CHECK AGAINST DELIVERY EMBARGOED UNTIL DELIVERY
SPEECH BY THE PRIME MINISTER
LUNCHEON OF KOREAN BUSINESS ASSOCIATIONS
" REGIONAL CO-OPERATION:
CHALLENGES FOR KOREA AND AUSTRALIA"
KOREA 31 JANUARY 1989
Australia and Korea lie near the northern and southern
extremities of the most dynamically growing region in the
world: the Asia Pacific region.
This regIon generates more than one third of the world's
trade, and is likely in the next decade to create more than
half the world's economic output.
This extraordinary growth gives nations such as ours
tremendous opportunities and new responsibilities.
Whether we can fulfill the predictions of those who see us
entering a ' Pacific Century', with all that would mean for
rising living standards for our people, is in our own hands.
But these opportunities cannot fully be exploited unless we
are prepared, as individual nations and as a region, to do
the hard work that will be involved.
Today I want to discuss one focus for that work: how we as a
region can better cooperate so that our future, individually
and regionally, is a secure and prosperous one.
First I want to pay tribute to your own spectacular
achievements in Korea.
When I came here last in 1984, I commented on the rapid
economic progress you were making.
Today, five years later, I find that not only have you
managed to maintain the pace oE economic progress, you have
also undertaken very welcome political reforms.
This combination of economic dynamism and emergent democratic
processes so vividly and magnificently encapsulated in the
Seoul. Olylmpics last yeat is justifiably pushing the
Republic of Korea into a more prominent place on the world
stage.
Indeed it is no wonder that Korea will, before the turn of
the century, join the ranks of the developed nations a
transition that will bring new responsibilities as part of
your integration into the global political and economic
system.
As part of all this, Australia and Korea have built a very
successful bilateral trade relationship.
We are each among the eight most important trading partners
of the other.
Two way trade in 1987/ 88 was valued at almost $ A3 billion.
over the last five years the trend rate of growth of
Australia's exports to the ROK has been over 16 per cent per
annum, while for imports it has been over 29 per cent per
annum. This is spectacular growth.
S There are excellent prospects for further expansion. Last
year my Government released a Korean Trade and Commercial
Development Program as a means to develop further Australia's
relationship with the Republic of Korea.
In addition I am pleased that we have an in-principle
agreement to negotiate a protocol to the Australia-Korea
Bilateral Trade Agreement which was originally signed in
1965. 1 look forward to its early finalisation because it
will help both our countries identity and promote areas which
will expand our bilateral trade and commercial interests.
Australia enjoys excellent relations with Korea, the
countries of North East Asia and the Asia Pacific region as a
whole. About two-thirds of Australia's exports and imports
are directed to or sourced from our regional neighbours.
About half of the total foreign investment in Australia has
come from the Asia-Pacific region and almost three--fifths of
~ Australia's total investment overseas is located within the
Wregion. So we are keenly aware that the economic growth and
structural change taking place in North East Asia, in
particular, will have vital implications for us as well as
our region and the wider international economy.
With this in mind we have asked Dr Ross Garnaut, our former
Ambassador to China, to review the Australian response to
these changes. Dr Garnaut is one of our most distinguished
economists and a person closely associated with public
policy. His study will analyse and report on North East Asian changes
over recent years and prospectively through to the end of
this century and beyond. It will identify areas where our
country can co-operate with you and other regional countries
for mutual economic, political and wider benefits.
Dr Garnaut will be coming to Seoul in April arid proposes to
discuss these : issues with Government and business leaders. I
hope that these discussions, and the subsequent report, will
be of value to Korean decision makers as it obviously will be
to those in Australia.
Ladies and gentlemen,
If one had to isolate the single key factor underpinning the
growth of all the dynamically performing nations of the
region, it would surely be their capacity to take advantage
of a relatively open and non-discriminatory international
trading system.
The multilateral system of gi6bal trade, under the auspices
of the GATT, has provided more than four decades of growth
for the world's economies.
O North Asian economies, as major exporters, are enjoying
growth rates much greater than the OECD average.
Given this centrality of trade to our region, we have cause
for concern about our economic future.
Serious cracks are appearing in the international trading
system which have major implications for the future health of
both our region and the world economy.
First, you will all be aware of the bilateral trade pressures
associated with the significant trade imbalances between a
number of regional countries and the United States.
Second, there is a trend towards the formation of bilateral
or regional trading arrangements which run the risk of
undermnining a truly multilateral trading system.
Third, there are fundamental tensions within the GATT
framnework of multilateral trade, of which the recent Montreal
deadlock is but the latest manifestation.
Each of these problems has prompted calls for some sort of
regional action.
But they are not the only driving forces behind calls for
closer regional ties.
It has long been recognised especially as the region's
economic importance continues to grow that the countries in
the region are essentially interdependent; our economic
futures are interlinked.
That realisation led in 1980 to the creation of the Pacific
Economic Co-operation Conference PECC of which Australia
was a co-founder and of which we remain a consistent
supporter.
PECC's work has illuminated large areas of common interests
within the region.
But its informality, which has helped to broaden its
membership, has also made it difficult for it to address
policy issues which are properly the responsibility of
Governments. We have heard more recent proposals for new and closer
regional consultations from both sides of the Pacific.
Former Japanese Prime Minister Nakasone has put forward a
suggestion for a Pacific Forum for Economic and Cultural
Co-operation.
Former US Secretary of State, George Shultz, canvassed the
need for a Pacific intergovernmental forum to encourage
Sco-operation in specific sectors.
More recently, US Senator Bill Bradley has proposed a Pacific
coalition on trade and economic development designed to
reinforce the Uruguay Round and remove barriers to economic
growth in the region.
There have also been calls for various kinds of free trade
areas in the Pacific, including one between the US and Japan.
These different proposals have in common the perception that,
as a region, we do have interests that can be advanced
through greater consultation and co-operation.
I believe the time has come for us substantially to increase
our efforts towards building regional co-operation and
seriously to investigate what areas it might focus on and
what forms it might take.
SThat is why Australia has recently launched a substantial and
concerted diplomatic effort.
We have asked our missions in the region to gauge opinion
within the region about how best to push forward our regional
co-operation.
Senior Australian Ministers held constructive talks on this
issue with the Japanese leadership earlier this week.
We want to assess what the region's attitudes are towards the
possibility of creating a more formal intergovernmental
vehicle of regional co-operation.
A meeting of ministers from throughout the region would be a
useful forum to investigate the question.
What we are seeking to develop is a capacity for analysis and
consultation on economic and social issues, not as an
academic exercise but to help inform policy development by
our respective governments.
I see merit in the model provided, in a different context, by
the OECD.
I discussed these issues yesterday with President Roh, who is
of course the leader of a major regional economy one of t he
economies whose involvement would be vital to the success of
any new regional institution.
I regard it as a significant step forward that President Roh
gave his support to the proposals and expressed his
enthusiasm for pursuing them throlugh further regional
consultation.
OLet me spell out three areas in which I believe the
Asia-Pacific region could profit from closer co-operation
through such an institution.
First, effective regional co-operation can greatly improve
the chances of success of the Uruguay Round and could thereby
give a vital boost to the liberalisation and therefore the
preservation of the GATT-based trading system.
The GATT system now faces its most crucial test. The
Montreal impasse, essentially due to lack of progress on
trade liberalisation in agriculture, must be overcome. If
the Uruguay round fails, the underlying tensions which will
have caused this failure will corrode the essence of the GATT
system.
We must work together to save the GATT system. The region's
role will be critical given its strong growth, reliance on
trade and growing world importance and responsibility.
In 1983, in recognition of the importance of the
liberalisation of multilateral trade, I proposed a process of
regional consultations on these issues.
The most recent meeting was held in Wellington last year,
just prior to the Montreal Mid-term review. It was
successful in providing a better understanding of the
interests and concerns of regional countries in the
multilateral negotiations.
I am pleased that Korea has been participating in that
process and look forward to further regional consultations
this year.
NN0N0N931
At the same time, regional co-operation could lead to a
better understanding of, and a close monitoring of, the
impact of international economic developments, including the
1992 integration of Europe and the recent US/ Canada Free
Trade Agreement.
Australia and Japan are currently undertaking a study of the
potential regional impact of these new blocs. Because this
study will, I believe, be of relevance and importance beyond
our two countries, Prime Minister Takeshita and I will be
discussing how best to familiarise other countries with its
findings.
Second, we must be prepared openly to discuss obstacles to
trade within our region.
From Australia's point of view, the success of the newly
industrialising economies is an enormous opportunity, for us
and for the whole region.
Others see this very success as a threat, and it has led to
frictions in trade relations within the region and beyond.
There is undoubtedly room for dialogue and cooperation on
this issue.
Australia's view is that the essence of a properly
functioning trading system is, of course, that countries
should seek multilateral trade balance, not bilateral balance
with all countries.
Equally, we believe the newly industrialising countries have
a responsibility to liberalise further their own markets to
reflect their phenomenal growth in trade and investment.
And where such liberalisation occurs, it must not be used to
Slacate trade frictions being encountered with certain
countries. This is anathema to the principles of free trade,
and only invites counter-retaliation by those third countries
whose interests are damaged.
As a region we must investigate the scope for further
dismantling of barriers to trade within the region,
consistent with the GATT framework.
It is a noteworthy source of opportunity that each of us has
tended to impose the greatest barriers to trade in areas in
which regional partners are most competitive.
Some progress has been made in this area. In Korea, for
example, we recognise and appreciate reforms which have
lowered tariffs, liberalised imports and reduced restrictions
on foreign traders.
We give the Korean Government high credit for this and look
forward to further dismantling of barriers to trade and
investment, including in agriculture in which the problems of
trade barriers are greatest.
The recommendations of your recent Presidential Commission on
Economic Restructuring, if implemented, would be a worthw~ hile
move towards a more open Korean market.
in Australia, we have implemented a range of reforms to
liberalise our economy. We are intent on continuing this
process and the reforms to date are already providing new
opportunities for countries such as Korea.
We have floated the Australian dollar, deregulated our
financial markets, liberalised our foreign investment policy,
cut the rate of company taxation, reduced by a third the
level of tariff protection afforded to Australian
manufacturing industry, and made our primary industries more
responsive to changes in the international market place.
The third area in which we could benefit from regional
cooperation is through identifying the broad economic
interests we have in common. We should try to investigate
whether through co-ordinated Policy making we might better
capitalise on the extraordinary complementarity of the
economies in the region.
Australia's Industry Minister, Senator Button, has, for
example, just this week cited the enormous benefits we can
reap from harnessing our diverse science and technology
research efforts.
Surely this is an area in which we should assess our
capabilities to see where we can boost each other's efforts
in this crucial field.
Ladies and gentlemen,
I have already referred to the regional trading consultations
I initiated in 1983, and to the valuable work of PECC.
Bilateral exchanges such as my visit to Korea and that of
President Roh to Australia last year form valuable avenues of
co-operation. Studies such as Dr Garnaut's inquiry into
North East Asia, and the joint Japanese Australian inquiry
into the impact of the trading blocs will provide valuable
information with which to guide our future decisions.
But Ii believe we should be striving for a more effective
means of analysis of and consultation on the central issue we
face as a region.
Before I leave this topic, I must stress that my support for
a more formal vehicle for regional co-operation must not be
interpreted as suggesting by code words the creation of a
Pacific trading bloc.
Australia's support for non-discriminatory multilateral
trading solutions in the GATT framework is clear,
long-standing and unambiguous.
I have made it clear that a major priority of any regional
effort would be the strengthening of the GATT system.
Ladies and gentlemen,
Australia attaches particular significance to our
relationship with Korea. We would like to work with you, not
just in developing our bilateral ties, but also in developing
our mutual interests and opportunities in third countries.
The Asia Pacific region is at a pivotal point in history.
And the region is located at a pivotal point in the global
economy.
We have much to offer each other. We have substantial shared
political and economic interests, and a powerful
complementarity in our economic skills, resources, and
business, cultural, and political links.
Co-operation offers the region the opportunity to influence
the course of multilateral trade liberalisation, avoid
alternative approaches which would undermine this objective
and enable us to enter the next century with confidence that
our potential will be fulfilled.
I I