Australian Commonwealth Coat of Arms

Australia and Latin America: Charting the Course Ahead

Paper presented to the Council on Australia Latin America Relations by Stephen Smith MP, Minister for Foreign Affairs

Perth

8 April 2010

I am pleased to have the opportunity to set out the steps the Government has made to enhance Australia's economic, political and social relations with Latin America.

In August 2009, in a speech to the United Nations Economic Commission for Latin America and the Caribbean in Santiago, I spoke about Australia's desire to broaden, deepen and strengthen our relationship with Latin America and the Caribbean.

I observed that while our two continents were separated by the Pacific, there was much overlap in our interests and likemindedness in our approaches to critical international issues.

I also said that it was clear that Australia's relationship with the region was modest when compared with the degree of our shared interests and the potential that offered.

The ongoing strength of our people to people links

Our commercial, investment and trading links have long been the strongest aspects of our relationship with the countries of Latin America.

Australian companies have invested heavily in Latin America, largely reflecting our shared interests in minerals and petroleum resources.

Australia-based mining companies BHP Billiton and Rio Tinto hold 57.5 per cent and 30 per cent stakes respectively in the world's largest copper mine, Escondida, in Chile's Atacama Desert.

BHP Billiton's development of new projects such as the US$870 million Escondida Sulphide Leach project and the US$990 million Spence copper mine are well underway.

Delivery of nickel concentrate has begun from Mirabella Nickel's $600 million Santa Rita mine in Bahia, Brazil.

Having commenced operations in Chile, Brazil and Mexico, many Australian companies are now pursuing major opportunities and investments in other Latin America countries, particularly Peru and Colombia.

Our trade and investment relationship has, however, broadened beyond minerals and petroleum resources.

Major Australian companies including Orica, Pacific Hydro, Nufarm, Macquarie Bank and QBE continue to operate throughout Latin America.

In Western Australia, Perth-based Orbital recently announced it will supply Brazilian company Sygma Motors with electronic systems to convert diesel engines to ethanol, targeting the massive Brazilian sugar cane industry.

Qantas' decision to add an additional three services per week non-stop from Sydney to Buenos Aires this year is a clear indication of growing momentum.

This will bring to 12 the total number of direct flights between Australia and Latin America every week.

Australia's two-way merchandise trade with Latin America has also continued to grow consistently over the past decade, reaching $5.7 billion in 2009.

Even taking into account the impact of the Global Financial Crisis, this represents growth of more than 12 per cent annually over the past ten years.

The Australia-Chile Free Trade Agreement, which came into force last year, is a testament to the value Australia places on deepening the commercial relationship with Chile and the region.

Education has also been an area of significant growth and potential in our relationship.

Thousands of students, particularly from Brazil, Chile, Colombia and Mexico, travel to Australia each year to access our world class programs, including those that focus on English language skills.

Enrolments in Australian educational institutions from Latin American countries totalled more than 33,000 in 2009.

The number of Latin American student enrolments has grown fourfold since 2004, which represents annual growth of more than 34 per cent.

This makes Latin America one of the fastest growing sources of foreign students for Australia.

A region of growing influence

Economically, politically and strategically, Australia cannot ignore Latin America and the Caribbean.

The region is home to around 550 million people. It has the world's largest reserves of arable land and is rich in minerals and petroleum resources.

In 2008, the IMF ranked Brazil as the world's 10th largest economy and it is predicted that by 2050 it is likely to be the fourth largest.

Mexico is the world's 12th largest economy. Close ties with the United States through the North America Free Trade Agreement (NAFTA) and the estimated 26 million Mexican nationals now living in the US have seen Mexico have an increasing impact on the politics, economy and culture of the United States.

Along with Europe and North America, the Latin American region can lay claim to forming the world's third great group of democracies.

There has been a recent shift in the region's confidence, its level of engagement and influence on the major issues facing the international community.

In multilateral fora, we are like-minded with many Latin American countries on issues such as the environment, trade liberalisation, including agricultural trade reform, disarmament and nuclear nonproliferation, and human rights.

It is also clear that while the region has traditionally looked to the North, to the United States and Europe, it is now looking to the East and to the West, to Asia and the Pacific, and to Australia.

We both have a stake in the Asia-Pacific century and we both share a strong record of involvement in, and commitment to, regionalism and multilateralism.

Like Australia, demand for Latin American commodities from China and Asia has helped to fuel economic growth.

The Asia Pacific Economic Cooperation forum (APEC) is leading the way on Pacific engagement and initiatives such as negotiation of the Trans Pacific Partnership Free Trade Agreement and the Forum for East Asia Latin America Cooperation Forum (FEALAC) continue to solidify these links.

In coming years, the region will reach a major milestone with Rio de Janeiro's hosting of both the 2014 World Cup and the 2016 Olympics.

I expect thousands of Australians will take the opportunities presented by the World Cup and the Olympics to travel to Latin America where they will see for themselves all that the region has to offer.

Deepening links

The people-to-people links that I have referred to earlier have gotten well ahead of the government-to-government contact.

When that occurs, it is incumbent on governments to catch up.

This is why the Australian Government has been looking with fresh eyes and fresh enthusiasm at Latin America and the Caribbean, looking at ways to enhance and deepen our engagement.

This desire for deeper engagement is reflected by a number of recent Australian initiatives to work more closely with countries of the region.

We have increased the tempo of high-level exchanges.

I have travelled to the region three times in the last two years — to Mexico and Peru in November 2008, Brazil and Chile in August 2009 and to Cuba and the Caribbean, Trinidad and Tobago, in November 2009.

Mr Crean also visited Peru in November 2008 for APEC and will this week depart for Argentina, Brazil, Chile, Mexico and Uruguay, giving a further boost to Australia's bilateral and multilateral trade and investment interests.

In the last two years, we have seen successful visits to Australia by the Foreign Ministers of Chile and Brazil and both the Foreign and Trade Ministers of Colombia, as well as a range of senior officials.

We have strengthened our presence on the ground.

Our presence in a number of our diplomatic missions in the region has been expanded and we will appoint new Honorary Consuls in Panama and Paraguay, as well as six more in the Caribbean.

We have stepped up our engagement with key regional fora.

In September 2009 at the United Nations General Assembly in New York, I was the first Australian Foreign Minister to meet with Foreign Ministers representing the Rio Group of countries from Latin America and the Caribbean.

The 23 members of the Rio Group include all countries in Central and South America, as well as the Caribbean island states of Cuba, Haiti and the Dominican Republic.

Our discussions addressed the global financial crisis and climate change, two areas in which Australia and the countries of the Rio Group share strong interests.

In November 2009, Australia signed a Memorandum of Understanding with the 15 member countries of the Caribbean community (CARICOM) in Port of Spain, Trinidad and Tobago.

This agreement marked the beginning of a new phase in Australia's relations with the countries of the Caribbean.

The new partnership provides a framework for cooperation on climate change adaptation, renewable energy, disaster risk reduction, natural disaster management, food security and agriculture. It came into play recently with Australia's response to the Haiti earthquake disaster.

We have developed meaningful bilateral agreements in areas where our interests align.

In 2009, we concluded Memoranda of Understanding (MOU) on Political Cooperation with Mexico, Chile and Cuba, and during the recent visit of Foreign Minister Bermudez, we agreed to pursue a further MOU with Colombia.

These agreements create opportunities for officials to discuss the broad range of bilateral and global issues confronting each nation.

We have also developed agreements on agriculture with Chile, mining cooperation and education with Mexico, rail infrastructure with Argentina and Air Services Agreements with Brazil and Mexico.

To facilitate trade and investment, we have concluded a Double Taxation Agreement with Chile, a Trade and Investment MOU with Colombia and Tax and Information Exchange Agreements with six Caribbean countries. We have also agreed to convene a Joint Trade and Investment Commission with Mexico.

With Brazil we are working on a Plan of Action for an Enhanced Partnership which will strengthen Australia's links with Brazil across a broad range of areas, including energy, science and technology, sport and culture.

We have developed a new approach to development assistance in the region, focusing on trilateral cooperation.

On Monday this week, I announced Australia would provide a further $9 million in response to the terrible disaster in Haiti. This will include a project working with Brazil to help revive Haiti's agriculture sector and, under our new MOU, assistance to CARICOM to help improve its ability to respond to disasters in the region.

We are also looking at opportunities for trilateral development cooperation with Chile, Mexico, Colombia and Argentina.

We have also developed a new package of scholarships which will be available for Latin America.

We see the growth in the exchanges between our young people, particularly young leaders, as driving the relationship long into the future.

These scholarships will play an important role in this process.

In the next four years, Australia will provide up to 200 long-term and short-term Awards.

The scholarships, which will be delivered under the Australia Awards initiative announced by the Prime Minister in November 2009, will offer new opportunities for students from Latin America to come to Australia to undertake study, research and professional development and for Australians to do the same in the region.

Multilateral cooperation

We have also seized opportunities to work closely with Latin American countries in global fora.

As part of the G20, Argentina, Brazil and Mexico sit with Australia in a group that has driven the international response to the global economic crisis.

We welcome the G20's emergence as the premier forum for international economic cooperation and value our membership of the G20.

Australia looks forward to continuing to work closely with G20 members Argentina, Brazil and Mexico, and consulting with other countries such as Chile, in taking the G20's agenda forward.

We continue to work closely with key Latin American leaders towards an ambitious post-2012 international climate change outcome that is fair, effective and efficient.

We share with Latin American countries a commitment to non-proliferation and disarmament.

The need remains for real progress towards the Nuclear Non-proliferation Treaty's objective of a world free of nuclear weapons.

That's why Australia established last year, with Japan, an International Commission on Nuclear Non-Proliferation and Disarmament, in which we collaborate closely with the countries of Latin America.

By setting up the Commission we aim to reinvigorate the global effort against the proliferation of nuclear weapons and seek a recommitment to the ultimate goal of a nuclear weapons-free world.

The Commission appreciated the input of Commissioner Ernesto Zedillo, former President of Mexico and that of Brazilian Foreign Minister Celso Amorim, during the initial formation of the Commission.

We value our co-operation with the countries of Latin America in the United Nations.

We continue to work with Costa Rica, Guatemala, Mexico, Panama and Chile as part of the Group of Friends of the Responsibility to Protect.

In New York, in January 2009 and 2010, our Australian mission to the UN co-hosted with Uruguay a very successful peacekeeping workshop on the protection of civilians in UN peacekeeping operations.

We also share, of course, a long running commitment to trade liberalisation.

Mr Crean's upcoming visit to the region will include a Cairns Group meeting in Punta del Este, Uruguay.

Nine of the 19 Cairns Group of agricultural exporters are from Latin America: Argentina, Brazil, Chile, Colombia, Costa Rica, Guatemala, Paraguay, Peru and Uruguay.

In the margins of the Cairns Group meeting in Punta del Este, trade officials will also resume the CER-Mercosur dialogue that last met in 2004.

Conclusion

Strengthening our relationships with the region and the countries of Latin America and the Caribbean remains a high priority for the Australian Government.

The Council on Australia Latin America Relations (COALAR) and the Australia Latin America Business Council (ALABC), led by Chairmen Mr Bernard Wheelahan and Mr Jose Blanco, have played a central role influencing government and the broader community in Australia about the importance of Latin America for many years — since 2001 for COALAR and 1989 for ALABC.

These efforts have made a major contribution to policy development and to broader awareness of Latin America in Australia, and Australia in Latin America.

We know that we have a great many shared interests with Latin America and the Caribbean.

Some of these have been pursued on the ground by business and industry, who have grasped tremendous opportunities.

Governments, including the Australian Government, have now begun to catch up with that.

There is now an array of new or growing areas where our interests align. These provide a much broader, stronger foundation on which we can build our relationships into the future.

Australia has a new commitment to working much more closely with Latin America and the Caribbean, and we are determined to make that happen.