UNDER EMBARGO UNTIL 8 PM 6 NOVEMBER 1996

AUSTRALIA'S COMMITMENT TO THE REGION


THE 19TH ASIA-AUSTRALIA INSTITUTE LECTURE

Address by The Hon Alexander Downer, MP, Minister for Foreign Affairs, to the Asia-Australia Institute, University of New South Wales, Sydney, 6 November 1996.



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INTRODUCTION: AN UNSHAKEABLE COMMITMENT TO THE REGION



Justice Matthews, Professor FitzGerald, ladies and gentlemen,

Australia's future lies in Asia.

This Government is committed to that future.

That is why we have made closer engagement with Asia our highest foreign policy priority.

Dramatic economic transformation in China, Indonesia and India, political change throughout the region, spreading a technological revolution and rapidly advancing living standards across Asia are some of the new realities which Australia will face in the lead-up to the year 2020.

Put simply, Asia is on the move and it is moving forward at a pace and with a force unparalleled in recent history. The direction which this Government must then take to advance Australia's interests unfolds clearly when you look at the historial movements occuring within the Asian region.

Good motive of course is no guarantee of good policy. It is, however, a pretty good start.

What I want to outline for you this evening is an overview of Australia's policy towards the Asian region, beginning with a brief explanation of what we want to achieve and why we have set this objective as our highest foreign policy priority.

Beyond motive however, it is most important to know the "how" of Australia's Asia policy and I want to spend most of this evening concentrating on the key policy principles by which we will actually pursue engagement.

This lecture presents me with an opportunity to reflect on the foundations upon which action and direction are based for this Government. In that light there are four carefully considered and inter-related pillars which govern our approach to achieving greater security and prosperity for Australia within the Asian region. These four pillars are:

. A commitment to economic liberalisation;
. A commitment to regional cooperative security;
. A commitment to a humane and principled approach to the challenges which face our region; and
. A commitment to addressing foreign policy with a long-term view.

Taken together, these four pillars represent the basis of the Australian Government's commitment to Asia.


PART TWO: THE WHAT AND WHY OF ENGAGEMENT

What do I mean when I talk of engagement, and why should that be our policy?

Academics, of course, seek nuance and understanding from the words of policy-makers. But let me say this, whether it is engagement, enmeshment or integration which is used, the meanings all share a common sentiment. That is, the idea of getting closer.

This Government uses the term "engagement", a term which not only denotes a commitment, "a pledge, obligation or agreement" but also an active seeking of a deeper relationship. Australia's engagement with the region is no passing phase. It is the single overriding foreign policy objective of our Government. Australia is with Asia for the long-term. This objective leads directly to the question of why should we place such emphasis on interlocking with the countries of the region?

There are two reasons for this. First, in the same way that individuals are enriched by friendships, so, too are the lives of nations. These friendships mean we grow as a people, we develop breadth and diversity and we expose ourselves to the possibility of renewal, which is a constant need for every society. In short, we are enriched by our friendships.

Secondly where states are concerned there must also be a mutuality of interests. And in the case of Australia's relations with the countries of our region, there is a genuine shared interest. Our region is not just a geographical entity. It is already and will increasingly become a place of common interest.

Australia can and does contribute to the security and prosperity of Asia just as the region contributes to the security and prosperity of Australia. The reason why we seek closer engagement is therefore because of the profound benefit which flows from our friendship with the countries of the region and the realisation of our mutual interests.

The real question then is how do we execute our regional commitment?


PART THREE: THE FUTURE OF THE REGION

In forming policy Governments must identify what is inevitable or at the very least highly likely, because that sets the parameters within which we must work and the imperatives to which we must commit ourselves.

We must also separate the inevitable or the highly likely from our options, because by knowing them, we allow ourselves to set our priorities and to define our policies. I believe that there is one inevitable force in the case of our region.

The defining dynamic for East Asia will continue to be strong economic growth. World Bank projections have East Asia growing at over 7 per cent a year to the year 2004, or two and a half times faster than the rest of the world. Even if the maturing economies of Korea, Hong Kong and Singapore slow down somewhat, the huge potential in economies like China, Indonesia and India leaves plenty of fuel for high-speed regional growth.

By 2020, four of the world's ten largest economies will be in Asia - Japan, China, Korea and India. Indonesia will be near the top of the next ten, which will also include Thailand and Australia. Asia's share of world Gross Domestic Product will increase - probably to about 35 per cent in 2020 compared with around 28 per cent now. Even more than now, East Asia will be one of the locomotives of the world economy.

Rising incomes amongst our neighbours will help provide us with the economic opportunities we need for Australia's own growth. This vision of the future brings with it choices and opportunities for Australia.

Australians make unequivocal gains - both by exporting and by importing. Australian exporters become more competitive, increasing sales and jobs, as they get access to cheaper components and capital goods. Australian consumers gain a higher standard of living as they buy clothing, electronics and cars they could not have afforded before.

The opportunities for producers in all countries are immense. These opportunities bring benefits to the lives of steel workers in Port Kembla, hi-technology ferry builders in Hobart and semi-conductor makers in Penang.

But there will be opportunities only so long as the barriers to the movement of goods, capital and ideas continue to fall.
It is the liberalisation of trade and investment that provides the key to creating the regional and global conditions for growth. Indeed, the region's growth prospects simply will not be realised unless the process of economic liberalisation continues.

That is a key goal for Australia and the first pillar of our Asia policy.


PART FOUR: ENCOURAGING FURTHER ECONOMIC LIBERALISATION

Liberalisation of trade and investment has already brought immense benefits to Australia and its regional neighbours.

Freer trade in agricultural products, for example, is starting to give the people of Japan, Korea and Taiwan access to basic and luxury foods at prices they could only have dreamed of a few years ago. ASEAN countries have cut applied tariffs on a trade-weighted basis by about two-thirds in the last 7 years. In the same period, China has cut its average tariff rate from about 35 to 23 per cent.

There is still, however, a lot more to be done. Australian manufacturers who want to export to the region still face very high tariffs in some particular sectors. Tariffs on cars can be as high as 200 per cent. Australian agricultural and food exporters still face tariffs and other barriers, such as monopoly or state importing arrangements. And our exports of legal and financial services are often obstructed by investment and regulatory barriers. If East Asia is to continue to grow, and living standards to rise, governments must show the will to push out the boundaries of trade liberalisation. For its part, Australia has reduced its tariff levels to 5 per cent or less for most sectors. But liberalisation will only be fully effective if all regional economies contribute.

The key task is concerted action at the regional, global and bilateral levels. This is a task which is of paramount importance to the Australian Government.

The Regional Level

At the regional level, APEC set itself at the Bogor meeting in 1994 a goal more far-reaching than that agreed to by any other region in the world: free trade and investment for industrialised members by 2010 and for developing members by 2020.

To achieve that goal, the Osaka meeting in 1995 devised a totally new tool, the Individual Action Plan (or IAP), in which each economy is to set out in detail the steps of its liberalisation process. It is the tool by which APEC members are carrying out the difficult task of turning declarations into real commitments.

The IAP process will be an ongoing one, with APEC members submitting revised Plans each year for informal consultations and review. This is the first year of the IAP process, which will be the main focus at the annual meeting of APEC Leaders later this month at Subic Bay. At this early stage, we need to be realistic about what can be achieved there, but it is important that APEC members set a firm basis for concerted action and review in future years.

Aside from its trade liberalisation agenda, APEC is working on many projects aimed at facilitating business and keeping business costs down. Australia is, for example, working with its APEC partners to develop an APEC Business Travel Card which will allow the equivalent of visa-free travel for eligible business persons. The card should be launched at the Subic Bay meeting by Australia, the Philippines and Korea, with other economies joining the scheme later. APEC's agenda is wider than just liberalisation and facilitation. It is also tackling potential impediments to the region's future growth through an economic and technical cooperation program which covers fundamental issues like capacity-building at the human and investment level.

The Global Level

One of APEC's most important functions is to provide leadership for continuing liberalisation at the global level through the World Trade Organisation. Global trade liberalisation is the best means of increasing Australian access to world markets, which is why the Government believes the WTO should be at least as ambitious about liberalisation as APEC. The WTO Ministerial Meeting in Singapore next month is a key strategic opportunity to point the WTO towards further trade liberalisation. The challenges are significant - there is resistance to liberalisation on many fronts.

The Government has worked very hard to ensure that Australia's trade interests are at the forefront of the agenda. And we are looking to assist Singapore in setting the WTO firmly on the road towards holding another global trade round before the end of the century. The WTO's effectiveness will depend, of course, on its membership embracing all the major economies of the world. That is why Australia strongly supports China's early entry into the Organisation, in accordance with the rules-based system which serves all trading nations so well.

The Bilateral Level

In addition to these efforts at the regional and global level, the Coalition Government has placed renewed emphasis on the bilateral approach, which can sometimes produce faster results for particular markets.

The Minister for Trade, Mr Fischer, and I have visited all our major regional trade partners since coming into office.

Some of the successes from this early work include better access for Australian produced foodstuffs in Hong Kong and the Philippines, an agreement to jointly pursue third-country markets with Singapore and expanded air services with Indonesia. Only two weeks ago we founded the Australia and Indonesia Development Area - or AIDA - an impressive and historic achievement and the first such sub-regional arrangement between Australia and any ASEAN country and between Indonesia and any non ASEAN country.

We have also settled on a new Trade Agreement with Malaysia - for which much of the momentum flowed from Mr Howard's important first meeting with Dr Mahathir and much of the realisation from the personal diplomacy of my colleague Tim Fischer.

We are, then, making progress. If trade liberalisation is one pillar in the Government's Asia policy, then co-operative security is another key pillar.


PART FIVE: CO-OPERATIVE SECURITY

The post-Cold War era has brought challenges as well as opportunities. The regional security environment is now more fluid, complex and uncertain.

Issues such as the Korean Peninsula and the competing claims and interests over the South China Sea are all manageable, but they nevertheless pose challenges for the region, as does potentially the proliferation of weapons of mass destruction. Beyond these core security concerns, a range of other security issues such as terrorism, drug trafficking and international crime have added extra layers of complexity to the regional security environment.

The answer to these problems lies in building co-operative linkages. You cannot just put up the shutters and hope the difficult issues will go away. Indeed the region must take advantage of the window of opportunity which regional peace and stability now provides to develop mechanisms and processes to manage the future strategic environment and deal with difficult issues as they arise. That in turn relies on building a wider and stronger network of linkages at the bilateral, sub-regional and regional level.
All three levels are mutually reinforcing.

All contribute to what I see as the core task for all countries of the region, including Australia, that is: building a sense of trust, a sense of shared interests and a sense of shared responsibility for the region's future.

At the bilateral level, there is growing acceptance that strong, confident relationships provide the underpinning for regional stability and effective multilateral activity. Australia has been extending its linkages throughout the region at this level - under the rubric of "practical bilateralism". We make a practical contribution to the region's security through the Agreement on Maintaining Security with Indonesia, the Joint Declaration with Papua New Guinea, and Closer Defence Relations with New Zealand.

The Government sees Australia's alliance with the United States in the same light. Indeed the US presence in the region and its alliances with key partners are a key element of the region's stability. In July, Australia itself gave new vigour to its alliance with the United States through the AUSMIN Joint Declaration, the focus of which was squarely on the contribution the alliance makes to regional security.

In addition to these linkages based on formal arrangements, Australia has a range of other strong and growing bilateral defence and security ties with South East Asian countries.

Australia is also strengthening its bilateral security links with North East Asian countries.

First, we held the inaugural political-military talks with South Korea in July. The talks with Korea were supplemented by an agreement reached in August to expand our bilateral security dialogue with China to include discussion of regional security issues.

Along with the inaugural pol-mil talks with Japan earlier this year, these moves are a clear sign of the Government's success in adding to our existing regional links by developing strategic regional dialogues with countries in North East Asia.

China needs to be involved and integrated into the emerging regional security community. It will be an increasingly significant player in the security and prosperity of the Asia Pacific region, and I am convinced of the benefits of working cooperatively with it - both bilaterally and in regional security processes and dialogues.

At the sub-regional level the Five Power Defence Arrangements, which include Malaysia, Singapore, New Zealand and the UK provide for similar cooperation.

At the regional level, the three-year old ASEAN Regional Forum, or ARF, is characterised by minimal institutionalisation, consensus decision-making, an evolutionary approach to objectives and the use of second track diplomacy.

At the third ARF in July, for example, the Indonesian Foreign Minister, Ali Alatas, used his good offices as Chairman to convey ARF members' concerns about the situation in Burma to the Burmese Foreign Minister. I am proud to say that Australia played an instrumental role in this initiative. Observers brought up in the tradition of European statecraft sometimes question the value of the ARF because it is not itself able at this stage to resolve conflicts and regulate security affairs.

It must be remembered, however, that unlike Europe, the Asia Pacific has no tradition of inclusive multilateral approaches to security or defence. It will take time to build trust and confidence between countries which have no tradition of discussing their security concerns and their approaches to national security.

Australia is working with the other countries of the region to ensure that the ARF develops as the key regional process for promoting peace and stability in the East Asia/Pacific region.


PART SIX : HUMANE AND PRINCIPLED APPROACH TO CHALLENGES IN THE REGION

Up to now I have been talking about ways of promoting prosperity and providing security.

There are also very real human challenges which flow from changes within the region.

The approach which we take to these challenges, that of a humane and principled approach, is the third pillar in our Asian policy. It is an approach which is applicable both within Australia and in our broader dealings with the region.

To rework a phrase, humanity begins at home.

6.1 Australia's Challenge

Last week the Federal Parliament passed a bi-partisan motion condemning racism, and reaffirming our absolute commitment to a non-discriminatory immigration policy.

This motion was important for two reasons.

First, this motion had genuine moral force. It was something of deep personal importance to me. When I first joined the Foreign Service back in 1976, I did a training course with people from about 15 countries.

My job today involves even greater contact with people from throughout the world. It is a pleasure and an honour to have that opportunity on behalf of Australia. When you spend time with people from different cultures and creeds and of different colours, you realise how irrelevant those things are in measuring the worth of a person. You realise how fundamentally cruel and unfair it is, and, how fundamentally immoral it is, to discriminate against people on the basis of colour. It is also a matter of real and obvious self-interest that we should promote these sorts of values. In a nation made up of people from around 130 different countries, if we are to achieve internal harmony we must have as one of our core community values the value of tolerance. People simply have to understand that.

The second reason why it is in our self-interest to promote the values reaffirmed in last week's motion is that Australia is living in an increasingly internationalised world. Look at Australia. It is a country surrounded by nations of quite varied cultures and with people of all sorts of creeds. If we are to be successful in engaging with our own region--and we have to be--we must absolutely reject old-fashinoned, racist, elitist attitudes. It would be deeply destructive to this country if we adopted those sorts of values.

6.2 Regional Challenges

It is important that we also face regional challenges in a similarly humane approach.

It is important as a reflection of our own beliefs and it is important because overwhelmingly we believe that these are universal values which can contribute to the welfare and happiness of all peoples. Australian foreign policy is therefore concerned with upholding universal human rights and promoting democratic values. In that context, our goal is to achieve practical results.

The ability to have a genuine dialogue over Burma, for example, comes from the consultative approach which we have deliberately sought with our ASEAN partners.

The object is a humane outcome and it is outcomes which matter. For that reason we will not engage in lecturing our neighbours for the sake of it, because that rarely achieves anything more than a warm inner glow at home and a sense of alienation abroad. We believe that in most circumstances more can be achieved by frank private discussion, by cooperation based on mutual respect, and by making available to other societies what we regard as the better aspects of our own experience.

In one sense the way in which we carry forward our concerns with our partners will be a test of our success in dealing with our neighbours.

In order to carry this objective forward the Government this year announced funding for the secretariat of the Asia Pacific Forum of National Human Rights Institutions.

I believe that the significance of this first regional step will become evident as the years pass.

The same principles lie behind the Government's commitment to encourage the establishment of an independent Centre for Democratic Institutions, to help promote patterns of good governance and consolidate democratic transformation through indigenous institutions and structures within the region.

This approach leads to the final pillar in the Government's quartet of key Asia policies - that of addressing foreign policy with a long-term view.


PART 7: THE LONG-TERM

Long-term vision in foreign policy is the ability to stand back and seek objectives consistent with the needs of the next generation.

The first of these objectives is to ensure that Australia is not excluded from the future decision making structures which will affect our region.

7.1: ASEM

Economic dynamism in East Asia and an increasing sense of confidence about the region's growing weight in international affairs have led the countries of East Asia to strengthen processes of dialogue both among themselves and with other important economic groupings.

East Asia is already linked to the North American economies through APEC in which Australia plays an active role.

The Asia-Europe summit process, or ASEM, which had its inaugural meeting in Bangkok last March, is a historic attempt to strengthen the third side of a triangle connecting Europe, North America and East Asia. Australia is keen to join the ASEM process both because we recognise its importance as a new link between two economically powerful regions, and because Australia is already closely integrated with East Asia.

Over 60 per cent of Australia's exports are directed towards East Asia. This is a higher ratio than for most of the East Asian countries themselves.

Looked at from East Asia's perspective, Australia is an important regional partner. We are a vital supplier of industrial raw materials, energy and foodstuffs to a large number of East Asian economies, and an increasingly important supplier of technology and professional services. Australia's security links with East Asian countries are strong and we are valued for our contribution to a rapidly evolving regional diplomatic agenda.

A prolonged exclusion from ASEM would therefore seem at odds with our place in the region. Similarly, Australia's continued exclusion weakens the ASEM process. In that light, it is heartening that Australia's bid for membership of ASEM is supported by the vast majority of the existing Asian participants.

We are working actively to build support for the proposal that Australia should be part of an expanded ASEM membership.

7.2 Environmental Challenges

A further long term challenge thrown up by economic growth is its impact on resource bases, on regional demographics and on the natural environment. It is a challenge which ignores borders and affects all of us in the region. It requires new levels of regional cooperation. The impact of growth on primary resources has been immense. For example, global fisheries production has been marked by stagnation or decline since production peaked in 1989.

In our own region the Southern Bluefin Tuna fishery has suffered as global stocks have declined to less than 10 per cent of the 1970's level. Declining fisheries mean a major loss of protein for regional populations, and a critical issue for governments to address.
Forests, too, are under unprecedented threat. About two-thirds of Asia's forests have been lost this century, and East Asia experienced much higher rates of deforestation in the 1980s than any other part of the world. That is not to say that all forest harvesting is unacceptable - but more work needs to be done to ensure that it is sustainable.

Apart from specific environmental dangers like these, there is the sheer magnitude of the task of securing sufficient raw materials and energy for continued growth.

APEC is taking joint action to deal with this demand for food and energy into the next century. APEC, for example, is ensuring that its leading working groups take environmental issues into account. And in July this year APEC endorsed an Action Programme for sustainable cities, clean technology, and the marine environment.

The Prime Minister's proposal of free trade in primary energy by the year 2000 is designed to promote energy security and to ensure that energy scarcity will not become a brake on economic growth.

Efficient energy production is however an imperative if we are to control the environmental effect of growth. That is one of the main reasons why Australia has a particular long-term concern with the free flow of energy.

The Australian Government is also working actively with our neighbours to tackle environmental challenges. Australia has been active in promoting sustainable forestry and fishing. We made a strong contribution to the South Pacific Forum's Regional Code of Practice in forestry, and we are now working with the Food and Agriculture Organisation on a similar draft code of practice for the wider Asia Pacific. In fisheries, Australia has played a prominent role in developing sustainable management regimes, particularly where distant fishing nations have exploited regional resources largely free of controls.

There is, however, a great deal more to be done if we are to leave to our children and grandchildren a future in which the physical world they inherit is comparable to that which we inherited.

7.3: Education

The third long-term issue which we must address is that of education.

Australia's role in education, dating from the early 1950s and the Colombo Plan, has contributed much to development in the region, and has enriched our own society immeasurably. Over 200,000 overseas graduates of Australian institutions are testament to that.

And it is by no means a one-way flow. Australians are increasingly looking for education opportunities in the region. Andrew Thomson, my Parliamentary Secretary, studied law in Japan, for example. There are many graduate students in South East Asian universities, and more Australians are now planning to do undergraduate studies in the region.

Education links are now clearly in the process of transformation. They have gone far beyond the 1950s model of helping less well-off neighbours. Indeed two of our highest-growth markets - Singapore and Hong Kong - have higher per capita incomes than Australia. Education and training is now a vital input for the growth of dynamic regional economies, so it has huge export potential.

Full-fee student numbers in Australia have skyrocketed from 7,000 in 1987 to over 80,000 last year, 85 per cent of them from Asia.

If strategically pursued, as the Government and the education community are doing through the Australian International Education Foundation, education could generate export revenue of $4.5 billion a year by the end of the century.

Australian education and training providers are already developing imaginative linkages. Take for instance RMIT's full-time one year course on international trade and business in Wuhan, in which 80 managers from China and Australia are studying together. In China and South East Asia Australian universities are setting up joint ventures and twinned campuses, one example being the UNSW/Monash agreement to establish UniSadhuGuna in Jakarta .

The Asia-Australia Institute itself stands as perhaps one of the most imaginative of linkages. Uniquely, the Institute's mission goes far beyond education - narrowly understood - to explore the future for Australia's partnership with Asia in all fields of human activity. Above all, the Institute is committed to the generation of ideas and to the establishment of an intellectual infrastructure for the discussion of the future of the Asian region. That, I believe, is the essence of education in its broadest meaning.

So in the end, education is a vital element in bringing Australia and the region together. It is quintessentially about the long-term.

Conclusion: A Commitment to Partnership

I want to conclude now with the thought that everything I have said tonight centres on the idea of a common future for Australia and its neighbours.

Australia clearly shares an exciting future with its neighbours.
Extraordinary economic growth will not only tend to bring regional countries together, but it will bring genuine benefits to the lives of people - both within our near region and in Australia itself. Equally, any challenges which the region faces are challenges which we need to face together.

In looking at what we do, I have sought to convey two messages tonight.

First, our goal is to embrace the region - and to do so because we want to and because closer engagement with Asia is in Australia's clear interest.

My second message is that we have a clear comprehensive approach to binding us closer to the region. It is based on four pillars which reflect Australia's needs: a commitment to economic liberalisation; a commitment to co-operative security; a commitment to a humane and principled foreign policy; and a commitment to the long-term in our thinking.

Ultimately, in seeking to engage, we are seeking to strengthen our links with regional partners.

Let there be no doubt: Australia is committed to the region.

We have a plan to implement that commitment.

And above all else, Australia is with Asia for the long-term.