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J~ ASTAU~& EMBARGO: AGAINST DELIVERY
PRIME MINISTER I np R A
FOR MEDIA WEDNESDAY', 7 MAY, 1 a' LD'
ADDRESS TO PACIFIC BASIN ECONOMIC COUNCIL
It was weith great pleasure that I accepted your invitation to
address this annual meeting of the Pacific Basin Economic
Council, the theme of which is to be " The Pacific * Basin in
the 80s". It is a most timely theme.
As you will be well aware, the pastyear has witnessed a significant'
growth of interest among individuals-, institutions and
gov. ernments in the prospects of, and the need for, enhanced
co-operation among the countries of-the Pacific Basin.-region.
Someone, indeed, has referred to the Pacific Basin as an
idea whose time has come.
You, as members of an organisation which came into existence
as early as the mid-1960s to foster co-operation and
understanding among countries of the region, may be inclined
to say, 1 " and about time too".
If you are, you will have earned the right to do so, for
the Pacific Basin Economic Council has been one of the
trail-blazers in advancing the sense of community in the
wider region.
In any case, in the context of this very interest it is a
particular honour for Australia to have the opportunity
to act as host to representatives of other nations of the
Pacific region to discuss these matters: both at this
meeting of the Pacific Basin Economic Council and at
the non-governmental regional seminar to be held at the
Australian National University later this year.
At the beginning of this century, the American Secretary of
State John Hay wrote: " The Mediterranean is the ocean of the
past, the Atlantic is the ocean of the present, and the Pacific
is the ocean of the future". What is happening now is that we
are beginning to enter that future.
That we are doing so, is due to the cumulative effect of
three revolutionary processes which have impacted on the
region since the Second World War. / 2
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First, there was the political revolution which brought
to an end the Western colonial systems which had
previou~ ly been imposed like a grid on the region.
That did not occur without great turmoil and the
independent states which emerged were initially weak
and insecure. But in a remarkably short space of time
they have overcome formidable difficulties and
consolidated themselves. That political revolution was
a necessary precondition for the evolution of any sense
of community. For as long as colonial rule remained, the
attention of each colony was necessarily-directed out of
the region towards its metropolitan centre, where power
ultimately resided, rather than towards its neighbours.
While the region freed itself of outside political control,
the economic system associated with colonialism initially
remained in place. Most of the new countries remained the
providers of raw aterial and foodstuffs for the developed
countries and the markets for their manufactured goods.
But in the last two decades a second revolution an
economic one has taken place which has substantially changed
this. The're has been a breath-taking transformation from colonial
economic-systems to export-oriented manufacturing
economies, based in the first place on labour intensive
_ light manufactures but increasingly on capital and skill
intensive maufactures.
This process is not, of course, anything like completed,
throughout the region. We should keep a proper sense of
proportion and remember the very considerable areas of
poverty and economic backwardness which still remain.
Yet, when one remembers what the condition of the region was
as little as 25 years ago; when one remembers how
pessimistically its prospects were assessed; when one
remembers the cliches about the ' stagnation"' and
" immobility" and lack of entrepreneurial-skills of Asian
people who lacked the " Protestant Ethic" when one remembers
these things, what stands out is the magnitude of the
qualitative and quantitative changes-which occurred.
Economically, we are living in a different region. The third
revolution which has had a major impact on the region has
been a technological revolution a revolution involving among
many other things communication satellites, jet transport,
computerisation, tele-printers, containerisation and
super-tankers.
For two reasons, this revolution has been particularly
important for the Asia-Pacific region. First, because of its
impact on transport and communications. The Pacific ocean
covers a huge area roughly one third of the world's
surface and distance has always posed formidable problems
/ 3
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for those living in it and on it's rim. Technology
has now solved many of these problems. Secondly, the
fact that this technological revolution coincided with
the industrialisation of the region meant that countries
in the region were able to enjoy the advantage of the
latecomer and exploit it very successfully. The
visual evidence of the dynamic which has been generated
by the combined impact of these three revolutions is
evident throughout the Asia-Pacific region.
In statistical terms, we are talking about economies which
have been able to sustain G. N. P. growth rates of 6.7 and in
some cases 10 per cent, as well as export growth rates
of several times that order.
That countries in the region-were able to achieve these
growth rates during the 1970s was striking: that they
were able to maintain them in the 1970s when-theinternational
economywas-characterised by recession is
remarkable; and that they were able to do so, in many cases,
in the absence of any extensive national resource endowments
is truly extraordinary, and testifies to the crucial
importance of sound policies-and strong motivation in
achieving economic progress.
Economic growth, trade and structural change have
proceeded more rapidlyin North7East and South-East Asia
than in other areas of the-world economy during the last
decade. The growth of Jaopan as a-ma-jar industrial power and the
expanding market it has-. provided for other regional countries,
as well as the industrial progress achieved by the " newly
industrialising countries" ( the Republic of Korea, Taiwan,
Hong Kong and Singapore) and, to a lesser extent, other
ASEAN member countries, has contributed to spectacular
growth and trade expansion in the region.
It is worth emphasising in this context that, while resource
endowments within the region are unevenly shared and while as
I have said the lack of a resource base has not inhibited
remarkable growth in several countries the region as a whole
is nevertheless rich in resources.
It contains five of the world's major food exporters
Australia, Canada, New Zealand, Thailand and the United States.
These same countries plus Indonesia, Malaysia and the
Phillipines produce between them most industrial raw
materials.
* As apercentage of the world market economies' total
production, the region produces 49% of copper, 54% of lead,
of nickel, 69% of tin and 60% of iron ore, with
significant percentages of many other minerals.
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Moreover, the Chinese modernisation program offers the
possibility of new opportunities emerging for other
regional countries in that market in the future.
Such developments have led to forecasts that there may be
a progressive tilt in the world economic centre of gravity
away from the Atlantic/ Europe region towards Asia and the
Pacific in future.
Substance is lent to this by the fact that in 1978, United
States trade with the West Pacific exceeded total trade
with West and East Europe for the first time in its
history. These extraordinary growth achievements have been paralleled
-by incrcacing-economic interdependence.
The-value -of total tra-among the market economies of
0--the-West and Noroth-East. Pacific increased from $ US29 billion
in 1965 to $ US173 billion in 1977 an astonishing growth,
even allowing for inflation.
For-all r-egional countries, except the United States and
Japan, more than half their trade is with other countries
within the region and for most the proportion is much
higher.
-Near-ly half of Japan's trade is intra-regional.
In the case of the United States, as I have noted already,
with the Pacific is assuming an increasing
imnnrt-ance.
A similar pattern of interdependence has emerged in the
investment field and countries of the Pacific, with the
exception of the United States, are doing most of their
investment within the region.
And even with the United States, investment in the Pacific
region, while not great in absolute terms, is nonetheless
substantial. In addition to this economic and investment interdependence
there are the effects of the declaration of economic zones
by many coastal states in the Pacific. These declarations
have accompanying obligations, with certain conditions, to share
the resources within such zones.
For our own part, a substantial number of Australia's more
important bilateral relationships are with countries of
the Pacific region. These have grown considerably over
the last fifteen years.
Parallel to these developments, Australia has sought to develop
closer political relationships with the countries of the
Pacific region both bilaterally and through multilateral
channels such as ESCAP, the Asian Development Bank and
the South Pacific Forum.
Our businessmen, of course, have also played an active
role within the Pacific Basic Economic Council since its
inception. The upshot of these developments is very
significant.
What they indicate, in the simplest terms, is that for the
countries of the West and North East Pacific, including
Australia, their economic relationships with each other
are assuming a very great importance and that economic
importance and that economic interdependence within the
region is now extensive.
A principal rationale advanced by proponents of a Pacific
community is that this state of affairs is not
adequately reflected in the existence of regional institutions
and arrangements at present and that it should-. be..
On_ the-one-hand,--it. is -maintained that market. forces. andtraditional
bilateral arrangements are no longer. adequate,.
given the complexity of the relationships and the need for
a regional. focus in dealing with issues emerging from
growing regional interdependence.
On the other hand, i~ t is pointed out that existing
international economic institutions are to some extent
Atlantic-centred and were originally created primarily
to cope with the needs of the economies of that regionnot
of the Pacific Basin.
-While they have subsequently been adapted to meet changes
. athe. inter-national -sys-tem, some would argue. that. theystill
reflect their origins to some-extent.
In terms of its progress, it is claimed that the Pacific
reg-ion-is institutionally under-developed. What institutions
there are, are not, in terms of history, membership,
resources or.. character seen as adequate for handling theopportunities
and problems created by the quite dramatic
changes which are occurring.
Just as the Atlantic countries have created a range of
institutions designed to serve their interests, it is argued,
so the dynamic and interdependent countries of the Pacific
must now make the same effort.
Not only is-this required, but, as a consequence of the
revolution in communication and transport, it is now feasible
in a way in which it was not, even a decade or two ago.
The central purposesenvisaged for a Pacific community
arrangement flow from this rationale. They are: to foster
closer links and greater co-operation between states which
have an increasingly large volume of economic transactions
with each other; to assist the effective management of
increasing economic interdependence, bearing, in mind that / 6
6
such interdependence brings with it the possibility of
increased friction as well as new opportunities; and
to foster the continuing economic dynamism of the region
by encouraging greater rationalisation within it, based
on the principle of comparative advantage.
It has also been urged that the aims should extend beyond
that into co-operation in the social and cultural field,
involving greater exchanges of people, research and
related matters.
This is seen as an important means of promoting greater
mutual understanding in a region which, over the centuries,
has been characterised by wide differences from one country
to another.
But it should be stressed that the basic motivation supporting
the--onceprt is-clearly quie diff erent-from that which led
to earl-i-er-efforts at-regional--o--erperation, when political
and strategic security considerations dominated.
As to the institutional form such a new grouping might
take, many different ideas have been floated, not all of them
mutually exclusive.
Dr. Peter Drysdale of the Australian National University
and Professor Hugh Patrick of Yale have proposed an organisation
for Pacific-Trade and DevelopmCht ( OPTAD) in connection with
recent United States Congressional hearings.
it-i-o-spo~ i-iiity -xni~ gh 1rurt of scaled down
OECD to facilitate consultation and to collect, analyse and
disseminate economic information.
Other ideas include a loose arrangement of over-lapping
functional groups, perhaps with variable membership, and a
-Pacific pr of Ieads-of-Government-r-lin-sters along the
model of the Commonwealth.
There is also the difficulty of determining membership. The
Pacific region encompasses a large number of states.
They include super powers and mini-states: the most developed
countries in the world and some of the least developed: countries
committed to the market economy and countries dedicated to
comprehensive central planning: countries with widely differing
ideologies and cultures.
Not all the countries of the region hold entirely friendly
feelings for each other. There are special cases like Taiwan,
and perhaps Hong Kong, to consider.
And again, although most of the interest in the concept so
far has come from the West and North East Pacific, there are
the ten Latin American countries which border on the Pacific
-to be tak-n into account, althoug-so far they-have had a
limited interaction with countries on this side of the ocean. / 7
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There are, therefore, formidable problems about prospective
membership about how literally the phrase " Pacific Basin"
should be taken and how widely any arrangement should
cast its net.
And there are other difficulties: of ensuring that the
interests and development of existing sub-regional organisations
such as ASEAN and the South Pacific Forum are not undermined
and that any wider arrangement will be mutually advantageous
and will not put the progress of those valuable institutions
at risk; of ensuring that any steps taken would not result
in an inward-turning community which would weaken the
commitment of countries within the region, including Australia,
to a liberal international economic system; of accommodating
the economic super powers without creating something which
will simply be their instrument and of ensuring that any
new regional grouping does not just become another " rich
man's club"-; and of avoiding the creation of a large,
expensive bureaucracy-which might be intrusive and
meddlesome, if only to justify its existence.
Taken together these difficulties are formidable. But
the existence of difficulties is not in itself a
justification for resignation or inaction otherwise we
would still be decorating the walls of our caves.
Any large and ima ginative enterprise will give rise to
the kinds of difficulties I have referred to and they must
always be balanced against the advantages which would flow
from its implementation.
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The dogmatists on both sides of the argument will claim to know
in advance what the outcome of such a balancing will be: for the
rest of us it is something to be examined and thought about.
That is why Australia, in its intial response to the proposal,
has put its emphasis firmly on the need for a thorough, extended
examination of the concept.
We are positive about tLhe need for such an examination and at this
stage cautious bat hopeful about its outcome.
This attitude is justified by at least four considerations.
First the complexity of the issues raised by the concept and the
lack of precision and detail which so far characterises it warrant
caution. Second, the fact that nearly all our major foreign
policy interests and a preponderance of our important trading
interests fall within the Pacific region means that much is at
stake and that we must proceed with caution. Third, and despite
this preponderance, Australia is a world trader and we must be
sure-that any arrangement which is proposed-will not restrictus
in this respect. And fourth, because we already enjoy fruitful*
bilateral dealings with other countries of the region and participate
in a numrberof regional institutions, we need to consider
carefully whether these existing arrangements are inadequate to
our current needs or incapable of adaptation, before entering
into new commitments.
In short, Australia, along-with every-e-& country involved,-
will have to determine whether the benefits for it would outweigh
the_ costs and obviously there would be costs.
But our approach to this task and to the concept itself
should be a positive and sympathetic one. It is not a matter of
simply sitting back sceptically and saying, ' convince but
of actively participating along with other countries of the region,
in the examination, testing and shaping of the concept.
We recognise also that a number of other countries, for varying
reasons, are cautious about the idea and that some have expressed
concern about the possible side-effects of a wider regional
arrangement. It is all the more important, therefore, that we proceed
carefully and seek to arrive at a broad regional consensus.
It was against this background that during Prime Minister Ohira' s
visit to Australia earlier this year, we agreed that a series of
non-governmental seminars held at academic or similar institutions
within the region, over a period of years, would offer an
important means of exploring the concept in depth.
As a step in this direction, Australia agreed to sponsor such a
seminar at the Australian National University, under the direction
of Sir John Crawford. Since then, we have been delighted by the
interest that has been shown in participating at this meeting.
In opting for a thorough examination of the concept of a Pacific
community, we should not delude ourselves that this process will
resolve all difficulties or remove all obstacles. You as.
businessmen, and I as a politician, know that in any worthwhile
enterprise an irreducible element of uncertainty will always
remain.
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There is no such thing as a risk-free initiative.
But it is as well to remember that in some situations the
most risky course is to do nothing.
Mr Chairman, I spoke earlier of three revolutions which had impacted
on the Asia-Pacific region in recent decades the political,
the economic and the technological.
For the Pacific community to become a reality rather than a
very partially realised aspiration-a fourth revolution would have
to take place: a psychological one.
We would have to think differently and feel differently.
If we are not to be overtaken by events if objective changes
are not to outrun subjective ones this process will have to
proceed. I am not suggesting that in itself this will be enough,
but it is a necessary condition for progress.
I believe that in an unsensational but sustained way, this Council,
along with other regional organisations, is making an important
contribution to this quiet revolution.