2,
22 MAY 1979
STATEMENT TO PARLIAMENT
During the five days I was away from Australia I had discussions
with Presidents Marcos and Soeharto and Prime Minister Ohira
of Japan, and addressed the UNCTAD meeting in Manila.
This series of discussions was held against the background of
significant changes in the international strategic situation.
There is continuing instability in Africa and parts of the
Middle East. Developments in Iran continue to generate
anxiety regarding oil supplies and about the security of the
north west Indian Ocean area. In Korea, new assessments of the
north's military strength have placed * this at a significantly
higher level than had previously been estimated, and concern
over security in the Korean Peninsula has led to adoption of
a longer time scale for United States ground troop-withdrawals
from the Fepublic of Korea. Hostilities continue in Indo-China
as Vietnam attempts to consolidate its posieion in Kampuchea.
The tensions which led to fighting between China and Vietnam
are still in evidence. A resurgence of fighting would lead to
the danger of wider international involvement.
In this international environment my discussions with
President Marcos and President Soeharto made clear our common
recognition that broadly based co-operation between Australia,
the Philippines and Indonesia and between Australia and
the other members of ASEAN has become all the more
important. We recognise our responsibility to press for
moderation and conciliation in the conduct of international
affairs. The movement toward greater cohesion among ASEAN countries is
of particular importance to Australia' s interests. It provides
mutual support, promotes co-operation, strengthens confidence
and assists forces for stable development. Accordingly, Australia
seeks to strengthen our links with the ASEAN countries.
my talks with President Marcos made manifest that Australia
and the Philippines, as members of the same region with
similar interests and attitudes, have a joint desire and
determination to work together to respond effectively to the
strains and tensions in the international situation.-We both
welcomed the normalisation of relations between Peking and
Washington. It will assist the development of a more effective
U. S. policy in the Pacific and Asia, which had been hampered
by the absence of formal recognition. Jjj AUS f RALIA
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Normalisation,* and the conclusion of the friendship treaty
between China and Japan, creates new opportunities for these
countries to play a positive and constructive role in the
Asia/ Pacific region. We expressed the hope that the Soviet
Union would make a similar constructive contribution to the
peacef * ul development of the region a contribution which
would be of particular importance because there are areas in
which the Soviet Union is not without influence.
Australia welcomes the conclusion of agreements between the
Philippines and the United States on military bases. These
agreements are of major importance to the strategic balance
in the western Pacific. By concluding them, the Philippines
has made a major contribution to the stability and security
of that region.
Against the background of a potential world-energy shortage
the Philippine and Australian governments will co-operate
on energy matters. A bilateral nuclear safeguards agreement
has recently been concluded, opening the way for negotiations
for the supply of Australian uranium to the Philippines.
In an exchange of letters between President Marcos and myself,
Australia has undertaken to be a reliable and reasonable
supplier of energy to the Philippines, and to give technical
and other assistance to help the Philippines develop its
own energy potential, including uranium exploration.
With respect to other aid programmes it is noteworthy that
Australia's two largest current aid projects are in the
Philippines. The growing co-operation between Australia and the Philippines
is further reflected in the signature of a double taxation
agreement and the ratification of the trade agreement between
Australia and the Philippines that had for some time been put
aside. The ratification of this agreement comes at a time
when trade with the Philippines has been growing faster than
our trade overall, with Philippine exports to Australia growing
at more than 45 per cent a year. The joint commission, which
will be set up under the terms of the agreement, will pursue
means of furthering our bilateral trade and investment.
President Marcos warmly welcomed Australia's strong support
for ASEAN and the arrangements which Australia is making
to assist the Philippines as a member of ASEAN to take up
market opportunities for exports to Australia.-
The Philippines and Australia have many common concerns and
common interests, a common perception of the challenges that
confront us and that we can work together to surmount.
The recent visit to the Philippines, at President Marcos'
invitation, resulted in the consolidation of a strong and
constructive relationship between our two countries. The
joint communique issued at the conclusion of the visit, which
I table for Honourable Members, reflects the range of matters.
we discussed, and something of the spirit of the meeting. / 3
-3
The visit to the Philippines has contributed to making possible
a relationship with that nation of a kind we have not had before.
I wish to record my thanks to the President, Mrs Marcos, and
members of the Philippines government, for all that they did
to make my visit such a warm and very constructive one.
As Honourable Members will know, UNCTAD V is meeting in Manila
throughout this month. It is a meeting of enormous importance.
It comes at a signficant time, towards'the end of the Tokyo
round of Multi-lateral Trade Negotiations and before the Tokyo
economic summit. It comes at the end of a period of some real
progress on the North/ South Dialogue, particularly on the
Common Fund.
Over the last five years, both developed and developing countries
have come to accept the necessity for compromise--formovement
from the rigid positions they adopted in the past. In this
process, Australia has sought to set an example and has worked
to build consensus. This is reflected in Australia's work to
advance the Common Fund, which has long been a policy of this
Government. At one stage, both developed and developing countries took the
position that the other side had to move first. Australia's
view was that, if such rigid stances were maintained, there
would never be agreement, and that Australia, in the interests
of progress, should take the initiative.
At the 1977 Commonwealth Heads of Government. Meeting in London,
Prime Minister Manley of Jamaica and I1 took the lead in setting
up a Commonwealth technical group to define the realistic
possibilities for a Common Fund, and how this could relate to
an integrated programme for commodities. A negotiating conference
on the Common Fund was held in November 1977. Its results were
disappointing, the outcome was a virtual deadlock which held
out the prospect of continuing frustration and conflict between
the developed and developing countries.
To aid in avoiding this outcome at the Sydney Commonwealth
Heads of Government Regional meeting in February 1978, Australia
took a new and positive position on the Common Fund. In April
1978, the Hon. R. V. Garland, Minister for Special Trade
Representations, represented Australia at a Commonwealth
Ministerial Meeting, called to discuss the report of the
technical group set up at the London Commonwealth Heads of
Government Meeting. This Ministerial Meeting contributed to
a greater -flexibility in the, positionsof the developed and
developing country participants. And, before the November 1978
Common Fund Negotiating Conference, Australia circulated a
paper setting out a suggested model on fundamental aspects of
the Fund, with the aim of encouraging an accommodation between
the two sides. Much of what Australia put forward was adopted
by the Conference.
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In addition to Autai's actions in -international forums, the
Foreign Minister and I were active in discussions with the
United States Secretary of State, the Secretary-General of the
Commonwealth, the Secretary-General of UNCTAD, and with others,
in advancing the idea that countries must be prepared to move
if the Common Fund were to become a reality.
The discussion at the December 1978 Heads of Government meeting
in Jamaica was instrumental in helping-to reinforce developed
countries' support for the Common Fund.
The most recent Common Fund negotiating conference, in March 1979,
agreed on the fundamental elements of a Common Fund a position
that, eighteen months ago, few would have thought possible.
Australia made an important contribution to that, but there is
much work to be done before the Common Fund becomes a reality.
UNCTAD must build on the gains that have been made.
At UNCTAD I announced the Government's decision to contribute
to the first window of the Common Fund, which will finance
buffer-stocks of international commodity agreements. Further
negotiation is needed to define the formula for contributions
to the first window.
Australia will also make an effective contribution to the Fund's
second window, which will finance other measures for the stabilisation
of commodity prices, such as adequate research and effective
promotion. It will also be important for commodities where it
is not appropriate to establish a commodity agreement based on
buffer-stocking, for example, a perishable commodity.
Our support for-a second window is firmly based in our own
history. We know from experience that such supports as
research and promotion can be crucial to the success of a
commodity agreement. Australia believes that with respect
to the second window, although contributions are to be
voluntary, it too needs a formula approach which would give
more stability in financing and would do much to guarantee its
success.
Australia will continue to be involved fully in the further
negotiation within UNCTAD, on the Common Fund.
If the Common Fund is to work there need to be international
commodity agreements for certain commodities. Unfortunately
there has been little progress in negotiating commodity agreements
involving both producers and consumers, and consistent with
the principles ? f the common Fund.
Although some progress is being made in relation to rubber,
the International Sugar Agreement is in jeopardy because of
the attitude of the E. E. C. While the U. S. administration is
experiencing difficulties in having the agreement ratified,
. further, some aspects of existing agreements would need to
be re-negotiated to make them acceptable.
Developed countries must join, and agree to participate
financially, in all viable commodity arrangements where they
have a major interest in the trade, otherwise it will be
difficult to see their agreement to the establishment of the
Conmon Fund as other than an empty and rather cynical gesture.
The effective translation of the commitment to a Common Fund
into a reality will contribute to the well-being of developing
and developed nations, but alone this is not enough. The dangers
of inflation and increased protectionism represent major problems
to both the developed and developing nations.
Inflation undermines both confidence in governments and the
confidence of governments. It causes unemployment by reducing
profitability and increasing uncertainty. With inflation, costs
rise, industries are priced out of markets, firms invest less
and employ less creating a national and international unemployment
problem. Inflation leads to disorderly exchange rate conditions
and increases pressure for forms of intervention which inhibit
market forces in general and world trade in particular..
We cannot overlook the conjunction between the increased rates
of inflation since 1973, and the fact that the volume of world
trade grew at only 4 percent per annum between 1973 and 1978
compared with 8 percent over the previous 20 years.
In Europe in particular, new protectionist devices have been
created in recent years. Export subsidies and wage and agricultural
subsidies in the E. E. C. run as high as $ 25 billion each year.
These are just as protectionist as tariffs, quotas or ." voluntary
restraint" arrangements. They deny markets to developing countries
and cause unfair competition for developing countries products
in third markets.
Countries must move to adopt the positive policies advocated
by the O. E. C. D. and allow market forces to work. As my discussions
with the Secretary-General of the Mr Van Lennep, made
clear, the O. E. C. D.' s view is that interventionist policies by
government have the effect of locking labour and capital
into particular industries. The removal or reduction of such
policies would significantly enhance the prospects for
growth in the international economy and international trade.
The Tokyo round of Multilateral Trade Negotiations has put
some brake on the increasing move to protectionism, and that
may be its greatest success. But although there-are individual
negotiations within, the round will be of significant benefit
to Australia, and many of our exporters will have better
assurance of market access than ever beforein their history.
In the world-wide scene, the gains are modest and the impact
is certainly not revolutionary. / 6
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There has been some progress in the reduction of industrial
tariffs but little has been done in relation to non-tariff
barriers, particularly in relation to agriculture. Virtually
nothing has been done in relation to wage subsidies and export
subsidies. Against this background the world must look beyond
the M. T. N. and ensure the continuation ' of effects to liberalise
trade. A lapse into protectionism would deny the basic truth that the
success of the existing system,. a system which has allowed
enormous progress to be made in the recent past, depends
essentially on the growth of mutual trade, and on maintaining
the conditions which allow and encourage that growth.
Nothing would lead to greater bitterness and disillusionment
among developing countries., would do more to strengthen
the case of those who argue for extreme policies. than the
systematic frustration of access to developed country markets.
If the reward for success is to be punishment by means of new
protectionist devices, it will demonstrate that the economic
principles by which the developed~ countries have professed to
live, apply only to those who have arrived and not those who
are on their way. The major developed countries carry a great
burden of responsibility. Thdir management of their own economies
has decisive effects on the international system.
Australia has proposed that UNCTAD should call on these countries
. when tI~ ey meet at-the economic summit in Tokyo to adopt
policies that will bring inflation under control and to resist
the temptation to Burrender to the pressures of protectionism.
Australia is developing a resolution on inflation, protectionism
and structural adjustment and it is expected that this resolution
will be launched at UNCTAD tomorrow. We hope that the resolution
will have a productive effect and will cut across group lines
in UNCTAD.
For Australia's part our record of trade with the developing
nations is a good one. In 1966 Australia introduced the first
system of tariff preferences to assist developing countries.
The Australian system has been'substantially expanded. Some
percent of imports from developing countries now enter
Australia duty free or at a preferential tariff rate. Australia's
imports of industrial products from developing countries have
increased substantially. on a per capita basis, Australia's imports
of manufactured products from developing countries, excluding
petroleum, more than doubled between 1973 and 1977 abetter
performance than that of the United States, the or Japan.
/ 7
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In the sensitive textiles, clothing and footwear area, access
to Australia is very high. Australia's imports on textiles,
clothing and footwear from ASEAN countries represent $ A2. l4
per capita compared with 63 cents for the 51 cents
for the E. E. C. and 25 cents for Japan.
If these three areas allowed imports to the same extent as
Australia then ASEAN imports of these products would expand
by $ 1 billion.
The task before UNCTAD is a formidable one. In approaching it,
we will need to display moderation, we will need to display
realism, we will need to display vision, and last, and perhaps
most important, we will need to display the resolution to
face formidable problems and to surmount them.
A useful aspect of the visit to the Philippines was the
opportunity it afforded for discussions with the
Prime Minister of Japan, Mr. Ohira, on important
international economic, political and strategic issues.
This broad based dialogue between Japan and Australia is
something which I believe both countries find useful.
It is a recent development which took shape primarily
following my 1978 talks in Japan with Prime minister Fukuda
when the Australian Government engaged Japan in a broad
discussion rather than focussing on bilateral issues which
important as they are are not the only matters of concern
to our nations.
In discussing the forthcoming Tokyo Summit, we agreed that
the strongest action against inflation is necessary,
especially in view of the link between inflation, world
trading opportunities and the North/ South dialogue.
It was plain from our discussions that Japan and Australia
have common views on many matters including the Common Fund,
co-operation in the peaceful uses of energy and the continuing
importance of the U. S. role in world affairs, and in
particular with respect to the Asia/ Pacific region.
One particular point of interest raised in the course of our
discussions was Mr. Ohira's concept of a Pacific Basin
Community in which there would be closer regional
co-operation amongst Pacific nations. The idea has
considerable potential and merits further discussion and
consultation. At the moment the concept is tentative and
exploratory and requires a great deal of thinking and
consultation, and I have asked the foreign Minister to develop
ideas and approaches to this subject.
The discussions with Mr. Ohira confirmed that Australia and
Japan have close economic relations, a growing political
understanding and shared perceptions about the Asia/ Pacific
region. We now have a broad and mutually accepted
framework for constructive dialogue with Japan across the
range of bilateral and more general issues which can only be
to the advantage of our countries. / 8
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At the conclusion of the meeting I expressed the hope that
Mr. Ohira would be able to visit Australia at the earliest
possible date. He would certainly receive a warm welcome.
Finally, I turn to my visit to Indonesia. I had earlier
enquired whether President Soeharto would, like Prime Minister
Ohira, be visiting Manila for UNCTAD V, in which case we
could have had an opportunity to meet there. As an
alternative, he suggested having talks on my way back, an
invitation which I very readily accepted because it provided
an opportunity for constructive forward-looking discussions
on a wide range of international, regional and bilateral
matters.
Our talks made it perfectly plain that Australia and
Indonesia recognise that, living together in one part of
the world, we need to work closely together. A strong
relationship between Indonesia and Australia is a
fundamental foreign policy objective of this Government and,
I believe, of President Soeharto's Government also.
The talks confirmed the strength of our relationship and
served further to advance it. They revealed a high degree
of common interest and common understanding on the many
political and economic problems facing the region. There
have in the past been some strains between our two countries.
Those difficulties are now firmly behind us, and we are
determined to look to the future constructively and
realistically.
The President and I reviewed developments at UNCTAD including
the debate on the Common Fund, and the renewed instability
in Indo-China and its implications for the region.
Australia welcomes Indonesia's current efforts to strengthen
its relationship with Papua New Guinea. On the issue of
the Australia/ Indonesia seabed boundary negotiations we were
both hopeful that they will be brought to a speedy conclusion.
Progress has been made in the reunification of Timorese
families and there was agreement that this programme should
be continued as rapidly as possible. The problem of
refugees from Indo-China is a-human problem of vast
proportions which affects all of us. It is a problem which
needs to be tackled at the international level. Indonesia's
co-operation in the Indo-China refugee problem is of
importance in maintaining an orderly intake of refugees into
Australia. Indonesia's continuing help in forestalling
unheralded arrivals of refugees is very much appreciated, for
it is much easier for Australia to take in a significant
number of refugees when this is done in an orderly way and
under proper immnigration procedures. Indonesia' s generous
and constructive proposal to establish an island processing
centre for refugees is welcomed and supported by Australia
and we will be contributing towards the cost of this centre.
The Government urges other nations to make financial
contributions. / 9
9-
Finally, we discussed the possiblity of President Soeharto
visiting Australia before too long and the Government looks
forward to offering President Soeharto the hospitality
of this country.
I discussed the new Australian low air fare scheme with
both President Marcos and President Soeharto. We welcomed
the progress made at the recent meeting of Australian and
ASEAN officials in Kuala. Lumpur where as a result of considerable
good will on both sides, agree ment was reached to recommend
to Ministers a package proposal for a settlement.
As General Romulo, the Philippine Minister for Foreign
Affairs said to the UNCTAD delegates, the joint communique
on civil aviation agreed by ASEAN-and Australian officials
at Kuala Lumpur was " an example of the way in which
differences can be reconciled in the spirit of compromise".
The Australian and Philippines Governments are to discuss
arrangements covering routes between Australia, the
Philippines and countries to the North.
Mr. Ohira and 1 agreed that lower air fares between Japan and
Australia are necessary and we urged that the negotiations
that are already underway between JAL and Qantas should be
concluded as quickly as possible.
In conclusion, this brief visit to nearby pountries was a
particularly valuable and effective one. It advanced our
bilateral relations with the Philippines, Japan and Indonesia.
It advanced Australian-ASEAN understanding. It allowed
Australia's views on major international economic issues to
be put at the world forum of UNCTAD V. The visit
allowed a warm and friendly exchange of views between Heads
of Government on a range of issues which can only lead to
better international co-operation and understanding on
world issues and to enduring relationships between the peoples
of our countries, our region and the world.
JOINT COMMUNIQUE
President Marcos and Prime Minister Fraser
Manila, 11 May 1979
At the invitation of His Excellency President
Ferdinand E. Marcos, the Prime Minister of Australia, the
Rt. Hon. Malcolm Fraser, made an official visit to the
Republic of the Philippines from 8 to 11 May 1979.
During the visit the President and the Prime
Minister held extensive discussions on a wide range of
subjects of mutual interest. The talks were held in a
very cordial and friendly atmosphere, reflecting the
important and expanding relationship between the
Philippines and Australia.
Discussion covered three broad areas: regional
and world stability; the international economic situation;
and the bilateral relationship between the Philippines and
Australia. The President and the Prime Minister agreed that
some aspects of the international situation caused
considerable concern, with areas of instability affecting
parts of Africa, the Middle East and Indo-China. In
addition, they noted that international economic difficulties
added significantly to world tensions.
In such circumstances, Australia and the countries
of the ASEAN region had a strong mutual interest in working
closely together to prevent such tensions from impeding
the peaceful progress and development of the region.
The President and the Prime Minister noted the
recent normalization of relations between China and the
United States and the conclusion of the Friendship Treaty
between China and Japan, and agreed that these events
created new opportunities for these countries to play a
positive and constructive role in the Asia/ Pacific region.
They expressed the hope that the Soviet Union would make
a similar constructive contribution.
The two leaders expressed serious concern about
the situation in Indo-China and called for a settlement
of differences among the parties concerned. They agreed
that disputes should be settled by peaceful means, and
without resort to the use of force.
The President and the Prime Minister referred to
the critical importance of the 5th Session of the United
Nations Conference on Trade and Development, currently
being held in Manila. They agreed that its location and
timing made the present conference especially important.
The immediately preceding period had been one of reduced
growth of world trade caused by inflation and leading to the
spread of unemployment and the dangerous increase of
protectionism.
2.
The two leaders recalled the part they and their
governments have played to date in bringing about an agreement
on the basic elements of a Common Fund, and welcomed the
prospects it brings for greater stability in commiodity
prices at levels which are remunerative to producers and
equitable to consumers. They expressed the firm conviction
that the Fund should be established as soon as possible.
They also called, in particular, upon producers
and consumers to proceed to negotiate expeditiousy appropriate
international commodity agreements and arrangements under
the Integrated Programme for Commodities of which the
Common Fund was a key instrument.
The President and the Prime Minister agreed
further that there was a need to look to the future and to
improve on the results of the Multilateral Trade Negotiations.
It was of critical importance to achieve significant
reductions in barriers to world trade. In this context,
they noted that high rates of inflation were a significant
element in the slower growth in volume of international
trade and in market opportunities for all countries,
especially developing ones. They therefore called upon
countries, and in particular the major industralized ones,
to pursue policies to bring inflation under control.
The President and the Prime Minister were pleased
with the contribution that had been made by ASEAN to political
stability and the economic and social development of the
region. The Prime Minister emphasized Australia's strong
commitment to South-East Asia and the whole-hearted support
for ASEAN, which he referred to as an excellent example of
the strength and stability which could be achieved through
regional cooperation. It was a basic element of Australia's
policy to work closely and cooperatively with ASEAN in all
matters. The two leaders discussed the new Australian
low air fare scheme and, in this connection, they welcomed
the progress made in the discussions at the recent meeting
of Aus tral ian and ASEAN of f ic ial s in Kual a Lumpur inc luding
the agreement to recommend to ASEAN and Australian Ministers
a settlement on a package basis.
The President and the Prime Minister agreed to
start discussions on arrangements covering routes between
Australia, the Philippines and countries to the north.
The President and the Prime Minister reviewed
the full range of the bilateral relationship between the
Philippines and Australia and were able to settle a number
of issues, thus clearing the way for the fuller development
of the existing network of bilateral agreements.
W
3.
Referring to the Nuclear Safeguards Agreement
which has just been concluded, the two leaders agreed
that this would be the basis for subsequent arrangements
for the supply of uranium from Australia to the
Philipr-ines. The President and the Prime Minister noted that
while the value of trade between the two countries has
increased considerably, there remains a significant
balance in Australia's favor. In this context, they noted
and the President welcomed the arrangements that the
Australian Government was making to increase market
opportunities for exports to Australia from the Philippines
and other ASEAN countries.
The two leaders welcomed the exchange of letters
of ratificiation which they had authorized to bring into
force the trade agreement between Australia and the
Philippines and agreed that this was a significant
development. The Prime Minister and the President further
welcomed the signing of a double taxation agreement between
the two countries which would help promote greater economic
cooperation. These various agreements, together with the
accompanying strengthening of the political relationship,
reflected the growing warmth and cooperation between the
Philippines and Australia.
The two leaders recognized the considerable
prospects for the substantial growth in tourism between
Australia and the Philippines and agreed to consider early
measures to realize this potential.
The President welcomed the continuing commitment
of the Australian Government to the economic development
of the Philippines through its various aid programs, and
the Prime Minister confirmed that the Australian Government
expected to maintain its aid-allocations to the Philippines.
The Prime Minister said that the Australian
Government had studied a recent Philippines request for
assistance in the development of its energy capability,
and confirmed that Australia would provide such assistance.
The President welcomed the Prime Miite' assurance that
Australia intended to be a reliable and reasonable supplier
of energy sources to the Philippines.
The Prime Minister expressed his pleasure and deep
gratitude to the President and Government of the Republic of
the Philippines for their invitation to him to visit Manila,
and for the excellent arrangements and gracious hospitality
that had been offered to his party. The President accepted
an invitation by the Prime Minister to visit Australia at a
mutually convenient time.