PRIME MINISTER
EMBARGOED UNTIL DELIVERY CHECK AGAINST DELIVERY
SPEECH BY THE PRIME MINISTER
PACRIM 1986
PERTH 16 NOVEMBER 1986
Premier Burke, Distinguished Guests, Ladies and Gentlemen.
I am delighted to be able to welcome you all here to Perth
for PacRim 1986. For those of you who have travelled from
overseas, I hope you'll enjoy your stay in Australia and I
trust that when you leave our shores you take with you fond
memories and warm friendships from your time here.
The timing of the conference will allow you to enjoy the
excitement of the America's Cup in the free time you have
available to you. I would like, therefore, to extend a
special w: elcome to our friends from the United States and
New Zealand. No doubt your yachting compatriots and
enthusiasts will receive an equally warm welcome when they
return to Australia in four years' time for the next
America's Cup challenge series.
By any standard this is a major international conference,
bringing together more than 400 delegates from around the
world. The theme of your symposium is indeed well chosen:
Finance, Trade and Investment in the Pacific Rim area. It
is a theme which encapsulates some of the major forces which
have shaped the world economy over the past decade or so
and which will continue to do so for the foreseeable future.
As I looked through the list of participants, I was struck
by the number and calibre of people from throughout the
Pacific Rim who have recognised the value of this meeting
and have backed up their judgement by travelling long
distances to participate. There is a further message about
the importance of this conference in the fact that several
delegates have travelled from beyond the Pacific region to
be with us.
It is fitting to recall at the outset a very significant
Australian whose work was crucial in developing the notion
of Pacific cooperation. I refer of course to the late
Sir John Crawford, who died in October 1984. For Australia
and the whole Asia/ Pacific area, Sir John Crawford was a
pioneer in thinking about the immense potential for the
growth of economic relationships in the Western Pacific.
It is particularly appropriate that we remember Sir Johnes
work because as we meet here, the Fifth Pacific Economic
Cooperation Conference is taking place in Vancouver.
Sir John was one of the architects of that conference and he
would have been delighted to know of the success both of
PECC and of this Pac Rim conference. I note in passing that
China will join the PECC conference as a full participant at
Vancouver. These conferences are a clear reflection both of the extent
to which the Pacific Rim has become the hub of global
economic activity and of the promise the area holds for the
rest of this decade and beyond.
if there is one single fact which summarises the reasons for
our being here it is this: two years ago, for the first
time, the value of trans-Pacific trade surpassed that of
trans-Atlantic trade.
That fact symbolises the enormous economic growth in the
region which you are here to discuss over the next few days.
The Pacific rim particularly its western half is truly
one of the great new engines of the world economy and is
playing an increasingly vital role in international affairs.
However that single fact and the rapidly growing trade
among the nations on the western rim also illustrates our
great and increasing inter-dependence. it is a reminder to
us that we must develop complementary skills and
specialisations, and that we must facilitate investment and
trade among the members of this vast region. We literally
cannot afford to fail.
And yet we are so varied in our economic structures and
levels of development! The Pacific Rim includes the world's
two major economic powers the United States and Japan. It
includes one of the world's most rapidly growing and
populous countries China. It includes an array of
developing countries of diverse size and resource
endowments. I do not intend to dwell in detail tonight on the
developments within the many nations and groupings of the
region. Yet I would be remiss if I opened our conference
without at least sketching some of the principal advances
and transformations.
In China, where history has always been played out on a
grand scale, the process of dramatic change is continuing
today. Since 1978, Australia, like other countries, has watched
with intense interest the bold program of modernisation on
which China has embarked.
it is necessarily a long-term vision, seen by Deng Xiaoping
and his colleagues as requiring a sustained effort through
the years ahead. The program has already been subject to
major revisions and may well be the subject of more.
Nevertheless we and others firmly believe that this latest
chapter in Chinese history can have profound implications
for China, Iror Australia, for the Asia-Pacific region and,
indeed, fox the world. We recognise its potential to rank
with the great beneficial landmark developments of our
times. In the ASEAN~ nations, we see one of the most successful
political and economic groupings in the world.
I am aware of course of dissatisfaction within ASEAN about
the limitattons on economic cooperation and trade within the
group.
But, if we compare today with 1967, when the Association was
formed, it i~ s impossible to gainsay the advances which have
been made b~ y its members. The rate of economic growth of
each ASEAN country in the past decade has easily outstripped
that of most industrialised countries, including
Australia'z. ASEAN's economic managers and entrepreneurs
have made a major contribution to the dynamism of the
Asia-Paci -ic region.
In South Korea, too, our region has seen a striking economic
success story. Its emergence from the devastation of the
Korean war @ is a rapidly industrialising growth economy has
had a signL. Zicant regional and global impact.
Nor should u-e overlook the economic success of Taiwan.
Indeed taken as a whole, East Asia's share of world GNP has
almost tr~ ipled over the last quarter century; its share of
world trade has doubled and it now accounts for almost
one-fifth oq? all international trade.
Finally, in Japan and the United States, the two most mature
economies og the Pacific Rim, we see fundamental changes
taking place.
Japan's annuaal trading surplus is now so large that it has
become the miajor net lender nation each year, and the United
States tho largest net borrower.
major struclural imbalances on this scale are worrying
enough. 3ut the fact that they involve two of the world's
largest economies and the world's reserve currency has added
to the urgency with which this issue mus be addressed.
The corrective realignment of the Japanese and American
currenciesi which has occurred over the past year or so is
creating new opportunities for trade and investment in the
Pacific Rimn area.
with the large appreciation of the yen, Japan is on the
threshold of a natural economic restructuring process. in
particular there is the potential for larger imports of
agricultural products, simply transformed manufactures, and
a range of services including overseas tourism. But, by the
same token, it is likely to lead to slower growth of imports
of raw materials, which will require exporters like
Australia to seek out new markets, including within the
region.
Australians have, over the last decades, been gradually
coming to a recognition of the importance to them of their
immediate region. Perhaps this recognition has been too
slow in coming. But without doubt the dynamism of the
region's economic growth, the productivity of its
workforces, the crucial and complex issues which dominate
the region's security, its growing technological
capabilities such issues have decisively forced
Australians to acknowledge that their welfare is irrevocably
enmeshed with that of the Pacific Rim.
This is a sobering thought, since it will force on us the
necessity of more productive work, serious competition, and
genuine inventiveness and resourcefulness to exploit the
opportunities presented by the newly affluent markets to our
north. For my part, my Government has sought to respond positively
to this new awareness. We cannot alone determine the pace
or pattern of our developing relationships with the region.
But we are aiming to fashion a range of policies calculated
to build a flexible and fruitful relationship*. We are
seeking to coordinate all our regional policies political,
security and trade so that we can speak with one voice to
the region and so we can build a durable and mutually
beneficial relationship with it.
But it is not enough simply to recognise our
inter-relationship. We must also be ready to respond to the
changes in the region.
And the future is not without its difficulties. Lying
before this region are structural changes which are at least
as profound as any which have taken place over the past
couple of decades.
most immediately, for the countries in the region that are
major commodity exporters including Australia the slump
in world prices has placed added strain on their economies
and brought into sharper focus the long-term decline in the
terms of trade of commodity exporters.
The volatility of commodity prices is a major source of
disruption to many economies. Long-term solutions can be
found only if all nations have equal access to the world's
markets, including for manufactured goods and if trading
decisions are made fairly on the basis of relative prices.
Therefore we must overcome the major obstacle formed by the
onset of protectionism, especially agricultural
protectioniom. Trade has been the engine of growth in this region. I noted
earlier the sharp growth in trans-Pacific trade. There has
also been enormous growth in trade among the Western Pacific
nations. This intra-regional trade has grown at just under
percent a year over the 13 years to 1984.
Yet sadly we now find ourselves in the midst of a global
conflict in international trade that is reducing our
collective opportunities to raise living standards through
international specialisation.
The international rules on fair trade are being manipulated
and broken to the detriment of all nations including,
ironically, those which have been active in stifling trade.
The dawning realisation of the futility of trade conflicts
has spurred the recent launch of the Uruguay Round of
multilateral Trade Negotiations. While those negotiations
no doubt will be protracted, they at least offer the
prospect oZ a reversal of protectionism of the
liberalisation once again of world trade.
Nations in the Pacific Rim area, I am pleased to say, have
been active in that process of liberalisation. The United
States took a leading role in the successful launch of a new
round of multilateral Trade Negotiations; the Cairns group
of 14 fair traders that successfully pushed for the
inclusion of agriculture on the MTN agenda was heavily
represented by PacRim countries; Japan has undertaken to
play its part in the freeing up of world trade; the
countries involved in the Regional Initiative on Trade that
I launched in Bangkok in November 1983 actively supported a
new MTN round; and China has indicated its interest in
joining the GATT.
The task now is to convert into action the principles and
undertakings articulated in the text of the Ministerial
statement launching the new MTN round. None of us can
afford to let pass this opportunity for permanent reform.
with this ferment of change and restructuring, we cannot be
sure of the magnitude of the new trading opportunities that
will aris~ e. But we can be sure that the countries benefiting
most froma these opportunities will be those that are
flexible and adaptable that have economic, political and
social structures capable of responding readily to changing
circumstances.
The major economies of the region have certainly
demonstrated that capacity in the past. But as trade has
grown and International financial flows have become more
integrated it is also becoming clear just how costly is the
regulation, which in the past, frequently underpinned
structural change in this region.
Greater emphasis needs to be given in several areas to
deregulation, to more liberal investment regimes and to
reform of the financial system.
That has certainly been a major emphasis of economic policy
here in Australia.
My Government has taken a series of major policy initiatives
to place Australia in a position where it is capable of both
creating and quickly seizing upon new trading opportunities.
Protection has been cut, starting with the most protected of
our manufacturing industries. We have developed policies to
make our manufacturing industries more outward looking. We
have substantially upgraded incentives for research and
development and for the provision of venture capital. We
have reformed the taxation system to encourage incentive and
remove distortions. We have floated the Australian dollar.
And most fundamentally, we are converting a substantial
nominal depreciation of our currency into a real
depreciation by sustained wage moderation and a genuine
effort to improve productivity by reforming working
practices. That real depreciation has produced a level of
competitiveness of Australian industry not experienced for
the best part of two decades.
Lest there be any doubt, let me also make it plain to this
audience that we in Australia recognise the value of foreign
capital in promoting national economic development.
Australia insists that there be a fair sharing of the fruits
of investment as between the host and lending country, but
we have systematically removed any unnecessary impediments
to the free flow of investment capital and we certainly
welcome worthwhile direct investment in this country.
The opportunities are there for those willing to work with
Australian industry, and the private sector response is
beginning to emerge.
Australian manufacturers are reporting greater success
against imports and are signing new contracts with overseas
purchasers. rndeed, I have recently visited a number of
companies which have been successful in securing export
contracts against intense international competition in such
non-traditional Australian products as heart pacemakers,
bionic ears and pharmaceutical products. There is truly an
enormous range of opportunities now open to Australian
industry.
Clearly Australia is playing its part in promoting a more
open, more growth-oriented world and regional economy and
we are prepared to do more.
We appreciate that the world's major economies recognise the
need for global trading reform. But if there is any message
to come out of this symposium over the next few days it
surely must be this that the small-to-medium sized
countries of this region are looking to our largest trading
partners to give full effect to those commitments.
In that context, the large losses being sustained by the
Japanese steel mills make it imperative that Japan makes its
purchasing decisions on coking coal on fully commercial
grounds. As I said earlier equality of access and free
competition based on price are essential for the long-term
viability of commodity traders.
I have so gar dwelt on the exciting economic aspects of the
Pacific relationships and that will be your principal
theme throughout this conference. But I want to conclude by
mentioning 3ome of the security aspects of the Pacific
region.
For as a region we can only fulfil our vanguard role in the
world economy and continue to improve the living standards
of our people if we can maintain regional peace.
Stability in the Asia-Pacific region has improved
immeasurably since the devastation of the Pacific war, the
violence of the Korean War and the protracted suffering in
Indo-Chinai.
But we cannot afford to become complacent about
developments. Dangers persist on the Korean peninsula.
Southeast Asia cannot be free of tension while Vietnam
remains i~ ol. ated and dependent on the Soviet Union as a
result of its military occupation of Cambodia.
And may I tzke this opportunity to say that nothing could do
more to seat back the long-term prospects for stability in
our region than any attempt to overthrow the Government of
President Aquino, whose coming to power at the beginning of
this year lifted a dark cloud from our midst and offered the
promise of oestoring the Philippines to the mainstream of
regional poliAtics and constructive cooperation.
Governments of the Pacific Rim must never accept that peace
is an issue of legitimate interest only to the nuclear
powers. South Pacifc countries have taken an important initiative
in the craation of the South Pacific Nuclear Free Zone,
which is a aignificant contribution to arms control and
disarmament, as well as a major step towards regional
security.
This initiative, and others such as ASEAN's concept of South
East Asia as a Zone of Peace, Freedom and Neutrality, will
help to enhance the Asia-Pacific region's prospects as an
area of progress and prosperity.
8.
Mr Premier, let me congratulate you, the Western Australian
Government and the People of Perth for having the foresight
and skill to bring about this important conference. It is a
privilege for me to declare the PacRim ' 86 conference open.
I wish you well in your deliberations. And I trust those
visiting from overseas will not make this their last visit
to Western Australia.
I now have pleasure in introducing the United States
Ambassador to Australia, Ambassador Bill Lane.