PROVING OUR METTLE - AUSTRALIA'S STRONG REGIONAL COMMITMENT

Speech

Australian Minister for Foreign Affairs, Alexander Downer

15 May 2000

PROVING OUR METTLE - AUSTRALIA'S STRONG REGIONAL COMMITMENT

Speech by the Hon Alexander Downer, MP, Minister for Foreign Affairs, at the 2000 Business Asia Awards

Introduction

Ladies and gentlemen.

It is a great pleasure to attend the Business Asia Awards ceremony once more. It's always good to talk with people who work at the very heart of our nation's trade effort - an effort which, after all, underpins the standard of living that all Australians enjoy. And I'm particularly happy that this year I speak to you at a time when Asia's economic prospects are looking much brighter, which is cause for good cheer for us all.

Regional economies are expanding again, Australia's own economy is powering along strongly, and the region's major political issues of 1999 - like East Timor or the election of the new President in Indonesia - have been settled. Australia can look forward to a period of growth in its relations with the region.

What I want to do tonight, then, is to look at the substance and the success of Australia's engagement with Asia, the steps our Government has taken to demonstrate our commitment to the region; in trade policy as well as foreign policy; in matters small and large.

All this has been achieved in an environment the likes of which has tested no Australian Government in decades. A strategy for engagement with Asia was straightforward when Asia was perceived to be politically stable and growing fast. Soon after we came to government, the outlook changed dramatically with the financial crisis and resulting political upheaval. The challenges were larger and more pressing than at any time since the Vietnam war. It is a measure of the achievement of the government - and of Australian business - that we have done so much to secure our, objectives and to assist the region through this period. We have shown ourselves to be a true "all weather friend" and in doing so have positioned Australia as a key player in the region's future.

Our Government's unswerving commitment to the region

I have said that I want to focus on our Government's deeds in the region, but I will make one basic point about our commitment to the region.

In its foreign affairs policy statement for the 1996 election, A Confident Australia, the Coalition set out its position in very unambiguous terms: "Closer engagement with Asia will be our highest foreign policy priority." That position was formally reiterated in 1997 in our White Paper on foreign and trade policy, In the National Interest, which also identified Japan, China and Indonesia as three of Australia's four most important international relationships. As the White Paper stated: "In both security and economic terms, there is no region where more significant Australian interests are engaged."

In fact, from the release of our 1996 election manifesto until today our Government's position on Asia has not deviated one centimetre.

But we didn't just assert our commitment - we took concrete action - and, in a difficult and unsettled period in the region, we got results.

Advancing Australia's economic interests in Asia

When one comes to examine the real substance of Australia's engagement with Asia, nowhere is progress more evident than in the economic relationship.

As I noted at the beginning of my remarks, the revival of the region's economic prospects is good news for Australia, and is being strongly reflected in our trade figures. The latest figures, which cover the first quarter of this year, show that at the end of March our exports to East Asia were up 27 per cent on the same month in 1999 - the eighth consecutive month of year-on-year improvement in our exports to that region.

To mention some more specific examples - exports to the Republic of Korea increased by 22 per cent, to Japan by 26 per cent, to South East Asia by 34 per cent and to China by 40 per cent. Australian exporters continue to punch above their weight, and in ASEAN, for example, the contribution to imports relative to our economic size is far higher than that of the United States or the EU -in fact, more than twice the size.

This turnaround justifies the faith shown in Asia's future by Australia, and by Australian business people in particular. I recall that, in the darkest days of the region's economic crisis, my Ministerial colleagues and I were urging Australian businesses not to walk away from Asian markets - decisions they needed to take into account the underlying strengths of East Asian economies and their promising longterm prospects. Those firms that made the commitment to the region are now well placed to benefit from its recovery. Tonight's awards recognise this achievement.

For our part, the Government was never in two minds about the need for Australia to help its neighbours overcome the many challenges presented by the Asian economic crisis. The crisis was a defining moment for Australia's relationship with Asia, and the effectiveness of our response was second to none.

Proof of our national resolve was shown in our participation in all three IMF second tier support arrangements for Indonesia, Korea and Thailand - a commitment that totalled $3 billion. It was shown when we persuaded the IMF to adjust the conditions of its package for Indonesia. I can vividly recall my robust debates with Larry Summers, now US Treasury Secretary, on the need to support the stability of the new Indonesia. To have an approach to economic reform that was sympathetic to the fundamental changes happening in our nearest neighbour was important, with Indonesia's powerful democratic transition under way. And it was shown when I organised a meeting in Sydney of ministers and senior officials from 27 countries and several major international financial institutions to seek a more coordinated responset to the crisis.

We stepped up our aid to the region and changed its composition to provide more support to improving governance and economic management. The Prime Minister convened a task force on international financial reform to respond to the structural problems shown by the crisis. And we got APEC focussed on the problem. It was an intensive and coordinated approach that has helped the region to return to growth faster than many expected.

A multifaceted engagement

Clearly, our Government's domestic policies together with our regional commitment have boosted Australia's trade and investment with Asia. There is nothing narrow about this nor is it anything to be ashamed about - indeed, the more than 750,000 Australian workers whose jobs rely on exports to East Asia would expect nothing less. But our regional engagement embraces so much more.

After we came to office in 1996, we moved swiftly to expand bilateral relationships across the region. That policy has allowed us to advance our national agenda across a wide range of issues of interest to Australians - so much so that government leaders in countries like China, Singapore and Thailand have commented that relations between their countries and Australia* are as good now as they have ever been. Last year alone the leaders of China, Korea, Singapore and Vietnam visited Australia. This week I will visit Cambodia and Vietnam, and the Prime Minister will visit Korea.

We have also acted to promote Australia's security interests in Asia. Trade and prosperity fundamentally depend on stability and confidence. We have established a web of political and security dialogues with various regional countries, including China, Japan, South Korea and Vietnam. These bilateral dialogues build on regional structures like the ASEAN Regional Forum and the ASEAN Post Ministerial Conference, to encourage the development of common approaches and the building of trust and mutual confidence. And last week we announced the restoration of diplomatic relations with the DPRK, to encourage North Korea to take further positive steps to engage more constructively in the international community. That was a step we took in close consultation with key regional partners and as part of a broader regional effort to contribute to peace and stability in one of the world's major trouble spots.

Australians are proud of their liberal-democratic traditions, and our Government has moved to assist countries in our region as they implement policies that promote democracy and human rights. We've implemented a regular human rights dialogue with China. We established the Centre for Democratic Institutions to provide targeted programs for governments in the region. And we have helped promote the principles of good governance through our international development assistance program. Good governance, in turn, improves transparency, accountability and the rule of law improving the climate in which our exporters and investors operate.

We've shown a practical commitment to democracy and security in the region through our strong support for Indonesia's democratic transformation, providing technical and financial support for the holding last year of that country's first truly democratic elections in more than four decades. And similar considerations informed our decisive role in leading the international effort to restore peace in East Timor, an effort broadly praised in our region and around the world.

The alternatives of not having acted as we did bear some thinking. If we had not taken the lead in East Timor, the crisis may well have dragged on indefinitely - at the cost not only of greater bloodshed in East Timor, but of instability in Indonesia and the region, and very possibly continued economic disruption in East Asia.

Obviously, this has had short-term costs for Australia's political relationship with Indonesia. But I remind you that resolution of the East Timor issue - which has dogged Australia's relations with Indonesia for the last 25 years - together with Indonesia's transition to democracy, offer major benefits for Australia. The process of restoring this relationship is well underway. We must expect some ups and downs, reflecting not least Indonesia's changed political circumstances, but the trend is overwhelmingly positive.

Finally, I want to recall the people-to-people and business-to-business links between Australia and Asia that have boomed in the past four years. Where many saw difficulty on Asia's economic crisis, many Australians saw opportunity. The everincreasing number of tourists exchanged between Australia and the countries of the region and Australia's emergence as a major supplier of education services to Asia provide further ballast to Australia's relations with the region. They help create an environment that is more conducive to Australia's trade and investment efforts and are strongly supported by the Government.

Conclusion

In many ways, the policies of the Howard Coalition Government are a continuation of Australia's long and overwhelmingly positive engagement with Asia. But with the juxtaposition of the Asian economic and East Timor crises, our Government has had to confront a combination of economic, political and security challenges that no other has faced in half a century. It was all very well to trumpet close engagement when the region's economies were experiencing record growth for decades, optimism was high and national stability was taken for granted. For the past two years or more, our Government has faced situations that the region had never even imagined, and has had to create the policies to deal with them.

We've emerged from those events in great shape, having demonstrated what a tremendous asset Australia is to the region. Robust growth in the Australian economy through the financial crisis was no accident. Our prudential management, our transparent and accountable financial systems, our strong national institutions and firm adherence to the rule of law, and our commitment to ongoing reform are all providing models for the region. Australians - especially you here tonight - are at the vanguard of building better and more robust institutions and capabilities in the region. Your companies are not only selling food or providing raw material: they are improving accounting standards, developing telecommunications and software and building infrastructure throughout Asia. They are backed by a government which supports them strongly and tonight I commend them - and you - for this achievement.