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PRIME MINISTER
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SPEECH BY THE PRIME MINISTER, THE HON P. J. KEATING, MP
CEDA CONFERENCE APEC AND AUSTRALIAN BUSINESS,
APEC THE OUTLOOK FOR OSAKA
SYDNEY, TUESDAY, 26 SEPTEMBER 1995
I am grateful to CEDA, to the Macquarie Bank and to the other sponsors of
this conference for the effort that has been put into arranging it and for this
invitation to speak to you.
It is proof of APEC's progress that four or five years ago conferences on the
subject were held at universities and attracted largely an audience of
academics and officials.
Now APEC requires practical attention from business people the sort of
attention you have been giving today.
I can't stress too strongly my conviction that a fundamental measure of
APEC's success from Australia's viewpoint will be whether it serves the
needs of Australian business.
Whether it helps you to export your products or services more quickly and
efficiently into currently restricted markets around us.
Whether it maximizes your opportunities to develop cooperative
arrangements with your counterparts in other APEC countries.
Whether it helps create new Australian jobs and develop Australian skills.
I am sometimes accused of being preoccupied with APEC. I am happy to.
wear the charge. But it is not, in fact, true.
I have certainly put a great deal of effort into APEC. And I am convinced it
offers Australia enormous opportunities.
But I am concerned and I think we should all be concerned with something
broader than APEC: by our need to establish in the Asia Pacific structures for
the long term which will cement our integration into the region.
It is no good expecting that our geography alone will deliver the economic
benefits of being part of the fastest growing region in the world.
And it is no good just declaring that Australia's future lies in Asia and
expecting that to be the end of the matter.
It is not the end of the matter for governments and it is not the end of the
matter for business.
Beyond recognition of the fact of our proximity and the fact of the opportunity,
there is a great deal of thinking and a great deal of work that needs to be
done. That is what the act of our engagement demands.
We need sustaining ideas about how to support our involvement and how to
secure the future.
And, above all, we have to be comfortable with Australia's place in Asia.
As I have said before, Australia's engagement with Asia is not a take -it-orleave-
it-affair. Asia is not a target of convenience for us us. It is not a
fashion, or a flavour-of-the-month or a political gimmick.
The structures this Government has been helping to put in place go beyond
APEC. They include the ASEAN Regional Forum, which deals with security
issues, and the new linkages we are establishing between the ASEAN Free
Trade Area and the Australia/ New Zealand CER arrangement.
We have just held the first, successful, AFTA-CER Trade Ministers meeting.
The structures also include the range of bilateral arrangements we have
made with our regional neighbours, such as the Austral ia-Indonesia
Ministerial Forum, which help to open up new areas of cooperation quite
outside traditional diplomatic contacts.
We have been helped greatly in our efforts to build these structures by a
little-remarked but quite historic shift which has taken place in the past year
or so in regional attitudes towards Australia.
I am convinced that, in a way which has never been true in the past, our
friends and neighbours; have recognised that Australia the continent and its
resources, the people and their skills and knowledge, the securedd emocracy
and the strong diverse society represents a substantial asset for the region
as a whole. A substantial asset and a valuable partner.
Evidence of this change was seen, in the unprecedented joint statement
about the Australia-Japan relationship which Prime Minister Murayama and I
issued in May. In that document the government of Japan said it " Welcomes
Australia's decision to create its future in the region and reaffirms that
Australia is an indispensable partner in regional affairs".
It was seen in the comment by President Ramos of the Philippines during his
visit last month that " For clear and practical reasons, the countries of our
region see Australia as an integral and vigorous part of the region"
It was seen the comments of the Indonesian Minister for Research and
Technology, Dr Habibie, when during his visit in May, he described Australia
as an asset in the region.
It was seen in Singapore's decision to establish its airforce flying school in
Western Australia, and in the original proposal by the former deputy Prime
Minister of Thailand, Dr Supachai, for the establishment of links between
AFTA and CER.
One of the reasons behind this change is, I am sure, the conviction in the
region that this Government has committed itself to the cause of engagement
with Asia in a way which Australian Governments have never done before.
This has not always been easy.
To succeed, you cannot regard this country's international relations as
peripheral to our main interests or as a remote sub-branch of domestic
politics.
You can't, for example, refuse, as the opposition did, to meet the Vietnamese
Communist Party leader, Mr Do Muci, in the very week Vietnam became a
member of ASEAN, because you think there might be a handful of votes to be
picked up in western Sydney, and expect that there will be no consequences.
Our effort has to be consistent and unrelenting.
In my three years as Prime Minister, for example, I have visited Indonesia five
times and Japan three times, with a further visit planned for November.
Important national Australian interests are engaged here.
One of those important interests is APEC, and that is what has brought all of
us here.
There is no doubt that APEC offers Australia enormous opportunities. Its 18
members represent the world's fastest growing economies and account for
half the world's output, and nearly half its exports.
In area after area the opportunities are vast. For example, expenditure in
regional markets on telecommunications services and equipment has been
estimated at nearly $ 300 billion by 2010. And the World Bank predicts
investment in energy systems of around $ 500 billion before 2000.
I was in Orange last week talking about the opportunities for Australia to
develop a vastly expanded food industry, capable of becoming a pre-eminent
supplier of fresh and processed food to Asia. Conservative estimates put the
Asian food market at nearly $ 1000 billion by 2000.
Already nearly three quarters of all Australia exports goes to other APEC
members.
And by as soon as next year when our exports to Indonesia and Malaysia
will each exceed our exports to the United Kingdom all our top 10 export
markets will be APEC members.
So it is no wonder that getting APEC right lowering the barriers and keeping
the trade and investment flowing is one of the Government's highest
priorities. Just on a year ago all APEC leaders met at Bogor under President
Soeharto's chairmanship and agreed to the audacious goal of free and open
trade in the region by 2010 for developed countries and 2020 for developing
countries. It is important to remember just how ambitious the Bogor Declaration was.
APEC, after all, covers more trade than either the European Union or the
North American Free Trade Area.
And the Bogor commitment to eliminate allI barriers to free trade and
investment was never attempted in the 40-odd year history of the GATT.
But what brought about the agreement to the Bogor declaration was the
recognition by all the APEC leaders that if we are to maintain the great,
transforming, growth in the Asia Pacific which history will judge to be one of
the defining developments of the late twentieth century it is essential to
maintain the dynamism of regional trade and keep dismantling the barriers.
We estimate that APEC-wide free trade will bring gains to Asia-Pacific
economies of around three times the benefits of the Uruguay Round outcome
alone an amount of more than $ 300 billion a year.
But a view of APEC which only pays attention to its economic dimension is
incomplete. Because although it is an economic and trade body and in my
view should remain one it also has very significant political and strategic
consequences for Australia and our region.
It encourages a continued constructive American engagement in Asia by
keeping open the links across the Pacific. This is important to all of us
because in the absence of a United States balancing security role in the
region, strategic uncertainties would multiply, especially in North Asia, and
the result could be a very dangerous arms race with quite unforeseeable
consequences.
APEC also provides a multilateral framework for regional engagement with
China, whose 1.2 billion people and rapidly growing economy guarantee that
it will be a central factor in regional, indeed in world, affairs into the next
century.
A regional organisation like APEC which engages the three Chinese
economies of China, Chinese Taipei and Hong Kong could probably not be
replicated again. It is certain to be a valuable asset for the region in the
years ahead.
APEC also gives Japan the opportunity to assume some of the higher
international and regional profile to which Australia believes its economic
weight entitles it.
Every step we have taken with APEC has been a step into unmarked territory.
The sort of thing we are trying to do has never been done before.
Quite simply, in APEC we are creating a new style of trade negotiation, but
one which fits the features of our region.
APEC's approach to trade and investment liberalisation will not follow the
model of traditional GATT rounds of trade bargaining. APEC is not about
creating an old fashioned trade arrangement confined to eliminating barriers
to trade at borders. Nor is it about establishing a Europe-style highly
institutionalised political and monetary union.
APEC's approach has already been unique in several ways.
Firstly, APEC has already set the end goal it wishes to reach free trade and
investment in the region by 2010 for developed economies and 2020 for
developing economies.
Secondly, in APEC, developing countries are for the first time, not just
participating in but leading a major trade liberalisation process.
Without President Soeharto's strong leadership, for example, the Bogor
declaration would never have been agreed.
In my discussions with him in Bali a week ago, I was again reassured by the
strength of President Soeharto's commitment to the decisions made at Bogor.
He remains firmly convinced of the benefits which APEC can offer to the
developing country members of APEC.
Thirdly, APEC has had Asian countries at the helm during its critical early
stages. Indonesia was in the chair last year, Japan is now and the
Philippines will be in 1996.
Asian countries have not yet taken a place in international affairs
commensurate with their economic power. In APEC, for the first time, we
have an international forum and an international agenda that is very much
shaped by Asia.
Fourthly, because APEC will build closely on the liberalisation programs on
which most countries in the region are already well embarked, it will be more
comfortable and familiar and more easily accepted as a ' win-win' outcome
than the traditional adversarial approach of the GATT.
Next, progress in APEC is being driven very much by leaders.
The establishment of informal leaders meetings, which I first suggested in
1992, has been critical in setting the agenda and keeping it moving. It was
national leaders who outlined the vision for APEC at Seattle, who set clear
goals at Bogor and who at Osaka in November will set out the blueprint for
getting us there.
There is nothing like an imminent summit of political leaders to galvanise
officials into action, and no-one other than leaders has the authority to take
the hard decisions when these are needed.
The Eminent Persons Group, and the way in which it has reported directly to
leaders on long term directions for APEC, has been important in preserving
the breadth of the APEC vision. Neville Wran has been Australia's
representative on the EPG for the past three years. I can see a continuing
role for an advisory body for leaders of this sort outside the official APEC
structure to keep us focussed on APEC's goals.
Finally, APEC has taken a new approach in the way it has actively and
directly involved business. Business views are sought, taken into account
and affect the outcome of policy decisions in APEC.
The Pacific Business Forum ( PBF), of course, has been advising leaders
directly. At my request, Imelda Roche and Philip Brass have ably and
effectively represented Australia on the Business Forum. Its most recent
report, released last week, will be considered by leaders at Osaka.
Business symposiums are now also regular events around APEC ministerial
meetings. The APEC meeting on small and medium enterprises in Adelaide this month
had an associated business forum attended by around 800 APEC business
people and business exhibitions drawn from all 18 APEC economies.
7
The feedback we have received from Australian business participants has
been overwhelmingly favourable. One of them wrote to the Secretary of our
Department of Industry, Science and Technology that we covered more
ground in two pleasant days in Adelaide than we would probably have
covered in a month had we simply gone directly [ to the region]".
Similar experiences were reported from APEC telecommunications and
transport ministers' meetings earlier this year.
And Indonesia also hosted last week a major APEC government-business
dialogue on regional infrastructure issues.
But whatever APEC's potential, and however interesting and unusual it may
be as a model, what really matters is whether it can continue to deliver the
goods.
We are now just two months away from the Osaka leaders' meeting, which
will be another critical moment in APEC's development.
APEC seems to be full of critical moments. But the reality is that unless it
demonstrates continual progress it runs the risk of marking time while the
march of history leaves it behind.
That would diminish an opportunity of unprecedented dimensions to the 21st
century.
While the task of leaders at Bogor last year was to identify the final
destination for APEC trade cooperation, our job at Osaka will be to agree on
a road map to reach it.
Australia will be looking for commitments from members to table before the
next leaders' meeting at Subic Bay individual country plans showing how and
when they will meet the Bogor free trade commitments, and to a parallel
program of collective liberalisation in those areas ( like mutual recognition of
standards and the harmonisation of regulations) where APEC-wide
agreement is the best way forward.
These action plans will be developed individually, but they will have to meet
agreed guidelines.
And the guiding principles must be sound:
liberalisation must be comprehensive, with sensitive
sectors being handled by phasing in over a longer
period not by excluding them altogether
all countries must begin liberalising at the same time,
even if some move more slowly ( as will happen with
the different end dates for developed and developing
countries) and plans must balance members' interests to ensure
that they all benefit from the liberalisation program.
Plans do not need to be the same for each member. They only need to have
each member proceeding at an adequate and balanced pace down the road
to 2010 or 2020.
The plans will be evolving documents over the 15-25 year period provided for
in Bogor and will be subject to a regular process of peer review. For this
reason, we will probably see in Subic Bay more detailed plans for
liberalisation in the early years, with greater definition of the later years as
plans evolve. What will not change, however, is the end goal already set by
leaders. For trade facilitation issues, where the most sensible way to make progress is
through collective action, I hope at Osaka we will set some clear targets and
dates. For example, adoption by 1996 of a common basis for tariff
classification, agreement to common APEC-wide standards for electronic
import clearance by 2000, or simplification and streamlining of business visas
by 1996.
Final agreement to a full program of collective action may not be possible at
Osaka and further work may be needed. But Osaka should make a good
start. The benefits of collective action in these areas should not be underestimated.
The regional coordination of electricity generating equipment specifications
alone could achieve savings in excess of $ 10 billion.
As agreed at Bogor, leaders at Osaka should also announce a package of
measures to accelerate our Uruguay Round commitments. This
' downpayment' on APEC liberalisation will demonstrate our commitment to
APEC and also represent tangible support for the multilateral trading system.
So by this mixture of individual action plans, collective action and concrete
downpayments we want Osaka to chart APEC's progress over coming years.
In this process Australia will need to be able to check that others are
matching our liberalisation and that there is balance across the board.
The Government will have to work out precisely what progress is required by
our key trading partners before we can determine how and when we will open
our market further.
We also need to know what a commercially relevant program of collective
action might look like.
The survey work CEDA has done for this conference, identifying and
prioritising business views on impediments to trade and investment in the
region, provides essential information for this.
That work is also a powerful reminder of why APEC is important to Australian
business. We have already opened up our economy, and we have reaped the economic
benefits. This is a much more competitive and world-oriented economy than
it was a decade ago.
But, as your survey has shown, we still face serious barriers to some of the
markets around us.
We don't have the size and clout to force those barriers down unilaterally.
And there are few signs that the international community is ready for another
global round of negotiations through the WTO.
So APEC is the best means we have of addressing the problems of access
which Australian businesses face.
It is vital that as APEC develops, and as our national contribution to APEC
evolves, the voice of Australian business is heard clearly. For this reason the
SGovernment needs to establish a clear consultative channel of
communication with business.
The latest Pacific Business Forum report proposes the establishment of a
permanent APEC Business Council, comprising representatives from each
APEC economy, to directly advise leaders and deal with APEC working
groups on business issues. I strongly support this.
But I also think we need to establish a national mechanism to coordinate
Australian business views on APEC and provide input to me and the
Government on the business community's interests in APEC.
I have asked Imelda Roche and Philip Brass, as my PBF representatives, to
liaise with business people and business groups over the next few weeks and
to advise me before Osaka how such a representative national APEC
business body can be best set up.
You will no doubt be reading a good deal about APEC in the weeks ahead,
much of it confusing and some of it contradictory.
I am now very familiar with the pattern of public commentary on APEC. It
goes this way.
First, we are told that our goals are too ambitious and that we are overreaching
ourselves. That was said about the original proposal for APEC,
about the likelihood of getting the ' three Chinas' in, about the prospects for
ever getting all the APEC leaders to meet, and about our chance of having
the Bogor declaration agreed.
The next stage goes " Well, of course you have done that, but the process
has obviously failed because all barriers to trade have not yet been
removed." In fact, of course, none of what we are doing is easy. And the closer we
come to implementing our action plans, the more energetically special
interests will fight. I said we will need to do a lot of thinking and a lot of work
we will also need a lot of determination and a lot of patience.
But bear in mind that APEC has come a long way in six years from a
tentative first meeting of ministers in Canberra in 1989 to the agreement by
the leaders of half the globe at Bogor last year to adopt the goal of regional
free trade and investment.
To put APEC's progress in context, although talk of a common European
market started soon after World War 11t, h e Treaty of Rome was not signed
until the mid fifties and it took until the single market exercise of the eighties
before European countries started addressing fully all the trade impediments
among them.
And more recently, with the Uruguay Round, the total period from the first
negotiations to the final implementation of all agreements will be about 23
years. Will we succeed at Osaka in sustaining APEC's forward momentum?
It is always hard to say, because leaders meet without officials present and
the dynamics are fluid and unpredictable.
The main outstanding issue at the moment looks like being the matter of
" comprehensiveness" that is whether APEC liberalisation will cover all
sectors of our economies and all trade barriers or not.
As you will have seen from newspaper reports, we are encountering
nervousness on the part of a few of the APEC economies surprisingly few I
might say about the coverage of agriculture.
Australia's position is clear. The Bogor declaration is unambiguous on the
question of comprehensive coverage. It refers to the goal of " free and open
trade and investment"; to promoting the " free movement of goods services
and capital"; and to ministers and officials addressing " all impediments to
achieving our goal".
It does not say " free trade except for agriculture".
We all have sensitive sectors for Australia, these might include automobiles
and TCF. The effect of any APEC member excluding one sector from
coverage of the free trade commitment would be that others would also look
for exceptions. This would paralyse APEC.
And agriculture is a vital issue for Australia. We worked for forty three years
to have it addressed in any serious way in the GATT and some of the
language now being used to justify " differential treatment" is all too familiar to
us. The fact of the matter is that the 15 25 year time period leaders set in Bogor
for the achievement of the free and open trade and investment goal provides
ample scope for member economies to undertake any necessary
adjustments. I think, in the end, we will resolve this question successfully because the
overwhelming majority of APEC members strongly support Bogor's
unequivocal intentions on this point.
In this regard, the Osaka meeting in November will be a real test of Japan's
capacity to look beyond sectoral preoccupations and to give a lead to the
countries of this region.
* It has never had a better opportunity than it will have in Osaka, in this
year since the end of the Second World War, to show that it has the capacity
to provide genuine leadership and to help shape the region's future in ways
which will benefit its own people as well as the other economies of the region.
I am sure it will take the right decisions, and I have told Prime Minister
Murayama, MITI Minister Hashimoto and Foreign Minister Kono recently that
Australia is willing to help Japan work for a successful outcome.
A long road lies ahead of us with APEC.
But the benefits for the Australian economy, for Australian businesses and for
Australians now and in the future make it a road we must travel.