Australia, Asia and Globalisation

Speech by the Hon. Alexander Downer MP, Minister for Foreign Affairs, to the Asia Society and AUSTCHAM, Hong Kong, 15 October 1997.


Introduction

I am delighted again to be in Hong Kong, just over 100 days after the historic handover which I had the honour of attending.

It is also a special pleasure to address this function organised by the Asia Society and the Australian Chamber of Commerce in Hong Kong - two bodies for which I have the highest regard.

AUSTCHAM is the biggest such organisation promoting Australia's commercial interests overseas.

In the reverse direction, the Asia Society promotes understanding of Asia within Australia. Not all of you would be aware that the Asia Society has recently spread its wings even further with the opening of an office in Melbourne, a development which I welcome wholeheartedly.

In August, I launched the very first White Paper on Australia's Foreign and Trade Policy. This historic document examines the key international challenges facing Australia over the next 15 years. It sets out the principles and priorities of the Howard Government's foreign and trade policies. It also charts the way ahead for Australia's regional future.

Now, I do not propose today to provide a comprehensive briefing on the White Paper. Rather, I will use it as the backdrop for some key messages in three broad areas:

Underpinning all this is one clear statement - Australia's future is the Asia Pacific's future. And, in an era of increasing globalisation, Australia is confident about our region's exciting prospects.

PART ONE: The Asia Pacific Outlook : Challenges and Opportunities in the New Century

There can be no question that globalisation offers huge opportunities for internationally competitive economies. But it also brings in its wake challenges for political and economic management. No economy stands - or prospers - alone. Globalisation brings with it increased competitive pressures in markets, and makes globally-based trade rules and disciplines even more important.

For nations and their governments, globalisation has blurred the division between domestic and external policy. Not only are policies judged by the international market place, individual companies - irrespective of whether they are exporters - are increasingly subject to the disciplines of international best practice.

Globalisation is clearly a powerful phenomenon. But it has not displaced the nation state as the primary force in international relations. Nor have national economies been swept aside in its wake.

Beyond globalisation, the economic growth of East Asia and its strategic, political and social consequences, are transforming international relations. As East Asian economies continue their growth over the next 15 years, the dramatic shift already under way in the centre of gravity of world economic production will continue.

We can already see the old Atlantic-centred global economy, built around the economic strength of the United States and Europe, beginning to accommodate a new centre of power and influence with different cultural traditions. East Asia's remarkable economic growth has been an overwhelmingly positive development for the region's peace and prosperity.

Our White Paper's judgement is that economic growth in industrialising Asia will continue at relatively high levels over the next 15 years. The World Bank forecasts growth for East Asia (excluding Japan) over the next decade at 6.8 per cent, compared with 2.4 percent for Western Europe and North America.

Some commentators on the recent currency and markets adjustments in South East Asia question this judgement.

No one doubts these recent developments pose new and real challenges for the ASEAN countries. But these are challenges of managing success and of managing growth. What the challenges demand are that governments stick with appropriate and prudent fiscal and monetary policies and continue the momentum of liberalisation. Australia believes that if this course is followed, then over the medium term there is no need substantially to rewrite the economic outlook for the region.

In recent weeks I have been stressing that despite the current volatility, the long-term prospects for South East Asian economies remain good. Australia's US$1 billion contribution to the Thai baht swap was an indication of our confidence in the region as well as our commitment to playing a practical regional role.

It was an investment in the region's economic stability. There are many reasons for confidence in the medium to long term growth prospects for East Asia. The continuation of high savings rates, emphasis on education and strong prospects for foreign investment are likely to contribute to continued high rates of growth over the next 15 years.

Likewise, the Indonesian Government's move to seek IMF technical assistance is a prudent and positive response to the fall in the rupiah. Indonesian foreign reserves are strong at over $US20 billion, sufficient to cover approximately five months of imports. Indonesia is in a good position to weather the current difficulties.

In short, let me make it clear, here in Hong Kong, the centre of so much regional financial activity, that the Australian Government has deep confidence in the future of the region's economies. That is an important message, and it is particularly important that I say it here in Hong Kong.

PART TWO: Shaping the Region's Future

Australia has had a deep engagement in the political and economic life of the Asia-Pacific for more than 50 years. As a consequence of our regional endeavours, we now enjoy a wealth of relationships and friendships in every aspect of the life of the region.

We are commited to help the region develop in a positive way.

From the Colombo Plan, begun in the 1950s, through security cooperation in the 1960s, to the greater economic cooperation of the 80s and 90s in regional institutions such as APEC - Australia has made a distinctive and constructive contribution to the development of the Asia Pacific.

Recently, apart from our contribution to the IMF package for Thailand, Australia has been deeply involved in helping to build a unified regional approach to the strategic problems which flow from the recent events in Cambodia. Closer to home, we are helping Irian Jaya and Papua New Guinea cope with the effects of a devastating drought. We are also continuing to play a leading role in promoting efforts to resolve the nine-year Bougainville conflict.

We have also been quick to respond to the regional environmental crisis caused by the forest fires in Indonesia, by providing medical supplies, technical experts and aerial water bombing capabilities.

A few days ago in Manila, I also announced a contribution of $A100 million for peace and development efforts in Mindanao - a practical contribution to helping further progress on the island after last year's peace accord.

In giving these examples, I simply want to underline that Australia's commitment to and involvement in the affairs of the region extend well beyond the political and the economic and the purely self-interested. Above all else, we do this because these are our friends and our neighbours.

Growing Regional Economic Integration: Complementarity and Mutual Benefit

All of this underlines Australia's accelerating integration into the economic life of the Asia Pacific, and the enormous potential to expand our economic ties across the region. As our White Paper recognises, the sustaining force behind the Asia Pacific's dynamism is economic liberalisation.

Australia has a great deal to offer the Asia Pacific and complements the region's emerging economies with their growing resource and infrastructure requirements. With the composition of our exports now much more sophisticated and manufactures and services roughly balancing agricultural and mineral exports, Australia now contributes to the region's growth on many fronts.

We can find no better example of this growing integration and complementarity than Australia's burgeoning economic links with China. Madame Wu Yi, China's Trade Minister, told our Deputy Prime Minister recently that the high level of complementarity between the Australian and Chinese economies meant that our two-way trade had the potential to double in size by 2000.

The effort to remove barriers to trade and investment has been a critical contributor to this region's economic growth. Trade and investment liberalisation - and greater integration into regional and global economic affairs - are very much in China's and Hong Kong's interests, and in the interests of Australia and other countries. It is the driving force behind the Asia-Pacific's economic dynamism.

At the regional level, we have already seen tremendous reductions in trade barriers, partly under the auspices of APEC. These have brought real benefits to Australia and its neighbours, including China and Hong Kong.

ASEAN, in particular, has cut applied tariffs on a trade-weighted basis by two-thirds and most recently Indonesia has announced further cuts. China likewise has continued to reduce its average tariff. A just announced further round of tariff cuts will bring China's rate down from 23 to 17 per cent, with a target rate of 15 per cent by the year 2000.

APEC 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.

Enhancing Regional Security: Building Relationships and Mutual Trust

This upbeat assessment is paralleled in the area of security and allows me to make the point that Australia and its regional neighbours have an historic opportunity to help lock in the peace which is underwriting the Asia Pacific's extraordinary economic growth.

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 near future. We are not complacent, however. 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. Our White Paper demonstrates that Australia's security interests should not be seen exclusively in terms of potential military threats or regional conflicts.

Over the next 15 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.

Australia's Contribution to a More Secure Region

For its part, Australia has also been building a wide-ranging set of bilateral linkages which provide the indispensable foundation for pursuing mutually beneficial objectives.

Consistent with our constructive approach to China's increasing economic influence, Australia is working actively to engage China more fully in regional and global security matters. China is already part of the growing web of relationships between countries at the bilateral and regional level, including enhanced regional security dialogues and exchanges. Australia has deep confidence in the commitment of China's leadership in playing a fully integrated and constructive role in the future of the region.

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 this year we have established security dialogues with four of our major regional partners - China, Vietnam, Thailand and the Philippines. During the Prime Minister's visit to China earlier this year, agreement was also reached on initiating a regular dialogue between our defence agencies. It is an important sign that in one year Australia has established four new dialogues with China - on security, defence, consular and human rights matters.

Beyond the country-to-country approach, at the regional level, Australia sees the ASEAN Regional Forum as the best mechanism to encourage constructive and effective discussion of these important issues among the major countries of the Asia Pacific.

Although the ARF is still in its youth, it is already chalking up some very positive results. To give just one example, through the first level of the ARF's activities - confidence-building - we can see a useful mechanism for developing a sense of shared strategic interest.

PART THREE: Improving the Asia Pacific's Quality of Life

The Importance of Australia's Core Values

For all that, the Asia Pacific's quality of life depends on much more than sustained prosperity and enhanced security. We need a climate of mutual trust and a commitment to institution-building which best come through participation in cooperative structures and processes.

In this respect, Australia's participation is firmly rooted in the values of our 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. While fundamentally a moral issue, the rejection of racial discrimination is an essential precondition to Australia's full engagement with the region where our vital economic and security interests lie.

Australia, like Hong Kong, is a successful and sophisticated immigrant society. People from all across the globe have come to live and work in Australia. We are home to people of some 130 nationalities. As a society, we are proud - and, as the son of a former Australian Immigration Minister, I am personally proud - of the job we have done in building a nation in which our people live together harmoniously.

We must never forget the truth about Australia is that it is one of the world's most tolerant and successfully diverse countries. That is the message from the Australian Government, and that is the only message which matters from Australia.

Institution-Building : A New Agenda for the 21st Century

One particularly important and innovative way in which Australia gives concrete expression to its fundamental values is through our support for institution-building and other outcomes-oriented measures in the human rights field.

The spread of national institutions for the promotion of human rights has been among the most significant developments in recent years. We believe the work of national institutions in individual countries can be strengthened through sub-regional and regional arrangements which provide a framework for exchanges of views and experiences.

Earlier this year, I announced the establishment in Australia of a Centre for Democratic Institutions. This Centre will offer practical support for the consolidation of democratic institutions in countries where democratic structures are still evolving or are yet to emerge. It exemplifies a cooperative rather than confrontational approach towards promoting human rights.

The protection of human rights to promote the dignity of the individual is too important a matter for symbolic gestures alone. Australia is not headline hunting. Australia is looking not just to make points and statements about human rights, but rather ultimately to make a difference.

Growing People-to-People Links

Our regional engagement covers more than just trade and security. Most fundamentally, it is underpinned by growing people-to-people contacts.

I don't need to tell a Hong Kong audience that there are thousands of expatriate Australians working in Asia with top-class services skills and expertise to offer. A conservative estimate puts their number at about 100,000. These include highly skilled managers, engineers, investment bankers, doctors, educators and artists forging bonds which integrate us even more firmly into the region's economy and society.

Australia's regional education links are longstanding. Indeed there is an impressive alumnus of senior figures in Asian governments and businesses who received academic training in Australia. We see this connection expanding as over the last decade students have been coming to Australia in ever greater numbers.

On the tourism front, the number of Hong Kong and Indonesian visitors - to take just two examples - grew in the order of 15 per cent. 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.

PART FOUR: Hong Kong's Future Regional Role

In addressing you today, I have sought to convey something of the sense of opportunity and challenge that Australia sees in its region as we enter the Asia Pacific century. We look to play an active and constructive role in developments and we look to our regional friends - including Hong Kong - to join in these endeavours.

It is no accident that Hong Kong is Australia's foremost Asia-Pacific offshore base for business. Hong Kong is simultaneously an exciting market in its own right, a gateway to substantial trade and investment in China and a springboard for new business partnerships in Asia.

Hong Kong's remarkable economic development and emergence as a regional force in its own right would not have been possible without China's economic reforms. But, just as important, if not more so, is China's promise that its free economy, free press, rule of law, and evolving democratic institutions will be protected under a high degree of autonomy. It is this which will allow Hong Kong to continue to play a key role in China - and the wider region's - economic development. It is this which will also contribute to regional prosperity and security.

Australia's basic approach to Hong Kong's historic transition has been and will continue to be to support the full exercise by Hong Kong of the autonomy it has been promised by China in areas other than foreign affairs and defence. This is the most realistic and pragmatic way of advancing Australia's substantial economic stake in Hong Kong's future as an important economic regional player. Our approach has also been rewarding in other senses - for example in terms of the constructive partnership we have developed with Hong Kong in multilateral bodies such as the WTO and APEC.

We believe this sense of Australia's commitment to Hong Kong's future is well-understood and positively received by China. While we have raised concerns in areas covering civil and political rights, we have been able to do so in a constructive and non-confrontational atmosphere.

Being here again, just over 100 days since its return to Chinese sovereignty, I am struck by the way many of the misgivings expressed in the days, weeks and months before the handover have been overtaken now by debates on different issues. It is fair to say that in dealing with the difficult issues associated with the transition, Hong Kong has made a solid start.

It is clear from the inaugural address just given by Chief Executive Tung Chee Hwa that he sees the maintenance of Hong Kong's economic competitiveness as a priority for his government. This is right and proper. Hong Kong's regional economic contribution will in many ways define its future. But for those with a stake in Hong Kong's future, it is important to remember that the totality of the "Hong Kong package" is what makes it work so well.

Conclusion: Our Asia Pacific Century

Let me then conclude with a reaffirmation of Australia's positive assessment for our region's economy and stability.

We can look to the medium term with confidence. That said, I would not deny we in the region will face new challenges and problems. Our job is to manage and resolve them. To do so, we must work well together.

Hong Kong and others in the region should feel confident that Australia will continue to make its contribution to a more peaceful and prosperous Asia Pacific as we move into a new century which will, in time, surely bear its name and be indeed the Asia Pacific Century.


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