Australia and Britain - partners in free trade

  • Speech, check against delivery
Bloomberg, London

It's a pleasure to have this opportunity to talk about whatAustralia and Britain can achieve together as open trading nations.

A month ago Britain's Trade Secretary, my good friend, LiamFox spoke here and posed some big questions.

Where did Britain see its place in the world?

What sort of economy and what sort of country do theBritish want to be?

What should their influence be in global affairs and globaltrade?

These are important questions.

While there's a lot of work to do, Secretary Fox set outsome clear principles.

In its trade policy, Britain will be sovereign, open andfree.

Britain will be active and influential globally.

Britain will, in Secretary Fox's own words, "offer clearleadership, to be a staunch defender of trading rights and freedoms, not onlyat the WTO, but at other international bodies too".

Well, that is all music to my ears!

Australia and Britain are already allies in trade policy.

We have fundamental objectives in common.

Australia set them out in the Foreign Policy White paper wepublished last November - we will resist protectionism and advocate for an openglobal economy.

We will protect and shape rules that promote economicgrowth, trade liberalisation and free markets.

This will take determined work with partners and globalinstitutions.

The Australian Government will also ensure the lowestpossible barriers to trade and investment, through modern free tradeagreements.

I am sure the close parallels with British trade policy areclear to you.

Today I want to talk about the ways Australia is workingwith Britain to advance our common interests, and where I see thiscollaboration heading.

I see four main lines of work - building from our own tradeand investment settings, out to the impact we can have on the global trade andinvestment environment.

We can have a big impact over time, if we play our cardsright.

Australia is committed to helping the United Kingdom defineits trade policy and emerge as a great new liberal voice in the internationaltrading system.

We are working intensively with the Department ofInternational Trade to share lessons and experience.

Britain has an historic opportunity, as it leaves theEuropean Union, to shape its own future through trade.

It is important the UK stays true to its principles at thistime.

The path of free and fair trade is strenuous, it is not theeasy road, but free trade is the proven path to prosperity and good governance,and we need to make the case for it again and again in our domestic politics aswell as internationally.

As I said in Hong Kong earlier this month, protectionismdestroys wealth and slows economic growth.

But free trade is not as simple as governments getting outof the way and letting business get on with it.

On the contrary, open trade and investment settings thatwork, and retain the public's confidence, require skilful, responsivegovernment.

And for government to do its job, business must also leadin the national interest.

The independent action of governments and the privatesector is, obviously, a great strength of the political and economic system wehave in common, but like all freedoms, it asks a lot of us.

If Britain is serious about taking the opportunity toliberalise its trade and investment settings, then some business sectors willhave to make what are sometimes painful adjustments.

The key is for government and business to steer by the samestar.

In our Foreign Policy White Paper, we described ournational interest in well-regulated economic openness, so that maximum possibleparticipation in international markets drives competition, productivity andopportunity.

A crucial part of this picture is the support we provide athome through investment in education, training, employment services andassistance to communities adjusting to economic changes.

We in Australia had our own painful adjustment when Britainjoined the European Economic Community in 1973.

It was our cue to shrug off the legacies of theCommonwealth preferential trading system, and reorient our economy to our ownregion and our own destiny.

We lost a decade stuck in an old economic model that soughtto protect our industries from the challenges of international competition.

By 1980, Australia's GDP per capita ranking had fallen to19th in the world – from 7th in 1950 and 2nd in 1913.

These years of drift and half-hearted adjustments made thereal reckoning harder when it came.

And yet, from the mid-1980s, there was a sea-change inAustralian attitudes towards industrial policy, and it was embraced by bothsides of politics.

Through a number of major policy reforms, we opened ournational economy, and accepted that our economy had to respond to internationalcompetition, and not industry protection.

Far from killing our national economy, the removal ofprotectionism made it stronger, changed its shape, and gave it new momentum.

Old industries that no longer made sense, in the emergingworld and region that was taking shape, did fall away.

Some people lost their jobs or struggled to adjust to workin the new services industries that emerged.

For those who lost their jobs, we had in place strongsocial security safety nets, industry transition programs, and a commitment toeducation and training to help people find new careers.

Government was active and responsive, not shielding thenation from competition, but equipping Australia for it.

The end result was that by 2015, even after the waning ofthe mining boom, we were back up from 19th in the world - we were the 10thrichest people in the world, measured by GDP per capita.

Our economy had become more adaptable and innovative.

We are now in our 27th consecutive year ofannual economic growth.

Open trade and investment settings are a crucial part ofthat success story and we are keen to share our lessons and experience.

The second line of work is on our bilateral traderelationship.

Australia and Britain are ideal partners to build anexemplary trade relationship.

Officials have made good progress, and now that we havedates for the Brexit transition period, it is time for strong support at thepolitical level.

When the time is right, I want to be in a position to actswiftly on securing our future free trade agreement.

We understand the UK must first finalise its newarrangements with the EU.

It is in Australia's interests for the EU and UK toestablish a new, mutually beneficial relationship that sustains the economiesand global influence of both parties.

We look to the EU and the UK to show leadership andconclude a comprehensive, trade liberalising agreement that maintains opennessto trade, and resists anti-trade policies.

Australia doesn't want to get in the way of that.

But at the same time, the EU and UK need to take intoaccount the interests and sensitivities of their trading partners.

The Australia-UK trading relationship took a big hit whenthe UK joined the European Community – especially our agriculturalexports.

So it will come as no surprise that Australia is determinedto ensure that our limited access to the EU and UK markets is not furtherdiminished as a result of the UK leaving the EU.

Australia is moving surely down our path to a formal launchof negotiations for our own free trade agreement with the EU.

Even so, I believe that Australia and the UK should preparenow, with a sense of urgency, to negotiate as soon as possible a high qualityand ambitious trade agreement of our own.

An agreement that will announce the arrival of the UK as amajor, modern, global trading nation in its own right.

We are fellow Westminster countries.

We have an outstanding record of close cooperation.

We understand one another at every level: from our tradeofficials who will fit and fasten the nuts and bolts, to our Prime Ministerschairing cabinet governments that share almost identical objectives at eitherend of the world.

We should commence formal negotiations on the 30th ofMarch, 2019 – on the day that Brexit implementation begins.

We can break new ground in liberalising trade in servicesand the digital economy.

An ambitious, comprehensive Australia–UK FTA will createwealth in its own right, and it will be a sure step towards the UK's widertrade goals.

The third line of work is influencing the global tradingenvironment.

The Australian Government is keen to invest energy andexpertise in a Britain that is true to its trading principles because we wantto see the UK Government succeed in its ambition to be a global champion forfree trade.

As Secretary Fox said here last month, "the prize at stakeis not simply the future prosperity of the United Kingdom but Britain's abilityto participate in and shape the world economy at one of the most exciting andimportant points in history".

From outside the European Union, Britain should remain animportant influence on European trade policy, including through the force ofsuccessful British example.

A vigorous free-trading Britain that backs its principleswith action will be an important influence in Washington too.

I am encouraged by the UK Government's interest in joiningthe Trans Pacific Partnership, in time.

Signed just this month by the eleven participatingcountries, the TPP is the world's most significant trade and investmentagreement in more than two decades.

As Prime Minister Turnbull said earlier this month, thedecision by Australia and Japan to pursue a TPP-11 after the withdrawal of theUnited States – and that of the other members to pursue it with us – was aclear signal of the continued strength of commitment globally to reform.

It's important to build on that momentum, and we arefocused on bringing the Agreement into force as soon as practicable.

Australia has always said the TPP-11 is an openplatform.

An early and high-quality UK-Australia FTA would be animportant signal to others of the UK's capacity to join the wider regionalgrouping.

But whether or not it joins the TPP, Australia looksforward to a Britain that lends its weight and powers of persuasion even moreeffectively to the cause of an open and integrated global trading system.

Britain can and should play a bigger part in building therules in Geneva at the World Trade Organization as an independent tradingpower.

We can work together to refresh the WTO agenda.

We need to do some hard work on digital trade.

As Secretary Fox said here last month, "the digital economyis growing 32 per cent faster than the wider economy and creating jobs threetimes more quickly.

"Digital trade is inherently transnational, and e-commerceoffers previously unknown opportunities for SMEs and individuals, particularlywomen, to take part in the globalised economy."

Australia and Britain are getting out ahead in the digitaleconomy.

Our Treasurer Scott Morrison and Mr Hammond signed theUK-Australia FinTech Bridge Agreement earlier this week.

And in our bilateral trade agreement, we can set the pacefor digital trade rules.

However, to fully benefit from the immense opportunities inthis area, we also need to play a leading part in global rule-setting.

There is also work to be done on investment, and on behindthe border issues, if we are to continue to drive change.

And we need to find a way to break the long-standing logjamon liberalising global agricultural trade, and reducing trade-distorting farmsupport.

This would boost economic growth globally and, veryimportantly, would benefit the poorest the most.

In recent decades, the WTO stood out amongst internationalorganisations for its relatively successful dispute settlement procedures.

Australia wants to work with Britain to strengthen the WTO,as a forum for getting the rules right, and for enforcing them.

Fourth and finally, another high priority for Australia isour work with Britain on reinforcing market principles and internationalstandards as we help meet developing countries' infrastructure needs.

There is vast potential to boost global economic growth,and massively reduce poverty, by providing quality infrastructure in developingcountries.

Britain has long been a pathbreaker in this field, notablythrough the Private Infrastructure Development Group, which has led the way insupporting infrastructure finance that helps build developing countries' owncapital markets.

Australia will continue to support the Group's work in theIndo Pacific.

Australia is also helping to meet the infrastructure needsin our region in partnership with the Association of Southeast Asian Nations.

At the ASEAN-Australia Special Summit in Sydney this month,we launched the ASEAN-Australia Smart Cities initiative, which draws onAustralia's world-class expertise in green infrastructure, water governance,renewable energy, innovative technologies, data analytics and transportation.

We also built linkages for ASEAN countries into the GlobalInfrastructure Hub, based in Sydney.

Australia is working with a wide range of partners todeliver quality infrastructure in developing countries in ways that meetinternational standards, benefit from market principles, meet genuine needs andavoid unsustainable debt burdens.

We are also keen to work with Britain on integratinginfrastructure initiatives into international systems.

With the Argentinian G20 Presidency, we're pursuing thetransformative long-term goal of creating a tradable infrastructure asset class– essential to attract the levels of private capital required to meet ourregion's 26 trillion US dollar infrastructure financing gap.

We are also working with Britain through the Asia EuropeMeeting and elsewhere to ensure that international infrastructure investmentaligns with a broader connectivity agenda, such that labour and capital arefree to move in accordance with international standards and agreements.

Together we can ensure that developing countries haveinfrastructure options that are efficient, affordable and designed to suit thehost country's situation.

Earlier this month at Mansion House, Prime Minister Maysaid, "as Britain departs the EU, the world is watching".

Britain is clearly at a turning point.

Trade and investment is at the heart of it.

Is Britain's turn symptomatic of an international order indecline, or of a great nation's determination to provide global leadership onits own terms?

Australia believes it's the latter, and we want to workwith Britain to help make it happen.

We love to compete with the Brits, in commerce, in jest,and in sport.

Our sporting rivalry will be on display in my home town onthe Gold Coast at the Commonwealth Games, which opens in nine days' time.

But the reality is that our shared values and interests rundeep, in the big picture, and over the long term, and we want the UK tosucceed.

So bring on prosperous, free-trading, global Britain.

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