which manufactures and markets bio therapeutics, employs about 11,000 Americans.

Australia's Treasury Wine Estates is the largest producer of wine in Napa Valley, and almost a third of its global workforce of 3,500 is here in the United States.

Australian products are also finding their way into American households in increasing number – not least our world-class wine and food exports, and Australia is in turn a big importer of US autos and airplanes.

The investment relationship between our countries is perhaps the most exciting aspect of our partnership.

Our investment relationship has grown by over 130 per cent since our free trade agreement came into force, to a staggering 1.5 trillion Australian dollars – that is around the size of Australia's GDP.

To put that in perspective, the stock of US direct investment in Australia is worth 80 per cent more than the total stock of US direct investment in China.

And for our part, Australia has invested seven times more in the US than it has in China.

Australia is home to the second largest slice of US direct investment in Asia, helping to support a whopping 370,000 jobs.

In turn, more than a third of Australian investment into the United States is in the manufacturing sector – supporting American jobs.

Ours is a partnership that affects the lives of everyday Australians, from Wyoming to Wollongong.

Tesla, as you may know, has just put the world's biggest battery storage array online in South Australia.

Iconic US companies like Boeing also have a great presence in Australia.

The Boeing Aero-structures division, based in Port Melbourne, manufactures 787 Dreamliner parts using a unique and innovative carbon fibre infusion technology developed in Victoria.

This is Australia's largest aerospace contract - valued at $5 billion over 20 years – and supporting hundreds of jobs in both our countries.

Australia welcomes productive foreign investment, and it's my pleasure today to launch a publication that highlights the great opportunities our economy offers foreign investors.

Austrade's annual Benchmark Report presents key economic, financial and demographic data that highlights Australia's strengths as a trade and investment destination.

The report demonstrates how the resilient Australian economy, coupled with Australia's sound governance and solid institutions, makes the country a safe and secure place to do business in an uncertain world.

Many Californians know this already and Australia and California are doing big things together.

Our landing pad right here in San Francisco has taken our collaboration to new heights.

The Landing Pad is giving market-ready tech innovators from Australia the boost they need to share their ideas in the Valley, with the greatest minds and smartest wallets in the business.

Sydney-founded start-up Snappr is the Uber of freelance photographers – connecting some of the best photographers in the US and Australia with clients through a very simple interface.

With the help of our landing pad, Snappr made the connections they needed to scale up.

Now we know California has no shortage of willing partners but you might be surprised to know just how complementary our economies are – and how similar our outlook is.

California shares a Pacific perspective with Australia's largest cities – including my home town on the Gold Coast in Queensland.

We are all looking toward the dynamic markets of Asia, one of the most exciting and competitive parts of the global economy.

We expect that by 2030, Asia will produce more than half of the world's economic output.

Californian firms continue to choose Australian investment partners in growing numbers, as they see Australia as both a gateway to Asia and an investment destination in its own right.

Thirty years ago, few would have predicted that our preeminent national science agency, CSIRO, would open an office in Silicon Valley.

CSIRO has opened a new door for US-Australia partnerships offering not only access to traditional research and innovation but to the entire innovation lifecycle – something which is unique globally.

US companies now have easy access to 5,000 brilliant Australian scientific minds, offering commercial solutions to transform businesses and industries.

We are also doing great things in the emerging field of Med-tech, complementing our strengths in more conventional medical research.

A small Australian start-up, Viralytics, has developed CAVATAK, a bio-selected cold virus that locates and destroys cancer cells.

Viralytics is undertaking clinical trials with some of the America's largest pharmaceutical companies.

In combination with US innovations, CAVATAK has stabilised advanced forms of cancer in nearly 70 per cent of patients in trials with advanced melanoma, lung cancer and bladder cancer.

This is truly a testament to the greatness our two nations can achieve together.

Now as I have said, our modern economies operate on the basis of economic openness to promote prosperity.

Today, Australia is an innovative, diverse and highly open economy deeply integrated into global markets.

For many years, Australia and the United States have had common cause in convincing other countries to emulate our economic openness and share in our success.

However, we are entering a period of new challenges.

There is no denying that we are living through a period of extraordinary change and upheaval in the global economic landscape.

The challenges and opportunities ahead for the Indo Pacific region will demand that we continue to make the case for a liberal and rules based trading environment.

We were pleased to see these ideas front and centre of the National Security Statement President Trump released at the end of last year.

This statement reflects the view held by many Americans – more than 70 per cent according to recent polling by the Chicago Centre – that open markets are good for the USA, and good for American jobs.

Australia's Lowy Institute has similar findings, with 67 per cent of polled Australians telling the Institute's 2017 poll that free trade was good for them personally, and for the Australian economy.

So we very much look forward to working with the United States to continue to support the international system that supports our collective prosperity.

The rules and norms of non-discriminatory and 'light-touch' global regulation of international trade, that served to protect and enhance our prosperity in the second half of the 20th Century, are being called into question as never before.

New barriers are being placed in front of trade flows, and new rules are being created to restrict the flow of goods, and particularly services, threatening the ongoing global recovery.

These barriers are bad for all of us. We know the alternative doesn't work. Australia was economically protectionist in the first three quarters of the twentieth century.

Behind tariff walls, we slid from being among the richest countries in the world per capita in 1901 to outside the top ten in 1975. How foolish that episode seems now! By reversing course and embracing openness, we entered and era of unbroken economic growth and restored our place among the world's richest nations.

The lesson is, if we want to prosper alongside the emerging markets in the Indo Pacific, we must engage with the region and promote free trade where all sides live up to their agreements.

We must engage with the emerging economic architecture of the Indo-Pacific, to extoll the virtues of staying open.

President Trump said at the World Economic Forum last week

"We support free trade but it needs to be fair"

And he went on to say that the

"United States is prepared to negotiate mutually beneficial, bilateral trade agreements with all countries"

All of us need to make the case, repeatedly, for open markets – for trade and investment rules which facilitate economic openness while respecting our sovereignty, so we can share the undoubted benefits of globalisation across the community.

For Australia, it is imperative that we work together with the United States to give voice to these concerns on the world stage.

Australia laid these values out in black and white last year in our Foreign Policy White Paper.

We recommitted ourselves to economic openness in words and in deed – articulating Australia's vision for a rules based international economy.

We will continue to pursue trade agreements that codify these principles.

In fact, the Turnbull Government is committed to pursuing an ambitious trade agenda and creating new export opportunities.

As we all know, more exports means more jobs – and openness to the international trade and investment drivers that deliver jobs growth is central to our prosperity.

Australia is part of two major region-wide economic integration negotiations that will be extremely important - first, the Comprehensive and Progressive Agreement for Trans Pacific Partnership.

I am convinced that the agreement reached on the final deal in Tokyo just last week marks a pivotal moment in shaping our region's future economic integration and growth.

In partnership with Japan, Australia took a leadership role in finalising the agreement among the eleven countries around the table.

Fundamentally, we see the TPP as a dynamic framework that will drive more Australian export opportunities and jobs in the future.

This TPP-11 agreement preserves the original TPP's important gains, and will significantly increase market access for our exporters of goods and services to a regional free trade area with a GDP worth $13.7 trillion.

Prime Minister Turnbull and I want to see this agreement signed on 8 March in Chile. We fully expect this will not be the end of the story.

As Prime Minister Turnbull said earlier this month during his visit to Tokyo, there is no doubt the economic and strategic logic of this agreement is so compelling that others will want to be a part of it once it has entered into force.

Indeed, this is what we are seeing already and that is consistent with Australia's vision of the agreement as an open platform.

In the future, Australia would welcome United States re-engagement in the TPP. President Trump said in Davos last week that the United States would re-engage with the TPP if it was in the US' interests.

We believe that the logic of the TPP is clear – its high standards and comprehensiveness provide us with a strong level of confidence that the deal will bring huge benefits to all who sign up, and will act as a positive force for market-opening economic reforms across the region.

Australia hopes to one day see the United States return to the TPP, and we will remain ready to engage with the US at any time to discuss how that vision might be made a reality.

In the meantime, we are moving forward as a group of 11 countries to bring the new TPP agreement into force, with great confidence about the positive impacts of this initiative on our region's economic and political future and on the global trading system.

The other major region-wide economic integration initiative is the negotiations underway for the Regional Comprehensive Economic Partnership, or 'RCEP'.

A high-quality RCEP deal also has immense potential to establish more open trade and investment in the region – bringing together 16 countries that account for more than 30 per cent of global GDP and more than a quarter of world exports.

We are also progressing bilateral trade agreements.

We now have underway or soon to start negotiations with Indonesia, Hong Kong, the Pacific Alliance (comprising Mexico, Colombia, Peru and Chile), and the European Union.

Finally of course we strongly support the WTO and the role it plays in generating the norms underpinning the current generation of trade agreements – be they bilateral, plurilateral or multilateral. The WTO's dispute settlement mechanism remains a central part of our rules based system.

The WTO may not be perfect, but without it, the global economy and all 164 WTO members would be worse off.

Australia is constantly looking to improve the terms with which we engage with the world, to ensure our strengths find their most productive use.

I referred earlier to our failed experiment with protectionism.

The adjustments from this era took time, but now the results speak for themselves.

We're into our 27th year of continuous economic growth.

And it's been shared prosperity – real median wages have gone up roughly 50 per cent over the past 20 years.

Tariffs on clothing have dropped from 55 per cent in 1990 to a maximum of 5 per cent today, and zero or heading to zero for countries where we have a free trade agreement.

The benefit to consumers was immediate – and they had more disposable income to spend, boosting Australia's economy.

Australian clothing manufacturers have transitioned to higher-value specialised goods.

Instead of being protected by tariffs, they are pushed to compete through design and innovation.

Sydney-based manufacturer Zhik, for example, produces performance garments for professional athletes involved in water sports, especially sailing. Zhik products are sold in more than 40 countries.

In addition to reducing tariffs, we also dramatically reduced and repurposed the assistance we provide to industries.

For example, the effective rate of government assistance to dairy farming, has fallen from almost 40 per cent in 1998 to 1.4 per cent in 2016.

Dairy farms have scaled up and invested in IT and superior genetics. Today, a much more efficient industry operates under fewer regulations, and full exposure to the opportunities and challenges of world markets. We export around 40 per cent of our dairy production, without the prop of government subsidy.

Ladies and gentlemen, in these dynamic economic conditions there are opportunities ahead if we stay true to our principles.

If the US wants the Indo-Pacific to meet its high standards of economic governance, it is important to engage with the fast-evolving regional economic architecture in the Indo-Pacific.

We need and want US leadership in the region on trade policy, as we do more generally in supporting rules-based economic governance.

Just as Australia and the United States have come a long way since our experiences on the battlefields in Europe and the Pacific, we will continue to engage with an unpredictable world side by side.

Our ability to continue to find opportunities for our people in these times relies on our commitment to staying open.

Of course, as good mates, we will continue to do our best work when we are working closely together.

I am immensely proud of the strong relationship Australia and the United States share and look forward to watching this relationship continue to go from strength to strength in the years to come.

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