LOOKING WEST: AUSTRALIA AND THE INDIAN OCEAN
Address by The Hon Alexander Downer, MP, Minister for Foreign Affairs, to the International Business Council of Western Australia, Perth, 13 March 1997.
Introduction
I am delighted to be in Perth today - with people who are at the forefront of Australia's efforts to strengthen ties with Asia and the Indian Ocean region.
I want to thank the International Business Council of Western Australia for this opportunity to address this distinguished gathering of export-oriented Western Australian business people.
This Government is committed to building Australia's links with the Indian Ocean and I want to take this opportunity today to outline the major elements of the Government's approach - in three stages.
First, I want to encourage Australian business to "look West" in their export and overseas investment plans.
Second, to make clear that the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) is a genuine chance for trade liberalisation.
Third, I will outline the real opportunities for Australian business in two key Indian Ocean markets, India and South Africa.
PART ONE: The Indian Ocean's Place in Australia's Foreign Policy Priorities
As many of you know, the Government places its highest foreign policy priority on closer engagement with Asia. We will not, however, repeat the previous Government's mistake of neglecting the Indian Ocean region and the potential market opportunities in South Africa and the Indian sub-continent.
On the contrary, the Government understands that it is not enough to focus on East Asia alone - we realise that our economic interests and security are tied up in regional engagement in the broadest sense, encompassing both the Indian and Pacific Oceans.
Indeed, Western Australia - Australia's fastest growing economy with the largest share of our export earnings - is playing an increasingly dynamic role in our national effort to look West.
The Indian Ocean region is not only diverse. It also includes countries of increasing importance to Australia such as India, South Africa, the vibrant South East Asian economies and significant markets in the Middle East. It is a region which overlaps with other regions covered by existing forums such as APEC.
That is why the Government has focused in a determined way on key countries which border the Indian Ocean Rim and our efforts to explore the scope for economic cooperation and trade liberalisation among the countries of the Indian Ocean. The Government is undertaking this effort in order to advance Australia's trade and investment interests.
We are making our policy priorities a reality in two ways - first, through strengthened bilateral relationships and, second, through active and practical support for regional economic cooperation.
Recent Developments in the Indian Ocean Region
An effective foreign policy depends in the first place on a clear and far-sighted understanding of the trends shaping the world and its regions.
In that context, it is clear that the countries of the Indian Ocean region have not been immune to the profound political and economic changes sweeping Asia and Europe since the end of the Cold War.
The spread of economic liberalisation, for example, has brought new challenges and opportunities to countries once characterised by centrally-planned economies.
India has made giant steps forward on the path to an outward-looking economy. South Africa - now welcomed back unambiguously into the global community - has emerged as a potentially important regional player. At the same time, South Africa has undergone a wide-ranging process of economic adjustment.
The end of superpower rivalry has created a more positive climate for regional cooperation. Above all, the diverse countries of the Indian Ocean are beginning to regain their ancient sense of regional identity - an identity that underpins their nascent aspirations for closer economic cooperation.
2.1 The Need for a New Regional Association
These regional developments demonstrate clearly the need for an effective organisation for economic cooperation in the Indian Ocean region.
The growth of intra-Indian Ocean trade has been inhibited in recent years by the lack of economic cooperation, and the Indian Ocean region is one of the last regions in the world not to have such an organisation.
More than that, the lack of economic cooperation in the Indian Ocean hinders Australia's economic engagement with the region just at the time when exciting opportunities for new Australian trade and investment are beginning to emerge.
The Government recognises that the habit of consultation among the countries of the Indian Ocean region is in its infancy. The practical benefits of cooperation will take time to flow through to all countries.
But I am convinced that the new Indian Ocean Rim Initiative is a landmark development for the region - the Australian Government welcomes it unreservedly.
That is why Australia has taken a leading role in the Indian Ocean Rim Initiative since its inception. Last week, at its inaugural ministerial meeting in Mauritius, Australia - with a range of other countries - became a founding member of the Indian Ocean Rim Association for Regional Cooperation.
Along with Australia, the new Association includes India, Indonesia, Kenya, Madagascar, Malaysia, Mauritius, Mozambique, Oman, Singapore, South Africa, Sri Lanka, Tanzania and Yemen.
Australia's experience in other comparable regional forums - especially APEC - demonstrates that the habit of consultation - and the close personal relationships between ministers and officials that develop over time - do a great deal to build regional trust and confidence.
That sense of trust and shared responsibility can - in turn - help countries in the region implement the sort of effective domestic policy settings that enable businesses to expand trade and investment.
In that regard, Indonesia, Singapore and Malaysia - our partners also in APEC - bring to the new Association a wide experience of regional institutions. I believe that their presence in the organisation can only strengthen the momentum of the IOR-ARC towards a more open trading regime.
2.2 The IOR-ARC as a Forum for Trade Liberalisation
I now want to take a few minutes to speak about what the IOR-ARC is, and what it is not.
First and foremost, the IOR-ARC is an outward-looking forum for economic dialogue and cooperation. It is designed to expand trade through free and open markets, thereby raising the livings standards of every country and citizen in the region.
Australia worked closely with its regional neighbours in Mauritius to ensure the primacy of trade liberalisation in the Indian Ocean Charter. All founding members of the Association have agreed that the IOR-ARC will not be a preferential trade bloc. Significantly, our regional partners in the Association are increasingly comfortable with the language of open regionalism - this was very evident last week in Mauritius.
I want to emphasise that greater regional economic cooperation will be driven for the most part by progressive tariff reductions in developed and developing countries.
In time, the Association could consider adopting APEC's targets for tariff reduction as set out in the 1994 Bogor Leaders' Declaration - that is, free trade and investment for developing economies by the year 2020, and for industrialised economies by the year 2010.
In the meantime, I am convinced that the Association's extensive program of regional dialogue and practical cooperation will strengthen the momentum towards trade liberalisation.
2.3 The IOR-ARC's Role in Economic and Trade Policy
The Association is also designed to set directions for economic and trade policy in the Indian Ocean region.
The key message that Australia delivered at last week's meeting in Mauritius concerned the central importance of the business community, and the need for governments to respond quickly and effectively to remove barriers to trade and investment identified by the business community.
In that context, I am pleased to report that the Association adopted as one of its first project proposals a suggestion made by the Australian business representative - Ross McLean of the Australian Chamber of Commerce and Industry (ACCI) - to conduct a study of other regional organisations such as APEC to see what lessons can be applied in the Indian Ocean region.
This study is being coordinated by the ACCI with assistance from the Department of Foreign Affairs and Trade.
Ross McLean - who is well known to you in Perth - has been one of the most important and influential individuals in the recent meetings establishing the IOR-ARC.
2.4 The Association's Future
Clearly, the IOR-ARC has only just begun its institutional life in the region.
The Government recognises that, in the past, there have been frank differences of view among the littoral countries of the Indian Ocean on a range of international issues.
The new Association includes a diverse range of countries, with economies in different states of development and varying political systems.
As a consequence, Australia's objectives at the Mauritius meeting of the Association were not unrealistic. The meeting was important in building the spirit of cooperation among member countries of the Association - it has ensured that we all have the same goals and similar perspectives on how to achieve those goals.
That is a considerable achievement in itself - it augurs well for the future of the Association.
Australia has consistently advocated expansion of the Mauritius process to include all of the major economies of the region. The Association's Charter requires that expansion of membership be decided by all member states on a consensus basis.
Australia is a member of a Working Group which has been established to develop criteria and formulate recommendations on the membership issue. I expect that an expanded IOR-ARC may become a reality within two years.
I want to emphasise that the Association is not a forum for discussing security issues in the Indian Ocean. We believe that it would be counterproductive to bring security considerations into the IOR-ARC at this formative stage. This is a view shared by all of the Association's participants.
In time, the countries of the region may want to consider the introduction of security issues - but it is not on the agenda for the foreseeable future.
PART THREE : Two Key Emerging Markets in the Indian Ocean Region
I now want to focus on two key emerging markets in the Indian Ocean region that are of special importance to Australia and which underline the under realised potential of this region - India and South Africa. I want to mention the specific opportunities that are opening up for Australian business.
In doing so, I will demonstrate how the Government's strong focus on developing bilateral relationships can bear fruit in expanded Australian trade and investment.
India
India's emergence as a dynamic regional player is uncontested. The World Bank has estimated that India will be one of the world's four largest economies by the year 2020. Based on current trends, we expect that India-Australia two-way trade will double over the next five years, making India one of our top ten trading partners.
But I need hardly remind a Western Australian audience of the new opportunities for trade and investment in India. Western Australia has been very active in strengthening business links with India.
For its part, the Australian Government - through the success of the recent New Horizons promotion - has reaffirmed the importance that Australia attaches to its relationship with India.
Substantial investment opportunities are opening up in India as economic reforms take hold. Australia investment - currently at approximately A$800 million - should expand further once expected liberalisation measures in the mining, financial services and power sectors are implemented.
Apart from wool and coal, India offers a diverse range of opportunities for Australian businesses in mining, infrastructure, the financial and insurance services sector, education, consumer goods, particularly food products, and agri-business.
South Africa
South Africa is another exciting trade and investment prospect for Australian business - it is one of Australia's fastest growing trading partners.
Australia's exports to South Africa in 1996 were valued at over A$940 million - a huge 44 per cent increase on the previous year - and include aluminium, animal products and elaborately transformed manufactures. South Africa is now Australia's 19th largest merchandise export destination. The level of two-way trade in 1996 was an impressive $A1.4 billion.
South Africa is also a significant player in the trade of the Indian Ocean region. It played host to a major meeting in Durban this week of the Indian Ocean research and business networks.
I am pleased to say that - in recognition of South Africa's growing importance to Australia - a Joint Ministerial Commission will meet in July 1997 to establish a framework for promoting trade and investment opportunities for Australian businesses.
Strong commercial opportunities exist for Australian business in a diverse range of South African markets such as telecommunications, mining and infrastructure development. South Africa will also provide opportunities as a regional hub for re-exports into the rest of southern Africa.
But the key task ahead in this important market - as in India - is to take the next step and raise Australia's trade and investment links to new and even more productive levels.
Conclusion
In conclusion, the Government's foreign policy approach to the Indian Ocean region is an excellent example of the hard-headed focus on practical and realistic initiatives that characterises our broad approach to the promotion of Australia's national interests.
The Indian Ocean Rim Association for Regional Cooperation, launched in Mauritius last week, is central to the Government's foreign policy strategy for the Indian Ocean region. Australia's commitment to this new regional organisation reflects the Government's strong commitment to regional engagement generally - a commitment made clear in the policy platform on which we were elected a year ago and which we have moved decisively to implement.
The new Association is well placed to help sustain the region's new economic momentum, and to advance the important goal of free trade and investment.
At the same time, I want to emphasise that the Government is determined to maintain its strong effort to develop bilateral relationships with key partners in the region. In that practical way, Western Australia's - and Australia's - business people and investors can take full advantage of the new opportunities available in the region.
We will have to do much more to ensure that the new IOR-ARC's focus is right, and I want to pay tribute to the contributions which West Australians have made in that connection.
The West Australian Government has been strongly supportive - in particular, Hendy Cowan's Department of Commerce and Trade. The Indian Ocean Centre at Curtin University - led by Ken McPherson - has been a central powerhouse of ideas and energy. This collaborative process is a testament to the possibilities of effective Federal - State cooperation.
The International Business Council of Western Australia - with its reservoir of expertise, experience and people-to-people contacts in the region - is vital to the success of our endeavours.
More than that, Western Australia itself - as the shining gateway to the Indian Ocean - must continue to play an important leadership role in Australia's engagement with the Indian Ocean region.
I very much look forward to the Council's continued close cooperation and expertise in the years ahead.