Speech by the Hon Alexander Downer, MP, Minister for Foreign Affairs, to the Asia Society, New York, 1 October 1997.
Introduction
Ladies and Gentlemen.
We are about to enter what will surely be the Asia Pacific century.
It will be a century when the momentous forces shaping today's world - particularly globalisation and technological advance - will provide more exciting opportunities, and pose greater challenges, for every government and society in the Asia Pacific and beyond.
It will be a century when success in foreign and trade policy is measured by a nation's ability to marshal its assets and bring them to bear on the prosperity and stability of the region in which it lives.
And it will be a century that offers its most enduring rewards to those countries with world-class and competitive economies, tolerant and innovative societies, and a confident outlook on the world.
That is why the Australian Government released Australia's first White Paper on Foreign and Trade Policy in August this year. The White Paper examines the key international challenges facing Australia over the next fifteen years.
It is a ringing declaration of Australia's enduring commitment to the Asia Pacific.
It contains elements both of change and continuity, and represents a significant rearticulation and rebalancing of Australian foreign and trade policy.
It draws together everything that Australia has already achieved in its Asia Pacific endeavour and charts the way ahead for Australia's regional future.
One of the White Paper's most significant judgements is that the United States will over the next fifteen years remain the world's largest economy, leading military power and primary source of technological innovation. The United States will thus continue to be an indispensable element in any configuration for peace, security and economic growth in the world.
The shared interests and aspirations that bring Australia and the United States together, and link our destinies to the Asia Pacific, become more important with every passing year.
I want to focus my remarks today on what the White Paper says about Australia's future in the Asia Pacific, including the enduring importance of the Australia-United States relationship, and what the Australian Government is doing to make the White Paper a practical reality in its regional policies.
But, first, I want to express my appreciation for this opportunity to speak once again to the Asia Society. The Asia Society continues to lead the way as the pre-eminent non-government American body concerned with the full range of relations between the United States and the other members of the Asia Pacific.
I am pleased to say that the AustralAsia Centre of the Asia Society was launched successfully in May this year by Australian Prime Minister John Howard, and it is already making a major contribution to mutual understanding and trust in the region.
PART ONE: Australia's Future in the Asia Pacific
A fundamental message of the White Paper is that Australia is committed to the Asia Pacific for the long haul, and that Australia's highest foreign policy priority is to make a lasting contribution to the region. As a member of the Asia Pacific, and with one of the most East Asian-oriented economies in the world, it makes perfect sense for Australia to build on the foundations which complementary economies and geographic proximity provide.
The White Paper makes clear that Australia brings substantial economic, strategic and cultural assets to its regional and global engagement. The Australian economy is bigger in absolute size than all in the region to our north except Japan, the ROK and China. Australia has a strong skills base sustained by quality educational and training institutions.
Australia has an impressive record of inventiveness and openness to new technology and innovation. In overall terms, Australia is ranked 8th in the world as a network society `plugged in' to the high-tech world. That puts Australia ahead of Germany (13th overall) and Japan (16th overall). Of the 17 Asia Pacific economies, only the US and Canada have a higher overall rating than Australia.
Australia's many cultural assets include a proven capacity to change and adapt which is a feature of immigrant cultures, particularly those that value ethnic and cultural diversity. Australia's unique economic and cultural profile makes us particularly attractive as a conduit for business between Asia, Europe and North America.
Globalisation and the Rise of East Asia - The Two Key Trends
The White Paper identifies globalisation and the rise of East Asia as the two most profound trends in the international environment to which Australia's foreign and trade policies must adapt and respond over the next fifteen years.
Globalisation offers huge opportunities for internationally competitive economies, but also brings in its wake challenges for political and economic management. It increases competitive pressures in markets, and makes globally-based trade rules and disciplines even more important.
The White Paper's judgement is that economic growth in industrialising Asia will continue at relatively high levels over the next fifteen years. World Bank forecasts growth for East Asia (excluding Japan) over the next decade at 6.8 percent, compared with 2.4 percent for Western Europe and North America.
Some commentators have been critical of this judgement - they point to the recent currency and market adjustments in South-East Asia as evidence that the East Asian miracle has come to an end.
There is no doubt that recent developments in the region's financial and currency markets have posed a challenge for ASEAN countries and Thailand in particular. But, by looking at the fundamentals of the economies of the region - and where they are likely to head over a decade or more - we can identify what is really in Australia's and the region's long term interests.
The World Bank's principal regional economist only recently pointed out that the countries of South East Asia are all maintaining sound fiscal positions with Malaysia, the Philippines, Singapore and Thailand all running budget surpluses last year.
Even Paul Krugman - a well known sceptic about Asia's long-term growth prospects - has pointed out that these currency movements do not tell us much about the long term. In fact, Krugman expects Asia's growth to resume, albeit at slower rates but driven by education, savings, and growing labour force participation.
Let me say clearly that Australia's confidence in the economic fundamentals of the region - and its extraordinary prospects for the next fifteen years -are unchanged by recent events. The fundamentals remain and I am confident that prudent policy settings will prevail.
All of this means that the countries of Asia will become even more important to Australia as trade and investment partners, and in security terms. It also has implications for Australia's relative standing in the region, and significant consequences for the broader relativities of power and influence in the Asia Pacific and beyond.
PART TWO: Advancing Regional Prosperity and Security
Growing Regional Trading Links - The Importance of Economic Liberalisation
The White Paper underlines Australia's accelerating involvement in the economic life of the Asia Pacific, and the enormous potential to expand our economic ties across the region. It recognises that the sustaining force behind the Asia Pacific's dynamism is economic liberalisation.
Economic liberalisation is the key to a buoyant trade and investment environment. It encourages a more efficient allocation of resources and gives recognition to the merits of comparative advantage. But, above all, it is the best means of sustaining the sort of economic growth that produces new jobs and improved standards of living for citizens in every country of the region.
The White Paper reinforces the importance of striving for further economic liberalisation at three levels - through bilateral relationships, APEC and the World Trade Organisation. Each level has an indispensable contribution to make to increasing Australia's prosperity, none offers the only way ahead, and all three will be needed if Australia is to continue to improve its trade performance.
At the bilateral level, the Australian Government has already had a great deal of success in building trust between countries in the region and striking mutually beneficial agreements. I want to mention just two of the more recent highlights:
. Agreement was reached earlier this year that the Australian and Japanese Prime Ministers will hold an annual summit on bilateral and regional issues. This gives us an unprecedented opportunity to work with our largest trading partner at Prime Ministerial level so as to achieve positive economic outcomes for Australian firms and workers.. In February this year, the Government gained concrete results from the inaugural Australia-Thailand Ministerial Economic Commission meeting held in Canberra. Thai and Australian Ministers set the goal of doubling Australian-Thai trade, and doubling our two-way investment, by the year 2000.
- A key demonstration of Australia's commitment to this goal was the decision to participate in the $1 billion dollar currency swap as part of the IMF's package to help the Thai economy. This was a concrete example of Australia's commitment in action.
At the regional level - as the White Paper indicates - we have already seen tremendous reductions in trade barriers, partly under the auspices of APEC, bringing significant benefits to Australia, the United States and its neighbours. ASEAN, in particular, has cut applied tariffs on a trade-weighted basis by two-thirds and most recently Indonesia has announced further cuts. In the same period, China has cut its average tariff rate from 35 to 23 per cent, and will reduce the rate to 15 per cent by the year 2000.
APEC, of course, gives us considerable hope that this trend will continue. Last year, APEC economies began implementing their goal of free and open trade and investment by 2010 and 2020 for industrialised and developing economies respectively. This year, APEC is continuing to make the transition towards implementing its agenda, including through closer involvement by the private sector.
I believe that if APEC can push ahead successfully with its far-reaching and comprehensive agenda, it will make a very practical contribution to sustainable growth in the region. In the process, it will nurture a greater sense of regional community, shared values and common interests.
Beyond APEC, the White Paper identifies as a key priority over the next five years the need for genuinely closer links between CER (Australia's economic relations agreement with New Zealand) and the ASEAN Free Trade Area (AFTA).
The United States deserves a great deal of credit since the Second World War in helping to develop a more open trade and investment regime in the Asia Pacific. US-led investment and access to US markets has enabled regional countries to export their way to greater prosperity and gain access to technology.
The White Paper concludes that US trade policy will be an important factor in determining the effectiveness of its leadership in the Asia Pacific and globally. The United States will remain a critical force for regional and global trade liberalisation. At the same time, the United States is likely to continue to pursue reciprocity in trade arrangements, and future US Administrations can be expected to follow an aggressive approach to opening markets using all available mechanisms to induce its trading partners to adopt measures which suit the interests of US business.
Clearly, as we look ahead, Australia and the United States will continue to share a strong interest in promoting freer and more open trade and investment, not just in the Asia Pacific but globally as well through the World Trade Organisation.
The New Regional Security Environment
The White Paper's analysis of regional trade and investment patterns is matched by its hard-headed appraisal of the new regional security environment. This appraisal shows that Australia and the other countries of the region have an historic opportunity to help lock in the peace which is underwriting the region's extraordinary economic growth.
First, Australia does not face a direct threat or challenge from any country. Nor can we envisage a realistic scenario where that might evolve in the foreseeable future. It is important for Australia that we can reach such a conclusion. And it is important for the region that we make such statements.
While Australia's strategic environment is shaped by developments in the Asia Pacific, global issues can also have significant security implications for Australia. The risk of global conflict has diminished considerably with the end of the Cold War, but other potential threats remain, including the proliferation of weapons of mass destruction.
Australia does not see its security interests exclusively in terms of potential military threats or regional conflicts. Over the next fifteen years it is likely that even more attention will be paid to so-called non-military threats such as pandemics, illegal migration, refugee flows, environmental degradation, narcotics and transnational crime.
In the absence of direct challenge to Australia's security, our task is to help bed down wider regional stability. The changing relationships among the major powers (United States, China, Japan and, in the longer term, India and Russia) will largely determine the nature of the Asia Pacific strategic environment. At the same time, the growth in economic and political influence by others in East Asia, notably the Republic of Korea and Indonesia, is also likely to affect the dynamics of regional security.
The White Paper's judgement is that China's economic growth, with attendant confidence and enhanced influence, will be the most important strategic development of the next fifteen years. China is expected to be among the world's three or four largest economies within the next fifteen years. How China manages its economic growth and pursues its international objectives, and how other countries, especially the United States, Japan, the Republic of Korea and the ASEAN countries, respond to China, will be crucial issues over the next fifteen years. It is important to reaffirm that I have deep confidence in the commitment of China's leadership in playing a fully integrated and constructive role in the future of the region.
In this period, the United States will remain the single most powerful country in the world, with the largest economy, the most advanced technology and, by a large margin, the most advanced armed forces. Within East Asia, US strategic engagement in the region is widely regarded as a crucial stabilising influence, and an indispensable condition for the continuing strategic stability on which the region's economic success is ultimately dependent. Without it, regional countries might seek significantly to expand their defence capability in a destabilising way, and uncertainty on the Korean Peninsula would increase.
The White Paper concludes that the United States will continue to see maintaining its engagement in East Asia, where it has extensive economic and strategic interests, as in its own best interests. The United States will retain its regional alliances, and retain the capability and intent to protect its regional interests and meet its security obligations.
The White Paper also notes, however, that the nature of US engagement may alter and it is possible that the profile of US forces in Korea and Japan might change if Korea is unified or as US force structure and strategic planning doctrines evolve, and military technologies develop.
Australia's Vital Contribution to a More Secure Region
I am pleased to say that the Australian Government is already making substantial progress along the policy lines and framework advocated by the White Paper.
Last year, Australia gave new vigour to its alliance with the United States through the AUSMIN joint declaration - known as the Sydney Declaration - the focus of which was very much on the contribution the alliance makes to regional security. I will speak more about the importance of the alliance shortly.
Australia has also been building a wide-ranging set of bilateral linkages which provide the indispensable foundation for pursuing mutually beneficial objectives.
Australia has in recent years been extending the number of countries with which it has bilateral dialogues on regional security issues. Last year we commenced political-military talks with Japan and the Republic of Korea and instituted semi-official talks with Vietnam.
Earlier this year, I announced in Kuala Lumpur four new important security dialogues which Australia will conduct with China, the Philippines, Thailand and Vietnam. These represent a real strengthening of regional security cooperation.
At the regional level, Australia strongly supports the ASEAN Regional Forum. Importantly, the ARF brings together all the countries which have an impact on, or are involved in, the security of the Asia Pacific region. Although the ARF is still in its youth, it is already starting to achieve some very positive results. The first level of the ARF's activities - confidence-building - is maturing as a useful mechanism for developing a sense of shared strategic interest.
The White Paper underlines the importance of building regional structures which promote the peaceful resolution of differences and which foster a sense of common interests and shared responsibility for the region's future.
PART THREE: Improving the Asia Pacific's Quality of Life
A Tolerant and Diverse Australia
One of the most important messages of the White Paper is that the Asia Pacific's quality of life depends on much more than sustained prosperity and enhanced security.
It requires a strengthened sense of trust, genuine respect for the sensitivities and interests of others, and a commitment to institution-building which best come through participation in cooperative structures and processes
In that respect, the White Paper makes it clear that Australia's national interests cannot be pursued without regard to the values of the Australian community, including its support for fundamental human rights. Central to these values is an unqualified commitment to racial equality and to the elimination of racial discrimination.
That is why the White Paper rejects racial discrimination absolutely and reaffirms Australia's commitment to human rights and sustainable development. The rejection of racial discrimination is not only a moral issue. It is fundamental to Australia's acceptance by, and engagement with, the region where its vital security and economic interests lie.
Australia's accelerating engagement with the life of the region is perhaps most clearly reflected in the growing people-to-people links being established by business men and women, academics and students.
What's more, Australians in the region are finding that people are receptive to Australia's values, and our way of communicating and problem-solving. This may be partly because there are many people in the Asia Pacific who were themselves educated in Australia at some stage.
These are the people-to-people ties which perhaps have the most enduring effects, flowing as they do across national borders and down through the generations.
The White Paper is a repudiation of the views of those who believe that Australia's future lies in an inward-looking and isolationist posture. Australia's historic transition from being a European outpost to becoming one of the most innovative and constructive members of the Asia Pacific region is one which presents great opportunities, and most Australians recognise that.
Like the United States, Australia is a successful and sophisticated immigrant society. People from all across the globe and the Asia Pacific have come to live and work in Australia. We are home to people of some 130 nationalities. It is one of the major reasons why Australia is such a remarkably tolerant and diverse country with a growing web of relationships across the Asia Pacific.
PART FOUR: The Importance of the Australia-United States Relationship
Finally, I want to return briefly to what the White Paper has to say about the enduring importance of the Australia-United States relationship.
The White Paper concludes that Australia's alliance relationship with the United States is an asset both redefined and strengthened by the end of the Cold War. It is a central component of Australia's defence and continues to provide Australia with beneficial access to technology, military equipment and intelligence. It complements and reinforces Australia's policy of closer engagement with East Asia.
The White Paper makes clear that - beyond its significance to the defence of Australia - the alliance strengthens United States strategic engagement in the region: an engagement which has underwritten the regional stability on which the East Asian economic miracle has been built.
A key objective of the Australian Government will be to strengthen further the relationship by expanding the already close links that exist at the bilateral, regional and multilateral levels. Australia will be looking, in particular, to broaden its dialogue with the United States on Asia Pacific issues, and to encourage it to accord sustained high-level policy attention to the region.
This means that Australian policy objectives will be directed at ensuring a continuing constructive United States engagement with the region, reflected in productive relations between the United States and its key regional partners, as well as in an active US role in key regional institutions.
The White Paper makes it clear that, despite its large trade surplus with Australia, the United States can be expected to continue to advance its interests vigorously on issues which it regards as significant, such as protecting intellectual property. The White Paper concludes that the United States will continue to use measures such as export subsidies or imposing restrictions on the access to its market in areas such as agriculture. The Australian Government urges the US Government to bring such anti-competitive measures to an end.
At the same time, the United States remains a key economic partner for Australia, particularly in relation to investment, and the Australian Government will be working to ensure that the wider economic relationship further expands over the next fifteen years. The Australian Government will also work towards expanding cultural and educational links in a way which reinforces a genuinely multi-dimensional relationship.
Conclusion: Our Shared Asia Pacific Endeavour
Like the extraordinary experience and history of the United States spanning more than two centuries, the successful Australian journey of nation-building is one of growth, adaptation and social progress, and it is no less remarkable for being so understated in Australia's national consciousness.
In the challenging period after the Second World War, Australia showed that it could adapt to radical changes by reshaping the priorities of its foreign policy and the focus of its trade.
The White Paper demonstrates convincingly that - in this dynamic period after the Cold War - Australia should retain equal confidence in its capacity to grow and adapt.
Each period of history brings with it unique challenges. In order to progress with our region, Australia must be part of the solution to these challenges. That is why our actions on four recent crises demonstrate Australia's fundamental commitment to the region and the importance of Australia to the region.
First, our US 1 billion contribution to the IMF Thailand package was a deep commitment to the economic health of our neighbour.
Second, we have been deeply involved, in particular this week, in helping to build a unified regional approach to the strategic problems which flow from the recent events in Cambodia.
Third, we have attempted to address a severe humanitarian crisis with our assistance for drought relief in Papua New Guinea.
Finally, only this week, we have taken the lead in addressing the regional environmental crisis caused by the forest fires in Indonesia, with major contributions of medical supplies, technical experts and aerial water bombing capabilities.
Taken together, these actions are tangible proof of our inextricable commitment to the region's economic, strategic, humanitarian and environmental health. It is also evidence of the fact that not only is the region important to Australia, but that Australia is important to the region.