The Australia Hong Kong Connection

6 May 2008, Australian Chamber of Commerce, Hong Kong and Macau

Salutation

Mr Chairman, thank you for that kind introduction.To you and to the members of your Chamber, let me first say how grateful I am for your invitation to address this morning’s breakfast meeting.

Introduction

I acknowledge the impressive work this Chamber has done in facilitating business development opportunities in Hong Kong and Macau for its growing membership. You are our largest overseas Chamber of Commerce. In your nearly 21 years of operation, you’ve attracted a Who’s Who of the Australian business world.

Your 21^st Anniversary this year coincides with the Hong Kong Government’s decision to eliminate duty on wines and beer, in itself a pretty good excuse to hold a party.The removal of these duties is something Australia’s wine industry warmly welcomes. It’s something on which our Consulate-General and your Chamber itself did a great deal of representation on.

I’d like briefly to set out for you today our view of Australia’s relationship with Hong Kong, and with China more broadly. It’s a message I’ll be conveying during my meetings today, including with Chief Executive Donald Tsang.

Importance of Hong Kong to Australia

Australia and Hong Kong have long shared a special relationship in Asia, underpinned by strong people-to-people links and a highly complementary trading and investment partnership. As one of the world’s freest economies, Hong Kong plays a significant role in this region’s, and Australia’s, prosperity.

Some 55,000 Australians live in Hong Kong. That’s our second largest expatriate community. There are some 1,700 Australian businesses based or represented here.

To a very considerable degree your work here, and your success, underpins the strength of our relationship with Hong Kong. Your success in turn is built on the strength and transparency of Hong Kong’s judicial and legal framework and its openness to the world. This openness is reflected in the propensity of Hong Kong citizens to study and travel abroad. Last year, some 16,000 students from Hong Kong studied in Australia. Nearly 150,000 others visited Australia.

Hong Kong was Australia’s 19^th largest merchandise trading partner in 2007, with total two-way trade worth A$4.2 billion. Our bilateral trade in services is growing. Hong Kong is Australia’s fourth largest source of foreign investment, with $38.5 billion dollars invested over a wide range of sectors. Australian investments here stood at $16 billion at the end of 2006.

Many Australian exporters use Hong Kong as a doorway to China and to test the Chinese market. They are increasingly able to take advantage of the close integration between the Hong Kong and Guangdong economies.

As well it is striking to note the impressive growth in Macau in recent years and the opportunities that’s creating. There are now about 2,000 Australians employed and living in Macau. Our direct investment is worth around $3 billion.

At a Government to Government level, our relations with Hong Kong remain in excellent shape. We maintain close contacts at Ministerial level in key areas of interest such as trade, education, security and law enforcement. My Ministerial colleague the Minister for Agriculture Tony Burke visited Hong Kong last month. Other senior colleagues will visit later this year.

In multilateral forums like the WTO and APEC, our frequent high-level contacts reflect Hong Kong’s strong interest in promoting economic prosperity in the region and globally, and its constructive role in taking forward APEC’s trade facilitation agenda.

Hong Kong’s continuing success owes much to the stability and transparency of its political and economic model, which does so much to facilitate industry and finance.

The strength of its institutions, and its ability to adapt to change helps Hong Kong adjust to the social and economic pressures of globalisation felt throughout our region.

One of the strengths of the Basic Law is that it provides an ongoing mechanism for constitutional development to address change. I wish the Task Group on Constitutional Development well as it considers options for electing the Chief Executive and forming Legco in 2012. I encourage the Hong Kong and Chinese Governments to work together to bring forward as soon as practicable the Basic Law’s goal of universal suffrage within the ‘one country, two systems’ framework.

Australia’s trade policy: the twin pillars

The Australian Government understands the benefits of openness, of rigorous domestic economic policy, and a strong commitment to an open multilateral trading system.

Trade liberalisation internationally and improved productivity and competitiveness at home, are mutually reinforcing. The Australian Government is committed to enhancing Australia’s trade performance by addressing impediments to productivity and competitiveness. There’s no point winning concessions from other countries if you can’t compete. We are addressing domestic constraints on productivity, including through education and skills training, infrastructure development, and the roll-out of modern broadband capability.

We have instituted a thorough review of Australia’s export and investment promotion programs. Businesses such as your own will have an important role in telling the Mortimer Review how you think we can do things better.

At the international level, multilateral trade liberalisation through the WTO is our highest trade priority. Trade liberalisation has delivered dramatic benefits to the global economy from which we have all benefited. That is why we’re so committed to getting a good outcome from the Doha round this year. We know that Hong Kong, with its global trading interests, also believes in the value of a strengthened and more liberal world trading order.

I encourage Hong Kong to take a more active role in pushing the Doha negotiations to a successful conclusion, particularly in the services negotiations, a sector in which Hong Kong is a world leader.

Australia complements our work in the Doha process by seeking to build support for open trade through APEC and the East Asia Summit.

Bilaterally, we pursue comprehensive and high-quality Free Trade Agreements, where such FTAs support multilateral outcomes. One of these prospective FTAs is with China. The Government appreciates the effort you put into identifying barriers to market access on the mainland.

FTA progress has been slow since negotiations began in May 2005. But recently, there have been some positive developments. At their meeting last month, Prime Minister Rudd and Premier Wen Jiabao agreed on the need to unfreeze the FTA negotiations. The Minister for Trade, Simon Crean, subsequently met with his counterpart, Minister for Commerce Chen Deming, to decide on a work program that will intensify the negotiations. The next round begins next month.

Our goal remains a high-quality, comprehensive FTA that delivers real benefits to Australia.

Australia and China

The Prime Minister’s recent visit to China was successful on a number of levels. It laid the basis for a more diverse bilateral economic and trade relationship. Australia and China have a common interest in deepening commercial engagement across the board, from minerals and petroleum resources to technology exchange to financial services. The Prime Minister was able to achieve significant progress in opening up discussions on greater access to the Chinese services sector.

More broadly, the visit showed that there was a firm foundation for Australia’s overall relationship with China to be expanded. The way is now clear for closer discussions and cooperation on critical subjects like climate change and energy security.

We are also engaged in a dialogue on security challenges facing this region. Early this year I held the first Australia – China Security Dialogue with my Chinese counterpart Foreign Minister Yang.

One area in which we have spoken frankly is human rights. The Prime Minister made our position known, in public and in private.

Our relationship with China is fast growing and broad based. We have a strong friendship based on a long history of people to people links. The Government is committed to constructive and friendly relations with China, building on mutual respect and our many shared interests while managing our differences.

Australians in the world

The Australian Government took office determined to ensure that Australia did more to make its voice heard in regional and global affairs. We are in the world’s top 15 if you look at the size of our economy. On income per capita, we are among the top 20 countries. We are a significant and considerable nation and we should make a difference.

We are determined that our foreign policy should be imbued with the values for which we as a country stand. These include a respect for human rights, and for the welfare of others not as well off as we are.

One of our real assets is the size and talent of our expatriate community, which numbers about 1 million. This talent is abundantly present in Hong Kong. Australian expatriates make contributions in many fields, ranging from commerce, to the arts, to science. It’s heartening, for example, that members of CPA Australia have made such a useful contribution in transferring skills here in Hong Kong.

Conclusion

Ladies and gentlemen, Hong Kong embodies the spirit of economic liberalism that underpins the global trading system from which we’ve all gained so much – as countries and as businesses.

I’m sure that our excellent official relationship, built on healthy economic and social ties, will continue to flourish. And I know that your Chamber and your members will continue to play a vital role in this.

Thank you.