PRIME MINVISTER
STATEMENT BY THE PRIME MINISTER, THE HON P J KEATING
TO THE HOUSE OF REPRESENTATIVES, 6 DECEMBER 1994
THE APEC INFORMAL LEADERS' MEETING, BOGOR, INDONESIA
I want to report to the House on the results of the second informal meeting of the
leaders of APEC economies, which I attended in Bogor, Indonesia, on 15 November.
It is not overstating the case to suggest that the Bogor meeting, and the Declaration of
Common Resolve which leaders issued afterwards, has permanently changed the nature
of our region and the fu~ ture of Australia.
For nearly forty years, Australians have spoken loosely about what we have called " our
region" of the world. We have regularly talked about our " northern neighbours". But
until now these phrases have been statements of aspiration or hollow cliches rather
than descriptions of reality and real national intent.
What our region was, where it extended, who was in it, whether the others we claimed
as partners accepted that role, was always uncertain indeed unknowable.
With Bogor, however, Australians can say for the first time that the region around us is
truly " our region".
We know its shape; we have an agreed institutional structure; we share with its other
members a common agenda for change.
Historical turning points are rare and, like phantoms, they are seen more often than
they are found to exist.
But I am certain, Mr Speaker, that the Bogor meeting will be seen as such a turning
point as the beginning of the Pacific century.
Just as the Bretton Woods agreements after the Second World War established
structures in the LIMF and the World Bank which enabled the world to grow and
prosper, so in APEC we have established a model which will serve the interests of the
post-Cold War world.
It brings together in one multilateral framework a grouping which by 2020 will include,
according to some estimates, seven of the world's ten largest economies, and which by
the end of the century will account for 57 per cent of world trade.
It gives all the economies Iof this region developed, newly industrialised and
developing a stake in a cooperative enterprise whose aim is to maintain the dynamism
and growth in this part of the world.
It offers business people the opportunity to plan with confidence as Governments work
to remove unnecessary blockages to trade and investment.
It engages the United States, China and Japan in a structure which minimises the
danger that trade frictions will eventually lead to strategic tension.
Between my arrival in Jakarta on 13th November and my departure on the 16th, I held
bilateral discussions with Prime Minister Chretien of Canada, Prime Minister Mahathir
of Malaysia, President Jiang Zemin of China, Prime Minister Chuan of Thailand,
President Clinton, President Soeharto, President Ramos of the Philippines and Prime
Minister Bolger.
The day before I left, on 12th November, 1 met President Frei of Chile in Sydney. And,
of course, President Kim Young Sam of Korea visited Australia immediately after the
Bogor meeting.
APEC was, of course, a central element in all these discussions, but they also enabled
me to cover some important bilateral issues.
Dr Mahathir and I were able to agree, for example, on the need to improve exchanges
6RN67en'Nalaysia and Australia in the area of science and technology.
Pre sident Frei and I agreed to encourage Chilean and Australian business people to use
each counti-y as a base for expanding business in South America and Asia respectively.
I was able to have a very frank and productive discussion with Prime Minister Chuan
about Cambodia and Thai-Australian relations.
My own experience was replicated by the other leaders. The easy opportunity to hold
high-level discussions like these gives APEC leaders' meetings a value additional to
APEC's economic agenda.
The informal leaders' meeting was hosted by President Soeharto on 15 November in
Bogor. I want to pay tribute, Mr Speaker, to President Soeharto's chairing of APEC during
the year and at the Bogor meeting. A consensus of the 18 APEC economies on these
very large issues was an extraordinary achievement. It required great leadership and
vision, and President Soeharto provided that. We would not have achieved this
outcome without him.
As was the case in Seattle last year, the Bogor meeting was held without officials
present and without a pre-set agenda.
Following consultations between leaders' assistants, President Soeharto had prepared a
draft declaration covering our common ambitions for APEC and its economic goals.
These subjects formed the focus for much of our discussion.
The central element in the Bogor Declaration of Common Resolve is a commitment to
free trade and investment in the region by 2010 for industrialised economies and 2020
for developing economies.
And what underpins that commitment is our recognition of the growing
interdependence of regional economies and the need to work together if we are to
maintain high rates of economic growth.
APEC's commitment to free trade was made in the context of our support for the
multilateral trading system and our desire to strengthen it.
In other words, Mr Speaker, APEC leaders showed that they were opposed to the
establishment of a closed and inward-looking organisation, but wanted whatever we
did in APEC to be additional to the GATT agreement GATT-plus.
We agreed, for example, to accelerate the implementation of our Uruguay Round
commitments and to undertake work aimed at deepening and broadening the Round's
outcome.
We called for the successful launching of the World Trade Organisati' 1on in January
1995 and for all APEC members to work with non-APEC members to achieve further
multilateral trade liberalisation through the WTO.
One of APEC's major benefits, in fact, is that by engaging the United States and East
Asian economies in a common framework it helps prevent the spectre of a world
divided into three hostile trade blocs in Europe, Asia and the Americas.
We agreed to a " standstill" commitment on a best endeavours basis to refrain from
increasing measures of protection.
We also decided to expand APEC's trade and investment facilitation program.
As a result of a proposal I made in Seattle, for example, we have now endorsed nonbinding
investment principles for the region which we will develop to make investment
flows in the region easier.
The trade facilitation program, on which a good deal of progress has already been
made, will become even more important to our business people as tariffs in the region
come down.
Ministers have been asked to draw up proposals for APEC arrangements to improve
customs procedures, establish common standards and lower administrative barriers to
market access. In this area of trade facilitation, APEC economies that are ready to
implement a cooperative arrangement may do so, while those that are not yet ready to
participate may join at a later date.
In Australia's case, for example, we are already discussing with a number of APEC
economies, such as Malaysia, Korea, Canada, New Zealand and the United States, the
possibility of an agreement under which we would mutually recognise each others'
testing and conformance arrangements.
The Bogor Declaration also gives further impetus to the dialogue on economic policy
which began with the first meeting of APEC Finance Ministers earlier this year. In my
view, these consultations on economic growth strategies, regional capital flows and
other macro-economic issues will become more important for APEC over the next few
years. Another new approach in the Declaration comes in the decision to examine the
establishment of a voluntary consultative dispute mediation service, to supplement the
World Trade Organisation's dispute settlement mechanism. APEC's informal and nonbinding
approach offers a useful, non-adversarial way of dealing with regional trade
disputes. One of APEC's most valuable dimensions is the way it brings together developed
economies, newly industrialised economies and developing countries.
When APEC talks about trade and economic issues, when it frames its actions, it has
to take into account the full complexity of eighteen economies all looking for growth
and liberalisation, but at different stages of development.
As I have said before, this is important because it is the way the global economy is
going. Co-operation across different levels of development is the way we will have to
address these trade and economic issues in future.
That is what made theBogor agreement remarkable it was an agreement reached
within the framework for the_ future. Bogor was not about catching up or rectifying
past mistakes. It was visionary in a rare sense and a true sense.
We agreed at Bogor, for example, that in addition to our trade liberalisation and trade
facilitation agendas we should expand co-operative activity across the fields of
education and training, science and technology, small and medium enterprises,
economic infrastructure including energy, transportation, telecommunications and
tourism and sustainable development.
In all these areas, in fact, APEC is already building linkages and discovering new areas
for co-operation.
Leaders at Bogor recognised the important contribution made to regional debate by
the Em~ inent Persons Giroup and the Pacific Business Forum, representing large and
small businesses throughout the region.
It was decided to ask these two groups to continue in operation to advise us on ways
we can step up APEC co-operation.
I am pleased to announce that Australia's participants in these groups Mr Neville
Wran on the EPG, and Mr Philip Brass, Managing Director of Pacific Dunlop and Mrs
Imelda Roche, Managing Director of Nutri-metics on the Pacific Business Forum
have accepted my invitation to continue in their positions.
All three of them have put enormous effort into the APEC task and I thank them for it.
I am confident that their experience and commitment will help us meet the new
challenges APEC has set itself
But the most important new decision to come from the Bogor meeting was on trade
liberalisation. The Bogor commitment is precise, wherein the leaders agreed to " complete the
achievement of the goal of free and open trade in the Asia Pacific no later than 2020",
with industrialised economies achieving the goal no later than 2010.
The goal involves a multiple year effort but, as the declaration says, " we will start our
concerted liberalisation process from the very date of this statement. We direct our
Ministers and officials to immediately begin preparing detailed proposals for
implementing our present decisions."
We have a long way to go before free trade is implemented in APEC. Much detailed
work remains to be done before we get an agreed plan of action for our meeting in
Osaka next year. No doubt there will be difficult negotiations and hard talk as we
chart the way forward.
Complex issues will need to be addressed, including modalities, coverage and whether
benefits will be extended on a Most Favoured Nation basis.
It may be that APEC will need to approach these issues in quite a different way from
past trade negotiations.
But contrary to the belief of some commentators, I do not think these next steps will
be the most difficult part. Perhaps the most complicated. Perhaps the most timeconsuming.
But not the hardest.
That part was getting the political commitment to a free trade goal for all APEC
economies made by the 18 leaders at Bogor.
That was what has given the region the negotiating agenda which will carry us
forward. My views of the Bogor outcome were shared by my colleagues there. As Prime
Minister Bolger has said: " The level of commitment from leaders was remarkable it
is truly going to change the nature of trade in the world in the next five years."
President Ramos has described the Bogor declaration as " A truly momentous decision
a very solid road map that we are all committed to follow." President Clinton said
he was convinced the declaration will be of historic importance. Prime Minister Goh
of Singapore said the declaration has " sown the seeds for prosperity in the region".
Like Mr Vincent Siew of Taiwan, Prime Minister Goh has committed his country to
the 20 10 timetable for free trade for industrialised economies. I
The advantages for Australia and the region of the commitments made in Bogor are
very great.
Modelling by the Office of National Assessments and the Industry Commission
suggests that free trade in APEC would more than triple the national income gains
from the Uruguay Round outcome alone to more than $ 300 billion.
For Australia, we estimate that under APEC free trade, Australia's real output would
rise by 3.8 per cent and real national income by 1.2 per cent.
This would include a 27 per cent increase in Australian exports and a 20 per cent
projected rise in imports. Once the effects of APEC trade liberalisation have fully
flowed through, we can expect a permanent increase in employment of over 200,000
jobs. The great advantage for Australia will come from the opening up of the fast-growing
APEC markets that already take three quarters of our exports.
It will come, too, from making Australia more attractive to investors from the rest of
the world.
For Australian business and workers, APEC trade liberalisation is good news because
Australia is already so far down the path towards free trade.
As Philip Brass of Pacific Dunlop has said " For Australia, it is all up-side."
By 2000, a full decade before we are committed to achieve free trade, Australia's
average trade-weighted tariff will be just 2.9 per cent. In 1986/ 87 it was 10.7 per cent.
Even in industries we have come to think of as highly protected, such as textiles,
clothing and footwear and motor vehicles, tariffs will be low by 2000 only 15 per
cent in the case of motor vehicles and between 5 per cent and 25 per cent for TCF.
This is amongst the lowest in the region. Tariffs on passenger motor vehicles range
from 100 to 300 per cent in some APEC economies, for example, and non-tariff
barriers are common.
So a great deal of our adjustment has already happened. Australian industry has
already shown it is more than capable of competing in a low tariff environment.
While average trade-weighted tariffs have come down by 44 per cent over the past
decade, Australia's exports of manufactures have grown by more than 17 per cent a
year in the case of elaborately transformed manufactures.
Even in the areas of passenger vehicles and textiles clothing and footwear, companies
like Toyota, which plans to lift exports from Australia from $ 47 million in 1990 to
$ 600 million by 2000, will benefit from lower APEC barriers.
I have said before that APEC gives Australia for the first time a seat at a very large
table. But the extent of the benefits we or any of the others will gain, and the extent to
which our voice is heard at this table, will depend on each of us; on our recognition of
the need for change and improvement; on our ability to use the resources we have
effectively and efficiently; on our imagination and creativity.
This is a large challenge that lies ahead for all of us in Australia for governments, for
business, for our unions, for our education and training system.
Our officials at home and abroad will have to liaise even more closely with industry.
Our business people across the board will have to understand the region better.
We will have to maintain the pressure for micro-economic reform.
To coordinate our response to these challenges, the Government has decided to
establish an ad hoc APEC committee of Cabinet.
I will chair the committee, with the Minister for Trade as Deputy Chair. Other
members will include the Minister for Foreign Affairs, the Treasurer, the Minister for
Industry, Science and Technology, the Minister for Employment, Education and
Training, the Minister for Primary Industries and Energy, the Minister for Transport
and the Minister for Communications and the Arts.
Detailed sectoral consultations will be undertaken by all the relevant Industry Ministers
to make sure we understand industry concerns and aspirations.
The Government's White Paper on employment, Working Nation provided for TCF
and PMV assistance arrangements to be reviewed sdfdecisions iia-nie taken in 1997 on
post-2000 arrangements. These reviews will take account of what progress is being
made on trade liberalisation in APEC. Through my colleagues Senator Cook and
Senator McMullan the industry will be fu~ lly involved in these decisions.
APEC has consistently confounded the sceptics.
Just twelve months ago the British journal, The Economist, described suggestions that
APEC should aim to form a free-trade area as " the stuff as dreams are made on".
In a sense they were right, but not in the way the Eurocentric editorial staff meant.
Last year, Australian newspapers were claiming that my ambition for APEC to become
an Asia-Pacific community was premature.
Yet, this year, without the slightest controversy, the Bogor declaration spoke of our
" moving toward a community of Asia-Pacific economies".
Why has APEC continued to go fujrther, faster, than the doubters expected?
Because it makes sense for all the diverse economies of the region.
I have said before that APEC did not have to happen. When the Cold War bindings
were removed, the development of a cooperative structure like this was neither
predictable nor inevitable. The next generation would probably have forgiven us for
failing to see the possibilities for letting the opportunity pass because it was
" 1premature" or the " stuff of dreams".
There was certainly nothing inevitable about the Bogor declaration. It was an act of
will by regional leaders and an act of goodwill. It was the result of imagination and
co-operation.
Alternative Asia Pacific futures were possible.
We might have seen the growth of a self-confident but inward-looking Asian grouping,
building on East Asian trade and investment flows and excluding Australia.
In my view that would have had the most serous consequences not only for the
economic growth of Asia and the Pacific but for the strategic stability of the region.
Over time it would inevitably have attenuated the defence and security partnership
between the United States and Japan with a broader impact throughout the region.
On the other hand, the region might have drifted along as before, buffeted by internal
and external frictions, but developing no institutional framework to deal with them.
It is true that the economic integration of Asia was underway before APEC began and
that even in the absence of such a structure it would no doubt have continued.
But it would be a very different sort of integration more ad hoc, driven by companies
working in their narrower interests and less open to Australia and Australian business.
We would have failed to engage the rapidly developing Chinese economy, or Indonesia
and the other South East Asian countries, in a broader regional framework. A critical
opportunity and one which is open for only a very short time would have been lost.
For Australia, either of these paths would have made for a stultified Australian
economy, strategic uncertainty and political isolation.
Instead, this Government chose the path of shaping the future for ourselves and the
region. Australia proposed APEC. We worked with other regional countries like
Korea to develop it. And now we have given it new institutional focus and energy by
proposing regular meetings of leaders to give it the executive authority that the
ministerial level meeting could never have had to give it the power to make the sort
of decisions taken at Bogor. I am very proud of what Australia has been able to do.
The Bogor declaration will help ensure that this generation of Australians and our
successors, have a dynamic role in their own region.
I said recently at the National Strategies Conference in Sydney that our most
fundamental responsibility is to provide for the next generation as we were provided
for to provide the conditions for security and prosperity and opportunities for talent
and energy.
Simple hard work and earnest intentions will not of themselves deliver these things.
The world has changed and we all must change with it.
The Bogor agreement was a recognition of this fact.
It is, of course, no reason to make less of our effort here in Australia. On the contrary,
because Bogor has, in an unprecedented way, taken on the responsibility to provide a
better world in the 21st century, the challenges for us are more obvious and immediate.
The Australia in which I grew up was a prosperous and secure place. It was then and
it is now an extraordinarily good place to live.
But if we are to maintain our way of life, the Australia of the 21st century will need to
be built on different foundations. Our success in the world will depend on our
effective integration with it. Our success in the world's most dynamic region will also
depend on this.
Bogor does not assure us of prosperity. It does not guarantee the future for the next
generation of Australians. That will continue to depend on the efforts of Australian
governments, Australian businesses and Australian workers.
But Bogor creates a massive opportunity and I think every Australian should be aware
of it.
I think every Australian should know that the chance really is there. In the next
century, to be Australian should mean not only the privileges we currently enjoy, but a
share in the extraordinary economic and cultural riches of the Asia-Pacific, and a
creative role in our region's remarkable progress. This opportunity is, I think, an
exciting prospect. I