AUSTRALIA AND FRANCE : REVIVING AUSTRALIA'S PARTNERSHIP WITH EUROPE

AUSTRALIA AND FRANCE : REVIVING AUSTRALIA'S PARTNERSHIP WITH EUROPE

Address by The Hon Alexander Downer, MP, Minister for Foreign Affairs, to the French-Australian Chamber of Commerce and Industry, Museum of Contemporary Art, Sydney, 21 May 1997.

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Part One : Europe in a Confident Australia's Sights

Part Two : The Australia-France Relationship

Part Three : Better Trade and Investment Ties - New Opportunities for Mutual Benefit

Part Four : What Australia Can Offer French Business

Conclusion

Introduction

I am delighted to have the opportunity to address this distinguished audience brought together by the French-Australian Chamber of Commerce and Industry.
I understand that the Chamber is comprised largely of representatives of affiliates of French companies operating in this country and their Australian business associates.
- It is a grouping which occupies an important place in Australia's corporate life by virtue of your consistently valuable contribution to the Australian economy.
One of the Australian Government's major foreign policy achievements since coming to office last year has been to enhance and expand our bilateral relationships with our partners and friends across Europe.
- There is no better example of this than the success the Government has had in reinvigorating our important relationship with France.
To an extent where my colleague the French Foreign Minister, Herve de Charette, said that we have "turned a new page" in our relationship
I want to look at that partnership today from several perspectives -
- Why the reinvigoration of Australia's relations with Europe is an important priority of the Government.
- How the gains already made in putting that relationship on a new footing are symbolised by our burgeoning relations with France
  - where bilateral trade and investment ties have not only made great progress but show enormous further potential for growth.
- How we can marry our Asian and European objectives by highlighting the advantages that Australia can offer French companies in the Asia Pacific region.

Part One : Europe in a Confident Australia's Sights

Europe versus Asia?

The Liberal/National Party Government came to power last year at a time when relations with Europe had been deliberately played down or neglected by the Keating Government.
- In "A Confident Australia", we promised to give new focus to our important bilateral relationships with Europe which had gone through a phase of being unneccessarily neglected by the previous government.
The focus of Australia's foreign and trade relations is still very much on Asia, of course, as that is where our major export markets and strategic interests lie.
- "Asia First" does not, however, - and was never intended to - mean "Asia Only" to this Government.
Diplomacy is not a zero sum game. This Government has recognised that Australia's relations with Europe - our complex and long-standing network of family, trade, investment, cultural, political and strategic links with Europe - are part of our credentials in Asia. The two don't work against each other; they complement.
- We have absorbed over two centuries of European experience and technology
  - our educational institutions draw from and rival Europe's best
  - our economy has long been a major destination for European investment.
- From our position in the Asia-Pacific, we can offer many of the advantages to Asia of our Europe-based technological, educational and cultural experience.
I don't, of course, say that in any boastful or condescending way
- We also have much to learn from Asia's traditions
  - the energies it now applies to economic development.
Nor does Asia have to find its links to Europe through Australia.
- Most Asian countries these days have well developed ties with Europe and are capable of making their own calculations on what they want to take from what Europe has to offer.
But Australia's relations with Asia are unique in the way we straddle two worlds.
- We can often repackage what Europe has developed in ways that are more interesting or relevant to an Asian audience or market.
- Reinvigorated relations with Europe are therefore not an add-on to our Asia strategy
  - our European ties form an essential part of our broader strategy including our Asian strategy.

Reality of the European Union

Also central to our strategy is the realisation that Australia cannot ignore how important the European Union is becoming as the embodiment of European economic and social aspirations. Increasingly Europe is speaking with one voice in world forums.
- The Europe of 15 will soon become an even more formidable presence on the world stage
  - It will become the Europe of 18 or 20
  - Many of its members will most likely have a common currency and be bound by the firm grip of one central bank.
  - Indeed, let me say for the record that Australia meets the convergence criteria.
The EU as an entity should be welcomed as a new pole of stability in a post-cold war world.
- Australia has to be able to influence that voice before the Europeans adopt positions that conspicuously or otherwise cut across Australia's interests.
This Government has therefore given new priority to finalising a new over-arching declaration to express the importance of Australia's relations with Europe.
The Labor Government had pursued the issue on the basis of a Framework Agreement, the format proposed by the European Commission
- even though they had originally proposed a non-treaty status declaration.
Indeed on no less than three occasions the Australian Embassy in Brussels was instructed that Australia's strong preference was for a non-treaty-status agreement
Each time they were told the EU could only negotiate a treaty-status Framework Agreement with Australia
- there would be a Framework Agreement or nothing at all
Eventually the Labor Party reversed its objection to the idea of a Framework Agreement. They then subsequently objected to the Human Rights clauses contained within the proposed text.
This government pursued that basic objective only to find as Labor did that the Europeans were locked into fixed positions on a standard framework text which did not take into account the position of a country like Australia.
- We were right to reject the human rights elements of the agreement.
  - This is based on principles held consistently by both the Coalition and Labor Governments
- While we had no objection to seeing human rights as an important element in our exchanges with Europe and were willing to advance that agenda by deepening the cooperation we already enjoy in international forums on human rights
  - we did not think it appropriate to link the Framework Agreement's operations to either side's judgment on human rights issues.
We have therefore moved, at my suggestion, to a Joint Declaration - a format which we hope will get around the rigidities of the EU's position.
Discussions on a new text are proceeding. I hope that we will have a result in the next few months. We will approach the discussions, however, conscious that we are looking to Australian interests and Australian objectives and are not signing on to a standard text taken off the shelf in Brussels
- We are conscious, for example, that there are real points of difference with Europe on our mutual approach to basic issues such as the future freeing up of agricultural trade.
I am confident, though, that these issues can be ironed out.
- The new Europe has come a long way towards recognising that it cannot go on subsidising its farmers to produce goods that no one wants at their real price
  - that it certainly cannot subsidise millions of new adherents among the farmers of Eastern Europe
  - and that everyone gains by freeing up international trade in agriculture and moving it away from continued expensive subsidisation.

Bilateral Relations with Europe

While we hope a new over-arching agreement with Brussels will help reinvigorate relations with Europe, we will not ignore the critical value of our bilateral relations with each member state.
- Bilateral relations with the key economic players in Europe are already taking on a fresh lease of life. Let me just give three examples.
Our program of cooperation with Germany could hardly be more spectacularly evident than in the visit this month of German Chancellor Kohl, so soon after visits by some of his senior Ministers including Economics Minister Rexrodt. Both were accompanied by important business delegations.
- During my September visit to Germany last year, Foreign Minister Kinkel and I announced the inauguration of Political and Military talks
  - another clear sign of the maturity of our relationship with Germany
We have upgraded our relations with Italy through the signing of an agreement to set up a Economic and Cultural Council, soon to hold its first meeting. This was signed during my February visit to Italy, the first bilateral visit to that country by a Foreign Minister in almost ten years.
The coming to power of a new Labour Government in Britain should mean no disruption to our efforts to further advance relations with the United Kingdom
- symbolised by the striking year-long program of activities in both Australia and Britain under the banner of NewIMAGES.
- I had a warm and valuable meeting with Tony Blair during my last visit to the UK in January.

Part Two: The Australia-France Relationship

A lot of countries may claim to be at the heart of Europe but France, holds a special claim.
- Certainly, it is one of the countries at the heart of our strategy for Europe.
I had the pleasure of visiting France in September last year.
That visit demonstrated that not only have we been able to turn the page on our dispute over nuclear testing but we have given added momentum to the relationship enjoyed in the recent past.
- This was the key message that Foreign Minister De Charette made last September
During my visit, I exchanged views on a wide range of issues and discussed the state of the bilateral relationship with Prime Minister Juppe, Foreign Minister de Charette and other key ministers.
- We explored ways of putting new vigour and dynamism into the relationship including by doing things together in third countries (including some where outmoded tradition would have once seen Australia and France as rivals).
- We identified the South Pacific as an area where we could work together on development assistance projects - in fact, work is now well advanced in identifying particular projects for joint cooperation.
Moreover, the French are responding by adding real content from their side. There have been highly productive visits by several high-level delegations this year - two from the French Parliament, and the high level business mission led by Mr Jean Gandois, President of the National Council of French Employers.
- Many of you will have attended the function hosted by the Chamber in honour of Mr Gandois and his accompanying party on 24 February and others will no doubt have met the delegation at one or other of the many functions organised during his very successful visit.
I am convinced that people-to-people links are at the heart of the bilateral relationship - it is particularly pleasing to see that these ties are expanding at all levels, not just at the official or government level.
- Tourism levels are very healthy.
- The number of French students in Australia has also increased rapidly.
We would like to see these people-to-people ties grow and are working with France to remove the requirement for tourists and business people to obtain visas.
- The introduction of Australia's Electronic Travel authority (ETA) to Europe this year gives us the opportunity to secure an agreement with France to waive short stay visas for Australians.
- We are also encouraging France to consider reciprocating our working holiday scheme.

Part Three : Better Trade and Investment Ties - New Opportunities for Mutual Benefit

Turning now to our trade and investment links, Jean Gandois's successful business mission to Australia was a clear signal that the commercial relationship is in excellent shape as the delegation found very receptive government and business audiences across Australia.
Australia's two-way merchandise trade with metropolitan France now amounts to AUD2.6 billion, a large 80 per cent increase over the last ten years.
- Services trade amounts to AUD450 million, a 165 per cent increase over the same period.
French exports to Australia are particularly strong, representing almost 75 per cent of two-way merchandise trade.
- While traditional commodity exports have fallen, Australian manufactures have performed well - elaborately transformed manufactures increased as a proportion of Australian exports to France from about 3 per cent in 1985 to 18 per cent in 1995-96.
- Service exports to France are also up: as a percentage of total exports, services have grown from 7 per cent of exports in 1985-86 to 20 per cent in 1994-95.
It is still true that the sectors in which we have our greatest comparative advantage such as agricultural and energy are the very sectors which retain barriers preventing the further expansion of Australia's exports.
- On the positive side, the Uruguay Round outcomes which have brought agriculture under WTO disciplines have provided a valuable forum to discuss these issues, and have helped lay the basis for Australia's improved relations with all our European partners, including France.
French direct investment in Australia has more than doubled from AUD1.2 billion to AUD3 billion over the last six years.
- Australian direct investment in France has remained small scale and low - it is heavily concentrated in the transport and logistics sector - and so there is wide scope for expanded Australian investment in France.

Part Four - What Australia Can Offer French Business

French business has established a strong presence in Australia: there are now over 200 affiliates operating in Australia employing approximately 40,000 people
Among those here now are very big players such as Pechiney and Axa, with individual investments exceeding the AUD1 billion mark.
- There are medium-sized enterprises such as Coflexip in Fremantle, Western Australia, which manufactures flexible tubes used in the `off shore' petroleum industry.
  - And there are smaller commercial representative offices as well.
As many of you know, President Chirac is committed to increasing France's share of Asian trade from two per cent at present to six per cent.
- The Australian Government welcomes that objective because we believe that it presents new opportunities for Australian and French companies to work together in joint ventures.
  - I believe Australia and France can benefit greatly by joining forces to capture a greater share of the Asia Pacific market.
I spoke earlier of the lack of any contradiction between Australia's strategies for Asia and Europe. I am pleased to say that many French companies already see the logic of this position
- companies wishing to take advantage of the exciting new opportunities that are opening up in the Asia-Pacific region.
At least eight major French companies have chosen to establish their regional headquarters and regional management operations in Australia.
- This is a very good start, but we would like to see much more.
For those of you still considering this option, let me set out what Australia can offer:
- long-standing and extensive ties with the Asia Pacific region;
- an excellent executive skills base;
- less expensive commercial and residential accommodation and other business overheads;
- world class telecommunications and support services infrastructures;
- an enviable lifestyle for expatriate executives;
- very robust economic and political base; and
- a Government that is strongly committed to encouraging the establishment of regional operations in Australia.

Conclusion

In conclusion, it is sometimes forgotten that Australia and France have many fundamental values and principles in common
- and have a distinguished record of close cooperation in peace and war throughout this century.
I am convinced that the modern Australia-France relationship is moving in a mutually beneficial direction.
- Our diverse trade and investment ties are in a strong expansionary phase.
- French companies are benefiting from a dynamic and increasingly competitive Australian economy.
More and more, Australia and France are working together to seize the many exciting opportunities available in the fastest growing economic region in the world - the Asia Pacific.
I believe that the French-Australian Chamber of Commerce plays an important role in this process
- and I encourage your continued efforts to bring the French and Australian business communities closer together.
But I also want to assure you that the Australian Government will continue to do its part in strengthening all aspects of the bilateral relationship both through expanding relations with Europe and, at the heart of it, France.