PRIME MINIISTER
SPEECH BY THE PRIME MINISTER, THE HON P J KEATING MP
TO THE NATIONAL TRADE AND INVESTMENT OUTLOOK CONFERENCE
MELBOURNE 7 DECEMBER 1994
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It is a great pleasure to be able to address the National Trade and Investment
Outlook Conference again.
When I spoke at the inaugural meeting last year, 900 people were present,
representing 162 Australian companies. We were very pleased with that
response and we are even more pleased with this one.
This year we have 1500 delegates representing 450 companies.
And twice as many international delegates are attending the conference this
year. This is an excellent result. It reflects the growing interest among Australian
companies in going off-shore, in exporting, in looking at a global market rather
than a market of 18 million people.
A real change is taking place in Australian business culture.
Export performance, best practice, international competitiveness are all
increasingly central tothe approach of Australian businesspeople and
Australian workers.
Already, around one in eight Australian manufacturers is involved in exporting.
But the important lesson and one that is getting through to more and more
Australian companies is that, irrespective of size, these manufacturing
exporters outperform their non-exporting counterparts.
In fact, firms which operate internationally are 65 per cent more productive
than those which operate only in the domestic market and they consistently
invest more in new capital equipment.
The people in this room understand this. There really is no more important
message for Australian business and for the Australian community at large. If
it was not apparent before, the APEC leaders' meeting at Bogor certainly
should have driven it home.
That is what I want to talk about this morning APEC, Australia and our trade
priorities. I have spoken a good deal about AP-EC.. over recent weeks, and I know you
have already heard from Bob McMullan on the subject, so I only want to put a
few simple propositions to you7
First, the commitments made at the Bogor meeting to achieve free trade
between the APEC economies by 2010 for industrialised economies and 2020
for developing economies will change fundamentally the way the countries of
the Asia-Pacific work together and the climate for business in the region.
Second, Australia is well placed to take advantage of this change.
Third, while APEC provides a tremendous framework for growth in the region,
the trade and commerce it facilitates will take place bilaterally. In other words,
we must not ignore our bilateral links with individual regional countries. And
when I say " our" I mean both of us governments and business.
And, fourth, while Australia's policy focus has been on the Asia-Pacific and
APEC, this does not mean that we will ignore the great importance to us of
other markets and other international relationships.
The term " historic achievement" is thrown around very loosely about
international meetings. But I think the Bogor meeting which President
Soeharto chaired was one by any measure.
The Declaration we agreed there commits us to establish free trade no later
than 2020 among a group of countries which already account for half the
world's production. It establishes an Asia-Pacific association which makes any
fracturing of the world into three contending trade groupings less likely. And it
offers an unprecedented opportunity to maintain dynamic economic growth in
Asia and the Pacific, while preserving strategic stability.
A good deal of work remains to be done as we fill out the details of the trade
liberalisation process in the lead-up to the next leaders' meeting in Osaka.
But the critical part getting the political commitment to trade and investment
liberalisation is now behind us. All the APEC economies have accepted that
we are working towards a common goal.
And I am convinced that, as was the case when this Government began
dismantling the ring fence of protectionism behind which Australia had
slumbered for so long, the timetable we are now talking about will come
forward as businesses begin to factor the decisions we have made into their
planning.
Most of the public attention since Bogor has been focussed on the free trade
aspect of the declaration.
That is understandable because the benefits from APEC-wide free trade for
Asia-Pacific economies are huge according to our estimates, around three
times the size of the Uruguay Round outcome alone.
But it is important not to lose sight of the other part of APEC's work the trade
facilitation agenda.
In this area, a lot of work is underway which will be of real benefit to business,
especially as formal barriers in the region such as tariff rates begin to come
down. At Bogor, for example, we agreed on:
a set of common investment principles, a first-step in a region-wide
effort to make investment flows easier
a commitment to improve customs procedures, establish common
standards and lower administrative barriers to market access
a " standstill" agreement, committing regional economies to refrain on a
best endeavours basis from increasing protection measures
the need to examine a voluntary dispute mediation service which could
supplement the WTO's more formal requirements
and support for the growing economic policy dialogue taking place
under the auspices of APEC Finance Ministers
All these decisions, together with the trade liberalisation commitment, add up
to an agreed agenda which has set the pattern for regional co-operation over
the next twenty five years.
This is a fundamental change in the political, economic and strategic dynamics
of the Asia-Pacific region. It offers enormous opportunities to businesses that
are creative and flexible and understand the wider environment. They can
plan on access to an increasingly large and integrated regional market,
representing forty per cent of the world's population.
The Bogor commitments have in my view changed the way business will have
to operate in the region. They will have to conceive of their operations in a
more integrated way. And, naturally, as they work to the new agenda, they will
do best if they work more closely with government. And the Government you
can be sure wants to work very closely with business.
Bob McMullan and Peter Cook and other Ministers will be consulting very
dro-sely with ' business -in thie period ahead.
And I have asked two distinguished Australian business people, Philip Brass of
Pacific Dunlop and Imelda Roche of Nutri-metics, to continue to represent
Australia on the Pacific Business Forum group, to which APEC leaders will be
looking for further guidance on what business needs from APEC.
The second point I want to make today is that Australia is very well placed to
meet these new challenges set by APEC.
By 2000 a full decade before Australia is required to achieve free trade under
the Bogor commitment our average trade-weighted tariff will be just 2.9 per
cent. Even in industries traditionally regarded as highly protected, such as textiles,
clothing and footwear and motor vehicles, tariffs will be low by 2000 only
per cent in the case of motor vehicles and between 5 per cent and 25 per cent
for TCF.
Much of our adjustment has already been made.
The effective rate of industry protection in Australia is now about one-third of
what it was in the early 1980s and yet our exports represent 22 per cent of our
GDP compared with less than 14 per cent in 1983.
Elaborately transformed manufactures, which now dominate world trade,
account for 21 per cent of Australia's merchandise exports. And services,
which will be increasingly important as economic growth in the region
continues, account for 20 per cent of our exports.
All Australian industries will benefit from lower barriers in a region where
formal and informal trade barriers have geine6-riily been' higher than our own.
This brings me to my third point:
Although APEC provides a structural framework for co-operation throughout
the Asia-Pacific, the actual business of commerce is conducted country-tocountry
and company-to-company.
When we talk about the opportunities which Bogor creates, that is what it
translates to on the ground contact between Australians and their Asia-
Pacific counterparts.
APEC can be an important accretion to but never a substitute for the
development of strong bilateral links with individual regional countries.
The process is mutually reinforcing.
At the time of the APEC leaders' meeting in Bogor, for example, I was able to
have a very useful series of meetings with ten other heads of government to
discuss bilateral issues.
And good bilateral relationships, in turn, make it easier to do things cooperatively
in the APEC forum.
The Government will continue to look for ways of strengthening relations with
individual regional countries.
A good example has been Indonesia, where we have established the Australia-
Indonesia Ministerial Forum, which has helped broaden the whole focus of the
rela'tionship, and where the Australia Today promotion earlier this year was
such a success in getting the message through to business and the public.
We have been working on the same sort of pattern with other regional
countries, too.
During my visit to Singapore in 1992, for example, our two Governments
agreed to support the efforts of Australian and Singaporean companies to
develop joint business opportunities so-called strategic linkages elsewhere
in Asia.
When Prime Minister Goh visited Australia in September we agreed to
contribute $ 1 million each to establish a Joint Venture Feasibility Study Fund
under this program to assist companies operating jointly in third markets.
We also agreed to establish a Singapore-Australia Business Alliance Forum
which will play a strategic role in developing commercial relations between
Australia and Singapore and business partnerships in third country markets.
We will each be nominating a select group of CEOs to the Forum, representing
companies with strong track records in the Asia-Pacific region.
We will retain close stewardship of the forum to ensure it meets each country's
aims. At the Strategic Business Partnerships session here tomorrow, I hope business
people from Australia and Singap~ e will decide on a destination for a joint
mission next year which will be led by Senator McMullan.
Initiatives such as this can be applied to other countries.
In Australia last month, both President Frei of Chile and President Kim of
Korea, expressed interest in developing linkages between their business
sectors and Australian companies. And I have also discussed such
opportunities with Prime Minister Mahathir of Malaysia.
My discussion with President Frei envisaged Australia as a gateway for
Chilean companies into Asia and Chile as a beach-head for Australia into
South America.
President Kim Young Sam and I also talked about the tremendous potential for
b6--o-perati-on betvween Australian and Korean firms in the science and
technology area.
We agreed to negotiate a new science and technology agreement and to
jointly invest in industrial technology projects in areas like the information
superhighway and clean energy.
These are just some examples of initiatives we are taking to develop bilateral
relationships in ways which facilitate closer private sector links as well.
The story here is being repeated with all our neighbours with China, with
Thailand, with Japan, with Vietnam and around the region.
The fourth point is one I want to make particularly clearly, because the
message sometimes gets lost.
It is that, despite the importance to Australia of APEC and regional economic
linkages, we fully recognise the continuing importance of our relationships with
other countries and other regions.
In other words, we are quite able to walk and chew gum at the same time.
That is why we particularly welcome the delegations here from France, India,
Saudi Arabia, the UAE and Mexico ( although Mexico is also a partner in
APEC). The message we hope you will take back is that this country has a lot to offer
you and your businesses through trade and investment, in Australia itself and,
through Australia, into the Asia-Pacific.
Because this is a very good place to do business an information-rich,
technologically advanced country, situated in the fastest growing region of the
world and with a highly trained multicultural workforce.
Business conditions here are the best they have been for years. The
Australian economy is growing strongly six per cent per annum over the past
twelve months.
And inflation remains below two per cent, less than the OECD average. For
the first time since the early 1960s, we have seen inflation under 2% per cent
for nearly three years.
Wages growth has been very subdued in the past few years, and we have
seen significant improvements in productivity.
These favourable business conditions have been reflected in high profits and
high levels of business confidence. Corporate profits rose by over 11 per cent
through the twelve months to the September quarter. The profit share is now
at its highest level since 1985.
Business investment, especially in plant and equipment, is mounting a strong
recovery which will upgrade and expand the productive capacity of the
economy. This in turn will boost the prospects for Australian exports.
In 1993-94, our volume of exports of goods and services grew by 9 per cent,
more strongly than the Budget forecast, while exports of elaborately
transformed manufactures grew by 16 per cent.
And it is important to appreciate that although Australia is still best known
overseas as an efficient producer of agriculture and minerals, this is a
technologically sophisticated country with a first rate scientific research base.
The image of Australia is to some extent divorced from the contemporary facts.
To give you some random examples:
We have more computers and processing power per head than any country
other than the United States and have invested a higher percentage of our
GDP in telecommunications infrastructure than any country other than Korea
and Germany.
Hundreds of Australian information technology and telecommunications firms
are exporting successfully worldwide.
Australian software runs the tracking, reservation and booking systems for
Lufthansa and other airlines, for example.
Buses in the UK and Denmark use ' smart card' ticketing developed by an
Australian company.
In March I will be attending the CeBIT' 95 Trade Fair in Hanover where 130
Australian companies will be participating.
Australian research and technology is leading the world in areas like gene
shears, which have huge benefits for plant, animal and human health; an antiinfluenza
drug which offers real hope of treatment for all strains of flu; and a
multibeam antenna, capable of communicating with twenty satellites at once
and which makes communications links more cost-effective.
A Co-operative Research Centres program linking universities and research
insfiflitions with industry is pioneering world-class technologies in Australia.
But although Australia has many great attributes, none is more important than
our people. The ethnic diversity of Australia's people gives this country a
natural network for doing global business.
All of the world's nationalities, cultures, religions and traditions are represented
here, but in a uniquely Australian blend.
Here again I suspect the image abroad is a little behind the reality.
Forty two per cent of Australians were either born overseas or have at least
one parent born overseas. Seventeen per cent of Australians speak a
language other than English at home.
We are implementing strategies to make effective economic use of our cultural
diversity which is becoming integral to our approach to industry and trade
development. There are more than 160 ethnic chambers of commerce and bilateral business
organisations around Australia, all actively engaged with Australia's
international commercial relations.
To help businesses get access to these networks, the Government recently
commissioned a study to identify the organisations and their networking
potential. I am pleased to announce that the associated database is available at this
conference for the first time. It is a resource which will help Australian
companies tap into global business networks by providing them with easy
access to people with inside knowledge of markets, first-hand experience,
fluency in their languages and an intimate knowledge of their cultures and
consumer preferences.
There are already many examples where astute Australian businesspeople
have drawn on this resource.
Among manufacturers, for example, Vulcanite and Utilux have utilised
Chinese-born Australian employees to capitalise on market opportunities in
China.
Of the more than 90 international corporations who have set up significant
regional activities from Australia, a number including Data General, the Hong
Kong Jockey Club, IBM, Novell and Oracle have cited Australia's multicultural
population as an important factor in making a decision to locate their regional
headquarters in Australia.
The final point I want to make is about the relationship between business and
government. The world we are moving into is very different from what we have known in the
past. It is more integrated than ever, a globalised environment in which more and
more aspects of our national economy have an international dimension to
them, and in which our external interests economic, strategic, political are
intertwined in a way we have never seen before.
In this sort of world, it is increasingly important that business and government
each understand what the other is saying and work in a complementary way.
That is a very important aim of this Government.
For example, a major part of the work of Australia's overseas posts is now to
assist Australian firms take advantage of trade and investment opportunities.
The Government's overseas trade support network, particularly in China,
Vietnam and other key Asian countries is being strengthened.
Our overseas network is also now increasingly specialised to cater for the
specific needs of Australian exporters. As well as a wide network of Foreign
Affairs and Trade posts, and Austrade staff here and overseas, we have
education counsellors promoting the export of education services and industry,
science and technology counsellors stationed around the globe.
And nine investment commissioners are encouraging foreign firms to set up
operations in Australia, either independently or as joint ventures with
Australian firms.
Government officials here or overseas can't make your deal happen. They
can't write the contracts. But they can help you through their local knowledge
and put you in touch with the right people. Using them can save time and
effort, open doors to opportunities and remove obstacles to doing business.
You should use the next two days to meet with the Australian Ambassadors
and Austrade overseas officers who have returned to be at this conference.
Let them know how they can help in your chosen markets and keep in touch
with them when they get back to their posts.
I hope all of you Australian delegates and international guests find this not
only an interesting couple of days but profitable ones.
Because, in the end, the purpose of this conference is not to listen to speakers
but to do business to help link our private sector with potential partners
overseas. As the theme says: to create networks for global business.