PRIME MINISTER
FOR MEDIA MONDAY, MAY 24 1982
SPEECH BY THE PRIME MINISTER AT THE
ECONOMIC ORGANISATIONS LUNCHEON, SEOUL
I would like to express my appreciation for your welcome.
I am grateful'for the opportunity to speak to the most
important business and economic leaders of the Republic
of Korea.
This is my first visit to your remarkable country and I
am most impressed with what I have seen. My ministerial
colleagues who regularly visit you here speak highly of
your economic achievements, not to mention your warm
hospitality. Before raising some of the issues in the Australia-Korea
trading relationship which I believe are of interest to
you as businessmen dealing with Australia, I thought I
would share with you some impressions of how leaders in
Washington, Ottawa and Tokyo view the prospects for the
world economy.
As you know, I visited these capitals just prior to arriving
in Korea and had the opportunity to talk in all three places
with government leaders, and in Washington, New Yorl and
Tokyo with industry leaders as well. Those visits have
taken place as the major Western powers are preparing
for the summit meetings to be held in Versailles and
Bonn next month. While Australia like Korea is
not represented directly at those summits, our interests
are involved, and we have views and concerns we wished
to put.
There was complete agreement in all three countries with
the view that I put that there is a genuine economic crisis
in Europe and North America which affects the entire free
world, and that the economic summit at Versailles must produce
results, must result in actions, not just words.
The nature of the economic crisis is well known. Last year,
for the first time in over 20 years, the value of world
trade fell; in the latest recorded 3 month period, industrial
production fell in 6 of the 7 n~ ajor economies, and by the
end of 1982 it is clear that unemployment in the major
industrialised nations will exceed 30 million people. ./ 2
2
Despite substantial success in some countries including
Korea -in getting inflation rates down, interest rates remain
high restraining the new investment that is needed to help
get durable growth going and there are increasing pressures.
in all countries to build up protective barriers. Nothing
I heard in any of the countries I visited gave me great
confidence that significant and sustainable recovery is
imminent in the all important United States economy.. And
even on the most optimistic view, any recovery which might
eventuate is unlikely to be sufficiently strong to lift
world trade and growth enough to significantly alleviate
the massive unemployment problems that now exist.
In a situation such as this, nations can do one of two
things -work together or fall apart. The dangers of
falling apart are all too-real, and it was for this reason Itook
to President Reagan, Prime Minister Trudeau and Prime Minister
Suzuki a concrete proposal for breaking-out of the current
economic recession. The proposal, which has the support of
the Australian Government, focusses on global protection
which affects growth, inflation and government expenditure.
What I have sugcrested is that the participants at the
Versailles Summit agree:
1) that there be a standstill on increases in protection
and on the introduction of new protectionist measures,
particularly on non-tariff forms;
2) that there be no new or increased export incentives
and subsidies, and that there be an international
commitment to'the abolition of existing export
incentives and subsidies over a period of fivey ears; and
3) that there be a commitment to significant and progressively
implemented reductions in all forms of protection, in
accordance with a set formula to be determined through
the mechanisms of the general agreement on tariffs and
trade.
Details could then be worked out at the GATT Ministerial*
meeting in November.
All three leaders were in agreement with the general principles
that underlie this proposal. All agreed that action was needed,
and none to my knowledge have come up with any other concrete
proposals for action.
I have put forward this proposal because I genuinely believe
that something must be done, and while action of this sort
would be difficult for any industrial country acting alone
it Could be done if all major countries agreed to work
at it together. The Australian Government has indicated that
it would implement these proposals if the seven major countries
agreed to do so. I / 3
-3
In recent days, the proposal has received significant support
from U. S. Special Trade Representative Brock, and from
Se cre tary-General Van Lennep of the OECD, and World Bank
President Clausen has made a call for liberal trading
policies and resistance to trade protectionism.
The aim of getting world trade moving again is one which
must be shared by all nations, and certainly Korea and
Australia have a profound interest in doing so, for we
are both great trading nations.
Turning now to our bilateral economic relationship,
the value of two-way trade between Australia and Korea
has grown significantly over the years from US'$ 17 million
in 1971 to over US$ 1.2 billion in 1981. Clearly there is
an underlying strength to our trading relationship which is
not easily shaken by adverse movements in the business cycle.
Australia is a major supplier to Korea of industrial raw
materials, energy resources and agricultural products.
I understand that Korea is now considering a move away from
its tradition of sourcing some of its food grain purchases
from a single supplier. As a major producer of food grains
at internationally competitive prices Australia welcomes
this development, for Australia has long indicated its
interest in supplying food grains to Korea.
I also want to record the value we place in Australia on
the annual talks between our Trade Ministers and between
government officials on resources and the processing of
raw materials. These talks facilitate trade, address
problems that inevitably arise in a relationship as large
and as complex as ours, and explore new avenues for co-operation
such as technical co-operation, for our mutual benefit,
covering such diverse fields as coal utilisation, exploration,
processing of minerals and mine safety.
A new dimension of the economic relationship between Australia
and Korea relates to the possibilities for construction in
Australia, and the supply of industrial products and
components needed to develop new resource projects coming
on stream in Australia. In this regard, the Australian
Government has noted the initiatives currently under
negotiation in Western Australia dealing with the cons truction
of gas pipeline, an aluminium smelter and a coal-fired power
station. But in the final analysis it is you, the businessman,
who must survey the market, make the necessary contacts with
Australian businessmen and take the eventual decisions to
trade or invest. It is this free contact between businessmen
which is the very basis of our market economy systems.
I am therefore glad that the Korea/ Australia and the
Australia/ Korea Businessmen's Co-operation Committees
are both active again. / 4
-4
I understand it is your turn to visit Australia this year,
and I hope you will profit from your discussions with your
Australian counterparts and benefit from the first-hand
experience of Australia. I know that you are concerned
and have to be concerned about security of supply of your
raw materials. There are two things to remember in relation
to this issue. One is thatthe negotiati * ng process to resolve
industrial problems in Australia is not easy, because we
have a free and open social and economic system. The second
and fundamental point is that Australia enjoys an underlying
long-term stability as a supplier the equal of anywhere in
the world, and superior to many.
I am also aware of concern that is sometimes expressed about
an imbalance in our trade with Korea, which as you all know
is in Australia's favour. The reasons for this imbalance
are clear. Australia is a small market of 15 million people.
It does not and cannot offer the same sales opportunties
for your finished goods as the larger markets of Japan,
North America and Western Europe. However Australia is
a country which has abundant resources which you need.
You buy them from us in large quantities because the price
and quality are right and the fundamental long-term supply
is stable. Korea will go on requiring these resources.
Indeed, your impressive programme of energy diversification
foreshadows substantially increased imports of steaming
coal and uranium. And ultimately a good proportion of what
you import from Australia is re-exported in processed form.
our coking coal and iron ore are turned into ships and
machinery, our sugar refined and exported, our wool spun
into textiles for markets outside Korea.
This underscores the need to look at trading relationships
not in a narrow bilateral sense but on a global scale,
balancing surpluses with one country against deficits with
another. The prime objective of all of us should not be
to cut back trade to create artificial bilateral equalities,
but to promote the overall growth of world trade as as whole.
Let me also say that while Australia is a small market, it is
a profitable one for those willing to explore its potential1
and it offers good opportunities for exporters of a large
range of products.
Methods of doing business vary widely in Australia depending
on the items traded but some basic principles can be stated.
The Australian market is very competitive and substantial
effort and regular visits are essential to establish most
imported products on the market and to maintain sales.
It is important for exporters to keep in regular contact
with Australian importers and to study changing market
requirements and consumer preferences, and for some products
effective after-sales service and a ready supply of replacement
parts are most important.
The establishment of representative offices in Australia,
staffed by senior people, is an important way of promoting
Korean exports to Australia. There is nothing like first-hand
knowledge, especially of the vast range of resources development
projects that are underway or being planned over the next
decade in Australia. Another important opportunity for
Korean enterprise is to involve itself in Australia's
growth through equity investment in these resource development
projects. The development of Australia's resources is a
mammoth task and the total finance required is not available
from within Australia. The Australian Government has therefore
developed clear anid non-discriminatory guidelines for foreign
investors interested in equity participation in resource
projects. Korean enterprises interested in this investment
will be warmly welcomed.
The Australian Government cannot direct Australian companies
to accept such overseas participation, but I can assure you
that we are fully prepared to encourage their involvement
with our major-resources customers. It makes enormous good
sense for us both.
The year 1981 witnessed a milestone in Korean equity investment
in Australia when two resources joint ventures were finaliscd.
There was a 20 percent equity participation by Pohang Iron
and Steel Co. in the Mt. Thorley coal mine, and a 5 percent
participation by Hyundai Corporation and Daesung Consolidated
Coal Mine Co. in the Drayton coal mine.
In addition, Cheil Wool Texctile and Samsung companies
successfully initiated a joint venture to establish a
wool processing plant not far from our national capital,
Canberra. I hope these investments will be the forerunner of others
involving Korean enterprises. The continued development of
economic relationships between Australia and Korea is
imoortant to the well-being and prospects of both our
peoples, just as the development of trade world-wide is
vital to the prospects of people everywhere.
I thank you again for the opportunity to speak to you
today about issues that are of central concern to both
our countries, for our common interests are substantial indeed.