G’Day USA Economic Outlook Address

  • Speech, check against delivery
New York

Courage, endurance, mateship, sacrifice. These arevariously acknowledged as the values of the ANZACs.

Values forged through the loss of life and limb, upon ablood soaked beach and rocky headland in Turkey.

This week we have had the opportunity to reflect on thesevalues, to reflect on the sacrifice, and to reflect on the relationship betweenthese two great nations of the United States of America, and Australia.

On Wednesday, at the moving ANZAC ceremony in TrinityChurch, I reflected on these values. Values share between us. Values forged from the bonds of mateship on the battlefield.

2018 marks 100 years of mateship on the battlefield. Side by side, defending a way of life that we hold dear assomething that is good and great. Something worth fighting for.

But when the guns fall silentand the roar of conflict subsides, what are the bonds that bind us?

Fundamentally, we are both nations seeking opportunity forour citizens, not empire for the State. We prize liberty for eachperson to pursue our dreams, to reach our potential, to begreat, and yes, also the freedom to fail, pick ourselves up, learn fromit, and try, try again.

We both especially hold dear the freedom for ourcitizens to speak up and freely admit we are imperfect and flawed –two relatively young nations, both works in progress.But we can and do hold ourselves out to the world asexamples to aspire to. And we must be doing a lot right. Because we both represent a way of life other peoplehave flocked to join. We're both nations of immigrants.

It is in fact this aspiration for freedom, shared as it is,that is the bedrock upon which our great countries are built. Thisunshakeable foundation of commitment to shared values is the reason we have fora century stood shoulder to shoulder in solidarity, defending aspiration andliberty for themselves and those they love against those who seek to extinguishhuman freedom.

This is the bond that binds us. And this bond actuallygoes back even further than 100 years.

In 1842, one of New York's most famous sons, HermanMelville, sailed into Sydney Harbour on a whaling ship.

Melville must have recognised familiar American qualities inthe energy and drive of Sydney's emancipated convicts and free settlers alike,thriving under the common law, because, in a memorable line, he calledAustralia "that great America on the other side of the sphere".

One of the things that's mattered enormously toAustralia from the 1800's to today is the health of theglobal economic environment, and whether trade and investmentpolicies favoured expansions in the free flow of goods and capital.

We have a very clear and steadfast position onthis.

We stand for economic openness.

We stand for a transparent world trade andinvestment system, based on rules. It is a crucial elementin Australia's economic prosperity.

We stand for rules that encourage growth, and point the wayto sound international cooperation.

Rules that reinforce market principles, with sovereignnations playing their important, clearly demarcated role.

Today, I will seek to outline how 200 years ofeconomic relations between Australia and the United States have culminated in today's economic partnership – one that is making areal contribution to our region's peace and prosperity.

As a result, we are well positioned to shape theinternational rules for sustained growth for our two economies and ourregion.

Let me explain why I am optimistic, despite thetenor of some contemporary commentary.

During the Australian colonies' wild early history offamine, gold, whales, and war, U.S.interests prospered while helping to build the Australianeconomy and nation.

The story starts in 1791, when Massachusetts-born, Nantucketseafarer, Captain Eber Bunker sailed the William and Ann fromLondon to Sydney.

Captain Bunker delivered 181 male convicts and badly neededsupplies to the famine-struck three-year old colony of New South Wales.

He would have found he could operate under a familiarcommon law system.

He stayed in New South Wales, and became known as the fatherof Australian whaling, which by 1839 provided more than half of theexports from New South Wales, thanks in part to American capital and expertise.

After whaling, the next great boost to Australian fortuneswas gold.

The 1848 California gold rush attracted many Australians,causing a population drain.

In response, the NSW Government relaxed itspolicy of suppressing news of gold finds.

Sure enough, in 1851, well publicised gold findsin Australia reversed the flow of economic migrants.

Many of California's 49ers joined Australia's diggers,unearthing the riches that founded towns, funded our great cities, and helpedthe colonies achieve self-government.

In 1897, the first in a long line of managers arrived at theSons of Gwalia gold mine in Western Australia from the United States – oneHerbert Hoover.

Evidently, Hoover got things off to a goodstart – the mine is still in operation today. And gold is still oursixth biggest export.

120 years later, the largest investor in the Sons of Gwaliagold mine is still an American company - New York's Van Eck, whichincreased its holding in the company now owning themine to 11 per cent last December.

Hoover went on to become a founding investor in the ZincCorporation, which became part of the Rio Tinto Group.

In the 1920s, another North-East U.S. connection: theRockefeller and Guggenheim families were major investors in the development ofMount Isa Mine's massive base metal deposits in Queensland.

Mt Isa is another project still in operation almost acentury later.

After the Second World War, our economic cooperation becamemore intense and sustained.

Australia was one of the many nations that benefitted fromthe long post-war boom thanks to both U.S. credit andthe economic institutions the United States built to underpineconomic growth and cooperation. These include the GATT, the IMFand the World Bank.

For a time, Australia became the largest borrower from theWorld Bank.

In the 1950s, Australia's Prime Minister received a notefrom the Bank's President, Mr Eugene Black, inscribed "To R. G.Menzies, my largest debtor, and my smallest worry."

U.S. private investment also continuedto build our industries, right up to the present daywith recent major investments in LNG by Chevronand ConocoPhillips.

Today, the stock of U.S. investment in Australia standsat over A$860 billion. That is roughly 10 times the stockof investment from China.

Quality U.S. manufactures and consumer goods have alsohelped to build the modern Australian household and nation.

As a result, Australia has run a trade deficit with theUnited States every year since the early 1950s. It's done both ourcountries a lot of good. And those of our region aroundus.

US investment helped underwrite Australia's developmentas the efficient, ultra-reliable provider of the fuel andminerals needed to sustain the economicand humanitarian miracle of Asia's historic surge ofprosperity.

And in time, the very positive U.S. investment experience inAustralia over many decades paved the way for subsequent Japanese andChinese investment.

Japan, South Korea and China's stake in thepost-war international order has increased apace withour dependable supply of fuel and minerals, regulated according tomarket principles and sustained by relations of trust.

This resources partnership between Australia and theUnited States is an underappreciated companion to our securitypartnership, which has contributed to the long peace many nations have enjoyedsince the Second World War.

We will continue to play this role, including throughour growing partnership in minerals that are critical for the development ofadvanced technologies.

Security and deterrence remain important for our region.

As Australia's 2017, Foreign Policy White Paper putsit, "the web of U.S. alliances in the Indo-Pacific makes an essentialcontribution to regional security, and supports the stability and openness ofthe world economy".

Over the next few years, Australia will increase ourspending on defence to two per cent of GDP. That investment in our defencecapability is vital to Australia's security and sovereignty.

Australia has one of the most open defence markets in theworld.

In the last decade, around 70 per cent of the money we spentacquiring defence capability was on equipment from the United States.

Over the next few years, we expect to spend more than US$16.2 billion on U.S. sourced defence capability. Indeed, Australia isspending $15 million every day on the purchase of defence equipment from theU.S. We are your second biggest customer.

This investment in capability willstrengthen our defence force and will be good for jobs andgrowth in both our countries.

Looking ahead, how can we ensure that our regional influencegrows and remains constructive amid the great changes of our age?

For one, we will keep deepening our own economiccollaboration, to keep our economies strong, and to demonstrate the powerof openness and the rule of law.

As evidenced by our slew of new trade agreements inoperation or in prospect, countries all over the world are working withAustralia to open their economies to benefit from international trade andinvestment.

The contemporary economic relationship between Australia andthe United States shows how this can be done.

Since our bilateral free trade agreement entered into forcein 2005, the stock of investment between our two countries has more thandoubled to A$1.5 trillion.

US-affiliated firms account for more than 372,000 jobs inAustralia.

Each one of these matters.

Likewise, Australian investment in the United Statessustains over 100,000 American jobs.

Take, for example, the investment by Bluescope in the U.S. Their subsidiary, Steelscape, employs 3,000 Americans and meets consumerdemand for quality building products.

In New York alone, more than 15,000 people are employed byAustralian companies.

US exports to Australia are significant too, supporting morethan 300,000 American jobs.

During his visit to Australia in April 2017, Vice PresidentPence described our FTA as a "model for a mutually beneficial tradeagreement and a model for the world".

Economic cooperation between Australia and the United Statescan be the platform for global success.

Consider the partnership between Australian packaging andlogistics firm Visy and internet retailer Amazon.

Visy has pledged 2 billion US dollars in new investment inthe United States in the next ten years, expected to generate another 5,000jobs in the Midwest.

Associated investment in Australia will create another5,000 jobs in my country.

Visy's U.S. partnership puts it at the forefrontof IT, artificial intelligence, customer service and product innovation – justthe recipe for success as Australia transitions to a 'dining boom' ofagribusiness into Asia.

Australia's openness to international trade and investmenthas been critical in our transition from the mining boom.

Our renowned economic resilience and flexibility have seenthe economy keep growing despite the drag from slowing mining investment.

In 2017, non-mining business investment increased by morethan 12 per cent.

The Australian economy has added over 400,000 new jobs inthe last year.

Our Reserve Bank predicts a gradual pick-up in wages ahead,widely distributed across the country.

This is the new Australian economy – still a resourcessuperpower, but with diverse economic strengths.

Today, growth is surging in a range of areas where we havecomparative advantages, including services led by education and tourism. Wehave manufacturers, like Visy, working at the cutting edge of technology.

Our partnership with the United States, and U.S. investmentin particular, is an integral part of this achievement.

So, our bilateral relationship is in a good place, and weare hard at work making it even better.

The Australian Government seeks greater links between ourbusiness communities, especially small and medium sized enterprises.

On Tuesday, I hosted an agriculture and ag-tech dinner forinvestors here in New York, and the level of investment interest, spurred byour brace of FTAs with the leading North Asian economies, waspalpable.

Our nations have recently started to share lessons in theeconomics of federation.

Since the 1980s, a spirit of 'competitive federalism' –encouraging the individual states to experiment and spur each other on withpro-growth policies – has been one of the manyreform agendas that has kept Australia's economy at the cuttingedge.

More recently, we have pioneered collaboration between ournational and state governments, incentivising states to fund newinfrastructure investment through the sale of mature assets to the privatesector.

If Australia's Ambassador and my good friend, JoeHockey, hasn't told you about "asset recycling" yet, don't worry, he will soon.

Just as Australia and the United Statescontinue to strengthen our complementary bilateral trade andinvestment relationship, so we are cooperating to shape theinternational environment.

The market principles that guide our broad trade andinvestment relationship are the same ones we apply in the World TradeOrganization, and promote in the G20 and APEC.

The WTO is the international trade referee.

It provide a constructive way forward forwhen members see things differently.

The United States has turned to the WTO to dispute China'sintellectual property practices, and China has lodged there its own challengeto U.S. tariffs.

We support moves to improve the WTO, to ensure itgets the job done, and we encourage all members to act consistentlywithin the existing rules.

The WTO can also facilitate new ways to trade.

Last December at the 11th WTO MinisterialConference, Australia, the United States and 68 other WTO members agreed towork toward future negotiations on e-commerce.

This initiative is an opportunity to create ambitious,commercially meaningful international rules that facilitate trade and keep pacewith technological change.

In February this year, US Trade Representative RobertLighthizer and I agreed that we would intensify our cooperation to supportthe growth of digital trade between our countries; ensure an open, free andsecure Internet; and advocate the liberalisation and facilitation of globaldigital trade.

Projecting our principles globally isimportant.

But Australia and the United States agree that inour own region there is a particular need to drive home ourcommitment to economic openness and market principles, promote growth andencourage cooperation between countries.

In recent months, both governments have made this focusquite explicit, in Australia's Foreign Policy White Paper, and the U.S.National Security Strategy.

This being so, a U.S. economic strategy for theregion will be a crucial complement to the United States'extensive security engagement.

Australia is a ready and willing economic and strategicpartner for the United States, deeply engaged from Mumbai to Manhattan and beyond.

One of the key pieces of economic architecture in ourregion is the Trans Pacific Partnership.

The decision by Australia and Japan to pursue a TPP-11 afterthe withdrawal of the United States – and that of the other members to pursueit with us – was a clear signal of commitment to writing the rules for reform.

In time, it is my aspiration the region will be even furtherboosted through the successful negotiation of the Regional ComprehensiveEconomic Partnership, known as RCEP.

The TPP-11 and RCEP create the potential for extraordinaryeconomic opportunity built on low or no tariff trade and unfetteredopportunities for nation building from the free flow of investment, drivingjobs and growth.

Indeed, this opportunity in the Asia-Pacific resonates soloudly that even in the Atlantic they hear the call. In recent days,Prime Minister Turnbull has spoken of the strong interest shown by theUK in joining the TPP-11.

Australia would warmly welcome a US return to the TPP.

Moreover, Australia and the United States are already movingto improve the region's energy and infrastructure options.

In February, our leaders agreed to develop theAustralia-U.S. Strategic Partnership on Energy in the Indo-Pacific to promoteopen and competitive regional markets for energy and infrastructure.

This Partnership will harness our very considerablestrengths in resources, capital markets and financial services.

Infrastructure and energy will be a powerful focus for ourwork to cement international norms such as market-based competition and transparency.

The Partnership will also reinforce our support for thesovereignty of our other international partners.

It will play out in coming months and years.

Ladies and gentlemen, if I can take us back to themid-nineteenth century and Herman Melville.

Then, sailing from Nantucket to Sydneytook several months.

Today, we can fly direct from Sydney to Houston on UnitedAirlines, or Sydney to Dallas on Qantas.

But already in 1851, even at that distance, Melvillerecognised that Australia and the United States were commercial kin.

Today we are closer than even he could have imagined.

That's a good thing for our prosperity and our security, andit's good for our region.

Countries around the world admire the economic rules we havein common, and the more they see of our collaboration – its fruits in trust,jobs, expertise and innovation – the more they will like it.

It is on this basis that we should redouble our internationalefforts together, to point the way to a prosperous Indo-Pacific for usall.

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