ADDRESS BY THE AUSTRALIAN PRIME MINISTER
THE HON P J KEATING MP TO THE WORLD AFFAIRS COUNCIL ORANGE COUNTY,
CALIFORNIA, 17 NOVEMBER 1993
" PRESENT AT THE CREATION OF TE
ASIA-PACIFIC ECONOMIC COMMUNITY"
I am in Orange County taking advantage of your kind invitation to
me to speak because I am on my way to Seattle to attend a meeting
about which I can tell you little.
Mostly, when political leaders meet, our officials and diplomats
f rom the best of motives are anxious that the soil is well tilled
and the crop planted and fertilised and the political leaders are
allowed near only when the harvest is ripe for picking.
This time, President Clinton has organised a break-out.
Leaders of the APEC economies will be left in a room for a day,
without of ficial s, to discuss with each other visions for their own
countries and for the region into the 21st century.
I'm sure you are by now beginning to become familiar with the
acronym APEC, the organisation just four year. old, which brings
together the nations of North America and the Western Pacific.
It includes all six ASEAN countries in South East Asia, Australia
and New Zealand, China, Korea, Japan, Hong Kong, Taiwan, the United
States and Canada. Mexico and Papua New Guinea are now expected to
join.
This leaders, meeting in Seattle is a remarkable event you will
forgive me if I use the word " unprecedented" once or twice today.
The people gathered, representing the most dynamic region in the
world, have never met as a group before. Indeed, until a couple of
years ago the idea of such a meeting would have been inconceivable.
It has all happened with extraordinary speed. Yet not before time.
One hundred years ago a US Secretary of State was proclaiming " 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."
At the turn of the 21st century, I think we can surely say that the
Pacific's time has arrived. For it is beyond question that the
Asia-Pacific economy is, as a recent analysis. concludes, " the
dominating fact of modern economic geography, the most striking
event in the economic history of the 21st century".
So when President Clinton proposed an informal APEC leaders meeting
to be held in Seattle, I was delighted.
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It was a sign of the freshness of approach and willingness to
embrace a now vision which has characterised President Clinton's
agenda. it was a sign which Australia and other countries in the western
Pacific welcomed, of a new commitment to engage with the region
with which the United States does more than half its trade, and
where it will always have vital security interests.
So while it is very difficult to predict what will emerge from the
Seattle meeting, I am confident that we will look back on it as one
of the defining moments in the remarkable history of the
Asia-Pacific.
Ladies and Gentlemen
I have called this speech " Present at the Creation of the
Asia-Pacific Economic Community", but the title begs the question
of what a commuunity is.
Are we talking about an uppercase " C"-style Community, like the
familiar European one, complete with an uppercase " E"-style
Eurobureaucracy, and aggressive protectionism against the rest of
the world?
Let me make it quite clear that I, for one, an not.
But I am talking about something more than a random collection of
countries which trade with one another to their mutual benefit.
A community and I am now using a lowercase HC" is marked by the
comprehension of common, and enduring, interests.
Among the most important of those interests is the maintenance and
improvement of the economic conditions which lead to shared
prosperity. A community is marked not necessarily by a monoculture, as
Australians and Americans accustomed to diversity readily
understand, but by a sympathetic understanding of cultural
differences. And, I might say, by an awareness that in cultural
diversity there is immense dynamism.
A community is marked by a shared history and a history in which
points of contact and common endeavour are of greater interest than
the threads of isolated achievement.
And above all, perhaps, a community is distinguished by a shared
sense of possibility, shared goals, a shared sense of. the future.
That is what APEC can help do. It can develop something like this
in the diverse Asia-Pacific region.
And, in fact, in the economic area at least an Asia-Pacific 3217
I3-
community has already emerged -unplanned, unstructured and
unheralded. In Seattle we will meet in a context which for the first time
obliges us to think about common problem and opportunities, and
how we may work together to underpin the extraordinary success of
the Asia-Pacific economic community.
This economic community is not something governments have brought
about by a process of formal agreement like the EEC, NAFTA or our
own agreement with our neighbour, New Zealand, the CER.
It is already happening spontaneously, based on a market which for
a decade has grown more rapidly than any other in the world, and
which is likely to continue to grow at twice the rats of Europe.
The two sides of the Pacific now form an integrated market of two
billion people, accounting for half the world's production and
nearly half the world's trade.
The economies of North America and the Western Pacific are actually
more closely integrated, without a regional trade agreement, than
are the economies of Europe or North America, with a regional trade
agreement.
That is, the APEC economies as a group have a higher proportion of
trade with each other than do the members of the EC or the members
of NAFTA.
Overall, the share of total exports of the APEC group to other
members of the group is 66 per cent.
In the EC, the comparable share is 61 per cent. In NAMT it is 42
per cent.
The European Community was created as a means of integrating the
economies of Europe, lowering tariffs and increasing trade.
By contrast the Asia-Pacific economic community is already highly
integrated, already successful, and already benefiting from four
decades of worldwide reductions in tariff protection.
Yet as the recent report of the APEC Eminent Persons Group pointed
out, 20 of the 24 members of the OECD increased their trade
protection during the 1980s. And after seven years of difficult
and often disheartening negotiations, the conclusion of the Uruguay
Round is less than a month away and there is still no assurance
whatever that we will get a worthwhile result. For the
increasingly open economies of our region, there is no higher
economic priority than an open and expanding world trading system.
Our weekend meeting is an occasion to ponder the significance and
the implications of what has already begun and what we can imagine
it to be.
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I have no doubt that there are many things we can do as a group to
increase trade and prosperity and to help private business make the
most of the region'sa opportunities.
And I am sure that Americans arm thinking along these lines too.
As the Clinton administration says, if the US is to go about
expanding its trade, increasing its competitiveness, renewing its
global economic force, the Asia-Pacific region is the logical place
to look.
Californians are already well aware of the importance 0ñ f the
western Pacific it is the market for a little under half of your
state's exports.
Since the mid eighties the trend rate of growth of US exports to
the Western Pacific has been three times the rate of growth of
Western Pacific exports to the United States.
In less than a decade the portion of US exports which go to East
Asia has risen towards one third.
Not only is the Western Pacific market growing faster than others
for you it is also buying a higher proportion of the most
sophisticated US exports.
Today US exports of elaborately transformed manufactures to the
Western Pacific total over $ 230 billion, and they continue to grow
rapidly. Ladies and Gentlemen
This process of growth in the Western Pacific market has some very
interesting characteristics.
We see, for example, great changes in the structure of production
in the region; labour intensive manufacturing industries which
first went to Japan, moved to Korea and Taiwan, then to Hong Kong
and Singapore, and are now moving to Malaysia and Indonesia and
Thailand and the Philippines and on to the awakening industrial
giant of China.
As those industries leave countries with rising labour costs,
others move in capital intensive high tech industries or
knowledge intensive industries as we see now in Japan, and in Hong
Kong, Taiwan, Singapore and Korea, as well as in the United States,
Canada and Australia.
The result is rapidly rising living standards through the whole
region, which in turn changes the structure of demand and of
consumption. Incomes and wages in Japan may now be as high as they are in the
United States, and higher than in Australia. 3219
Income per head in Hong Kong and Singapore is higher than it in in
Ireland, and as high in Taiwan as in Greece and Portugal. Wage
rates in manufacturing are higher in Taiwan and Korea than they are
In Portugal, and higher in Hong Kong than in Mexico. Indonesia now
has a middle class larger than the entire populations of some small
wealthy countries.
None of this has involved sacrificing the openness and
international isation of the regional economies, or the trend to
more and more liberalised markets.
China's most rapidly growing businesses, for example, are almost
always in the private economy.
Malaysia, Indonesia and Thailand have all been growing rapidly in
recent years because they have liberalised investment rules, and
begun to deregulate their economies.
We are familiar with similar stories in Korea and Hong Kong and
Japan. By any standard this growth is impressive. And we are still in the
early stages of the region's development.
China is still only at the beginning of a transition that could
well make it the world's second biggest economy sometime early in
the new century.
Indonesia, with its 190 million people, vast resources, stable
government and enlightened economic policies has enormous
potential. And the countries already achieving middle incomes, like Korea and
Singapore, will within a very few years be joining the rich
countries. Ladies and Gentlemen
As I have indicated, the region presents great challenges and great
possibilities. A reasonable estimate of what Western Pacific economies will need
to spend over the next decade in ports, roads, bridges and
utilities to support their continuing development is at least one
trillion US dollars.
McKinsey and Company tell us that the additional power capacity
required in Asia by the year 2000 is more than 350 gigawatts, with
a capital cost for generation alone exceeding $ U3400 billion. And
there are similar requirements in hydrocarbons.
Development on this scale will have a dramatic impact on the
regional environment. So we will have to use the advances of
technology and science to minimise the adverse environmental
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consequences of rising material living standards.
If these are the challenges, the opportunities are there to build
the roads and ports and pipelines; to devise and implement the
technologies for a cleaner environment; to seize the opportunities
for trade and investment.
And while many of the responses will be local or national, they
will be much more effective if we aiso have a well-designed
regional organisation able to help governments remove impediments.
APEC can be that organisation.
Ladies and Gentlemen
As I said earlier, the growth that has taken place in the APEc
community has been spontaneous growth.
It has had no regional safety net of understandings and agreed
processes spread beneath it, no mechanism for encouraging
agreement, or for facilitating trade growth by removing
impediments.
The more sceptical business people among you may say that, given
the growth that has taken place, we obviously don't need a
framework for the region. But I am convinced that as time goes by
this will be less and less true.
It is already the case that the trade problems between North
America and the Western Pacific could sometimes benefit from a
discussions among all the parties, * rather than bilateral
discussions between the United States and the individual countries
of East Asia.
We can benefit, too, from the adoption of common or compatible
product and occupational standards, simpler and more uniform
customs procedures.
Earlier this year I proposed an agenda of discussions along these
lines.
Agreement on rules like these would facilitate trade and economic
integration. Some of these discussions are already taking place among APEC
officials, and part of the purpose of the Leaders, Meeting is to
give them more political weight.
Most of the work being undertaken in APEC is not being successfully
done in other international institutions like the GATT. And while
it doesn't discriminate against countries outside our group, the
benefit will be mostly within. They are what I call " GATT-plus"
initiatives. The area of product and industry standards Is particularly 3221.
important. A feaw weeks ago I convened a meeting of business people in our
cabinet room to discuss APEC and what business hoped could be
achieved within it. And one of the things we talked about was the
impediments to exports caused by different product requirements and
standards in the f if teen nations of APEC.
In many product areas where large sellers and buyers have long-term
relationships, standards and product descriptions are not a
problem. But in other areas especially in manufactured food exports, in
pharmaceuticals and in telecommunications conflicting standards
and requirements are a significant difficulty.
One manufacturer told us that the standards requirements in
different markets added 5 to 10 per cent to the initial costs of
entering an export market.
The whole-problem is made worse because even where we have similar
standards, one country's standards authority often doesn't accept
the testing results of another's, and the same test has to be
replicated right through the region. There is not much sense in
that. Standards are also relevant in the finance industry, which I
believe will be one of the great growth markets in the region as
increasing wealth creates the demand for sophisticated funds
management. Here the problem is not so much too many standards, as
not enough.
We need to have clearer legal and administrative structures so that
funds can be reliably and prudently managed. Australia is eager to
play a part, through our legal firms and particularly through the
expertise of our Securities commission.
Another area we could look at is standards and descriptions in the
increasingly internationalised education market. I am told for
example that we do not have reliable common descriptions of courses
and standards in vocational education in the region a shortcoming
we ought to be able to remedy.
These are issues on which we can engage and produce results. We
don't pretend that harmonisation of standards will be easy, or that
once achieved it will revolutionise regional trade and welfare.
But it will get us talking, and if we are successful it will make
a discernible difference.
Economic research commissioned recently by the Australian Trade
Minister, Peter Cook, suggests that the value of removing
impediments like conflicting standards in the Asia-Pacific region
may be just as great as in Western Europe.
3222
f
The reforms summarised in Europe 92 were over time expected to
yield an increase in European GDP of around 3 per cent.
Our research suggests that a program of standards harmouisation in
APEC would yield at least MtJ400 billion boost to regional output
an increase bigger than the annual output of all but tour of the
fifteen APEC economies.
I am convinced that everything that APEC does wiil be done stronger
and more effectively it it draws regional business into its work
I think we should have business people on our standards committee.
for example, and energy committees and customs committees and so
on. The private sector has created the Asia-Pacific economic community,
and private business is best placed to know the impediments which
governments should remove.
There may veil be other things we can do in coming years.
There is little doubt, for example, that some of the energy needs
of the western Pacific could be most efficiently met through a
network of natural gas pipelines that, in the most ambitious form,
might extend from the north west of Australia to Japan. But no
such network could be imagined, let alone built, without a very
high degree of cooperation among governments in the region.
The same goes for connecting up the separate power generation and
transmission systems of the Western Pacific another logical and
efficient solution to energy problems, but one which would need a
degree of cooperation between governments which we are only likely
to develop through APEC.
At some point we may wish to talk about a regional steel agreement,
or a regional electronics agreement or a regional food agreement or
a regional services agreement.
But on these major trade issues the consensus within the group is
that we should await the outcome of the Uruguay Round of GATT and
then see what is left over which could be usefully advanced on a
regional basis.
If the Uruguay Round fails or the outcome is completely
unsatisfactory, perhaps we might think about some kind of regional
round which picks up the Geneva agenda and attempts to do for the
Asia-Pacific, for half of the world economy, what the GATT will
have failed to do for the whole world economy.
Some ideas on these issues were presented by the APEC Eminent
Persons Group report chaired by Washington economist Fred Bergstel.
In the longer term, the Eminent Persons Group report calls for free
trade in the region a goal to which Australia heartily
subscribes. But just how to get there and by what time is a 3223
subject which in my view it is too early to determine.
What really matters now is that f or the f irst time the governments
of these rapidly integrating economies are talking about comisn
problems and about their relationship to each other.
Secretary Bentsen has proposed regular meetings of APEC Finance
Ministers. I think that is a good idea. Although our economies
are different in scale and historical experience, the problem we
are facing are increasingly similar. Each of us has much to learn
from each other.
Ladies and Gentlemen
As I said at the beginning, for Australia's part, we are already
committed to the Asia-Pacific region. During the last decade we
have internationalised our economy through financial deregulation
and tariff cuts.
Since we began the reforms we have seen our exports trebled, and
increase as a proportion of GNP from 13 per cent to 20 per cent.
We have seen manufacturing exports rapidly increase, so that they
are now consistently stronger than the rural exports for which we
are still better known.
And we have seen the proportion of our exports to East Asia
increase from under half of the total towards two third@.
Australia now sends more of its exports to Asia than does Japan.
For us, there is no turning back just as I believe that for the
United States there is now no turning back.
Ladies and Gentlemen
The impact APEC can have goes well beyond its economic potential.
AFEC's development will have a lasting -strategic impact on the
Asia-Pacific region.
I do not mean by this that APEC itself has or should develop a
political or security dimension. other forums exist to fill those
roles. But I have no doubt that APEC has the potential to change quite
wfuonrdlda meinnttaelrlayc tt hew iwthay eianc hw hiocthh ert hea ncdo unthter iedse gorfe et hitos pwarhtic ho f thtehye
understand each other's interests. And that, I am convinced, will
have consequences well beyond the economic field.
The process will be quicker and deeper if, as I hope, this first
meeting in Seattle leads to a regular pattern of informal leaders'
meetings, with all the opportunities that would open up for closer
personal contact and understanding among the leaders of the APEC
3224
economies. By bringing the United States and Japan the world's two largest
economies and the emergi. ng giant of China into a framework of
multilateral economic cooperation, APEC will provide all the
countries of Asia and the Pacific with the reassurance-that during
a period of profound change in the world, this region will continue
to be characterised by interdependence and engagement.
Half a century ago a distinguished group of Americans around
President Truman were present at the creation of the post war order
an order based on superpower rivalry between the Soviet Union and
the United States, on the creation of a united Western Europe, and
the rebuilding of Japan and Germany as prosperous, free countries.
Today I believe we are present at the creation of quite another
configuration in world af fairs one which succeeds the cold war,
which is directed to increasing welfare through economic
prosperity, the Asia-Pacific economic community.
Thank you.