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Globalisation or Globaphobia: Does Australia have a choice?
Speech by The Hon Alexander Downer, MP, Minister for Foreign Affairs, to the National Press Club, Canberra, 1 December 1997.
Introduction
Today, the pace of global change is quickening.
Whether we like it or not, we are part of an international community whose outlook is becoming increasingly global.
As the economic and social map takes shape for the next century, we all fall into one of two camps.
You are either a globaphobe or a globaphile.
This is the great political dichotomy of our age, as fundamental as the old conflict between capital and labor.
But whether people fear globalisation or not, they cannot escape it.
It is driven, above all, by the extraordinary changes in technology in recent years - especially computer and communications technology.
For a society to achieve, it must use this technology to its advantage.
To be able to do that, it must be globally engaged.
Those who would slam shut Australia's doors on the world and propose we build massive walls to block out our region are preying on the fears of some Australians who suffer either reform fatigue or don't understand the massive benefits globalisation can and do bring to Australia.
The globaphobes among us - the Hansonites, the refashioned Australian Labor Party, and the Australian Democrats - seek to relive the past, not confront the future.
It is a world of the small-minded, the needlessly fearful, the ridiculously cautious and the hopelessly visionless.
It is a world without progress.
To close Australia off from the rest of the world in an orgy of nationalism is to shut us off from fast changing technology, from rising living standards, from new and more interesting jobs.
It is a case of "stop the clock".
If we start to succumb to the forces of globaphobia we will be left economically, strategically and socially isolated - cut off in every sense from the world around us.
That bleak future is not viable.
The triumph of globaphobia would be a death note for Australia.
Let me put this clearly - globalisation is an irreversible trend.
It is happening. And it is good for all Australians, the region and the world.
Today I want to outline the great benefits globalisation can bring to Australia and the world around us.
Why Globalisation and Trade Liberalisation are Good for Australia
One of the chief benefits of globalisation is trade liberalisation.
And trade liberalisation already has the 'runs on the board' for Australia.
There is no doubt that it has increased GDP, employment, family incomes and living standards generally in Australia.
Just look at the facts.
The removal of Australian tariffs over the last ten years has increased GDP by around 1.5 percent or $1,000 per average family per year.
Australian families have access to a wider range of affordable and high quality products.
Imported motor vehicles would be about 25 percent more expensive if the 1988 tariffs still applied that would be an extra $5,000 on a $20,000 car.
Clothing and footwear would be about 14 percent more expensive - an extra $300 or so per year for the average family.
Trade liberalisation is driving our export growth.
Australian exports have risen by over one-third during the past five years, at a time when the liberalisation of markets has proceeded quite rapidly.
Our exports of elaborately transformed manufactured goods have grown at an average of 17.6 percent over the last ten years.
There are countless examples of Australian exporters benefiting from tariff reductions undertaken by our trading partners.
Let me give you just a few specific examples from our region.
Only a few days ago in Korea we saw some very positive developments for Australian business as an unexpected spin-off of Korea's need to ensure that its exports become as competitive as possible.
On 19 November, the Korean National Assembly approved 182 tariff reductions - unilateral cuts which contribute to Korea's meeting its APEC commitments - effective from 1 January next year.
The major Korean reductions of benefit to Australia include reductions from 5 to 3 per cent on raw sugar, reductions from 2 to 1 per cent on wool and wool tops, and one percentage point reductions on a range of non-ferrous materials.
Beyond our region, the outcomes of the Uruguay Round and the establishment of the WTO reflect strong international support for trade liberalisation worldwide, and are likely to boost Australia's exports by over $5 billion.
When the Uruguay Round cuts are fully implemented, the proportion of Australia's industrial products to developed countries facing zero tariffs will more than double, from 20 to 43 percent.
For example, more than 22 percent of Australia's passenger motor vehicle exports will benefit from duty free entry; up from 4 percent previously, and around 68 percent of Australia's textile, clothing and footwear exports will enter overseas markets duty free.
The dividends are already flowing through to Australia's farming sector.
There is much less subsidised agricultural produce on world markets.
Between 1995 and the year 2000, we can expect to see: 50 million tonnes less subsidised wheat and flour on world markets; 1 million tonnes less subsidised beef; and 400,000 tonnes less subsidised cheese.
The Uruguay Round implementation will increase the value of Australian agricultural exports by as much as $1 billion a year.
This includes: a projected increase in beef exports estimated at $330 million per year, wheat by $320 million, dairy by $210 million, coarse grains by $50 million, rice by $30 million and sugar by $10 million.
The ultimate beneficiaries of these export successes are the employees, businesses and communities that produce the exports.
The Australian dairy industry is a premier example - it is now among the most cost efficient in the world and has benefited greatly from the opening up of East Asian markets where it has won a leading share - 30 percent - of the import market.
The services sector is another excellent illustration of the benefits of globalisation and open markets to Australians.
Over the past decade, liberalisation of services has accelerated throughout the world.
Australia's exports of services have grown 50 percent faster than our imports of services.
As a result, in 1996, Australia's balance of payments benefited from a surplus in our services trade with the rest of the world - for the first time in the history of the statistics which goes back some forty years.
The Australian Government has a strong commitment to deregulation in the services sector.
Prime Minister Howard, in his address to APEC CEOs in Vancouver last week, announced that Australia is strengthening its offer on financial services, reflecting recent developments in domestic
policy that will further open Australia's financial sector to competition from both domestic and foreign participants.
The Australian Government's financial sector reforms will:
Australians from all walks of life are already reaping the rewards of the global telecommunications and information revolution that underpins globalisation.
Information industries employ full time more than 500,000 Australians, and employment growth in the computer services industry has almost doubled in the last four years.
My Department estimates that trade on the internet could grow from $5 billion annually at present to $100 or even $150 billion by the turn of the century.
Australia has taken up new technology and innovation with great enthusiasm.
We are ranked 8th in the world as a network society "plugged in" to the high-tech world, a ranking that puts us ahead of both 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.
Benefits to the Asia Pacific Region
But it is not just Australia that is benefiting from globalisation and freer and more open markets.
Recent currency developments in East Asia should not blind us to the fact that the Asia Pacific owes much of its recent economic dynamism to global economic forces, including liberalisation.
From the 1970s onwards, the countries of East Asia were able to lift substantially their growth rates by linking themselves to the world economy through trade, investment, capital flows and technology exchanges.
The recent problems we have seen in several East Asia economies have not come about as a result of too much trade liberalisation or transparency.
Rather, the financial markets have responded to overheating in several regional economies and inadequate financial sector controls.
These countries, with the help of the IMF, are moving to address and rectify the weaknesses highlighted by recent developments.
The quicker the affected economies adjust through liberalisation and greater prudential controls and transparency, the faster they will solve their problems and return to high growth.
This is the clear lesson from the experiences of Latin America in the late 1980s and early 1990s and more recently the Mexican experience in 1994-95.
The Latin American economies, with the help of the IMF and others, were able to put their financial systems on a sounder footing, and hasten their return to economic growth. And, in several respects, East Asia has an easier task than Latin America - economic growth is higher in our region and inflation far lower than in the Latin American case.
The watershed APEC meeting in Vancouver last week sent a strong signal of confidence in the underlying strength of regional economies affected by currency instability.
There was also a strong reaffirmation of the need to press ahead with liberalisation, and to keep firmly in view the goals of free and open trade and investment by 2010 and 2020.
APEC Ministers agreed - and APEC Leaders endorsed - a continuing program of voluntary liberalisation of 15 trade sectors.
The decision is particularly pleasing to Australia because we took the initiative in the first half of this year to speed up the process so that a decision could be reached in Vancouver.
Involving over US $ 800 billion in intra-APEC trade, this is a clear indication that freer and more open trade is even more important than ever for sustained regional growth and prosperity.
The decision also has important implications for Australian exports and jobs.
For example, exports to APEC of coal and gas - two sectors which would be liberalised under the energy proposal - are valued at around A$ 5.9 billion, with tariffs on coal up to 20 percent.
Exports to APEC of chemicals are A$ 2.8 billion, and the industry has made it clear to us in consultations that it sees improved access in the region as crucial to promoting investment and jobs in Australia.
All these facts and figures add up to one simple but important point.
Globalisation and trade liberalisation are delivering the goods for Australians and our neighbours in the region, and hold the promise of more prosperity in the future.
The Wider Benefits of Globalisation: Enhanced Security and Quality of Life
I also want to emphasise that globalisation is not just an economic phenomenon with economic consequences.
It has significant security dimensions.
Globalisation, in tandem with economic growth, and driven by new technology, builds economic interdependence and deeper commercial links of all kinds between nations.
These closer economic links are the building blocks of better security and strategic relationships because they help build trust and mutual respect in powerful ways.
When nations have more in common, particularly when their trade and investment interests complement each other, everyone has more at stake in the regional and global system, and much more to lose if outright conflict or confrontation erupts.
Not just business interests, but entire communities that rely increasingly on external economic links for new jobs and better living standards, begin to see the value of international cooperation and mutual respect in an entirely new light.
And that is exactly what globalisation is doing.
It is encouraging new endeavours to enhance regional and global security.
It drives international momentum to rid the world of weapons of mass destruction once and for all.
It has made it possible for more and more people to see with their own eyes the horrors that the indiscriminate use of weapons can visit on humanity
Recent international action against anti-personnel landmines shows just how path-breaking and productive a sustained global effort can be.
Tomorrow, I leave for Canada to sign the Ottawa Treaty on Australia's behalf.
This will mean that Australia will forever forswear the use of anti-personnel landmines and destroy its stockpile, consistent with the provisions of the Treaty.
I am very proud of the leading role that Australia continues to play in international efforts to find a comprehensive and lasting solution to the grave humanitarian and economic crisis which the misuse of landmines has inflicted on many countries, including in our region.
This has been backed up by a practical $19 million commitment to demining in the last 20 months which will help make a real difference to villagers in Laos, Cambodia, Afghanistan and other countries.
The establishment and subsequent evolution of the ASEAN Regional Forum is another example of this globally-driven 'thirst' for better and more durable security linkages.
The growing web of regional security relationships in the Asia Pacific mirrors the extensive set of economic and people-to-people ties across the region.
Greater information exchanges on defence policies and acquisitions are a building block of transparency in the region.
In a broadly similar way, Australia's expanding bilateral security dialogues mirror and reinforce the valuable economic relationships we have with our neighbours.
Earlier this year, we agreed to commence four new important security dialogues with the Philippines, Thailand, Vietnam and China.
Beyond global and regional security, the tide of globalisation is moving inexorably into other areas - it has a positive 'knock-on' effect across a wide spectrum of human activity.
For example, it underpins the increased cooperation between nations in the health sector which is driving the global fight against HIV/AIDS.
1 would like to announce today, on World AIDS Day, that Australia is offering a helping hand to the region through support for a meeting of Australian and other health practitioners starting today in Bangkok.
This meeting will draft a sub-regional strategy for addressing HIV/AIDS in the Mekong sub-region.
Also, the climate change conference in Kyoto has been called because we all share the belief that a global effort is needed at Kyoto, including the involvement of developing nations.
In short, globalisation brings with it not just a sense of global responsibility but the means to help alleviate some of the most pressing problems of our times.
The fact that more people enjoy a better standard of living and health than ever before in the history of the world has a great deal to do with the accelerating process of globalisation.
Conclusion: Taking Charge of Australia's Future
In conclusion, let me be perfectly clear.
The opponents of globalisation want Australia to live in a time-warp. They want to turn the clock back.
In search of fear campaign and a cheap headline, the Australian Labor Party wants to pretend its 13 years in office never happened.
It wants us to forget that they - with our support - wound back tariffs and moved to strengthen ties with the Asia Pacific region.
It was only with our support while in Opposition that the Labor Party of Bob Hawke and Paul Keating was able to reduce tariffs.
Now, when we want to continue the process to meet the Bogor Agreement, the Labor Party resorts to an opportunistic scare campaign to frighten voters and attempts to put roadblocks in our path to reform with its sudden U-turn on tariffs and reversal on trade liberalisation.
The Labor Party appears to have decided that it is better to get a cheap headline from a media which generally finds the closure of one factory more newsworthy than the opening of many others, the loss of one job more appealing as a story than the creation of many others.
Likewise, Pauline Hanson wallows in a mire of misinformed economic nationalism, offering no alternative to the inevitability of globalisation apart from cries from the sideline calling on Australia to economically cut itself off from the rest of the world.
New isolationism is no prescription.
It is no solution.
I accept that globalisation can cause some short-term pain but it has long-term benefits for all Australians.
There are doubters, but the arguments for globalisation are clear and are persuasive.
Globalisation offers huge opportunities for all of us.
Robust economic growth and development has paid for health care improvements, better education and housing. Our generation has unimpeded access to information and knowledge of a kind unrivalled in human history.
Globaphobia offers us a return to a less productive past.
It is the approach of the timid and the afraid.
Its advocates want to develop a "Fortress Australia" - cut off from the rest of the world with its citizens paying higher prices for goods and services and having less access to jobs and economic growth.
There is no future for Australia in turning its back on the world.
Rather, Australia will always be a stronger, more innovative and more successful nation because of our unique capacity to embrace the best of the world and the region and make it our own.
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