A AS DELIVERED
FOR MEDIA THURSDAY, 10 JUNE 1982
ADDRESS TO THE AUSTRALIAN CHAMBER OF COMMERCE
Thank you very much Mr Chairman for that welcome. I would like
to welcome on behalf of the Government all of-those of-you
who have come from other countries amongst whom I have recognised
a number of old friends. I understand that Michael Somare
and myself were both affectod by MrWran'Is industrial troubles
this morning. I don't know what can be read from the fact that
Michael Somare took to the air to get here and I took to the
water, but not in the way that my one of my predecessors might have.
It was just in a police launch crossing the harbour.
I am personall1y very pleased to be opening this convention
whose objective is to achieve a stronger Pacific economy, a
stronger Pacific community. I think that is vastly important
for all of us. It is an important objective and it is very
much worth Working for. I would like to congratulate the
Australian and Sydney Chambers of Commerce on this convention.
Private enterprise, through organisations such as yours can
achieve a g: ceat deal in building friendly relations
around the P~ acific, and encouraging the fullest co-operation
between Pacific countries and partners.
The Pacific-is plainly one of the world's most dynamic and
exciting regions. It is the region for the future.
It is also one of the most diverse, with tremendous
S dwiiftfheirne nicte, s bbeettweweene n thtehier neseidzse s, a ndt heciarp absitlrietnigtehs, oft hetihre cpootuenntrtiiaels
and the degree of development which they have attained.
In thinking about Pacific development, this diversity has to be
recognised as fundamental, as it is recognised in the existing
network of Pacific institutions and arrangements. This network
is extensive and effective, and I would like to say something about
Australia's part in it because these matters are very closely bound
up with the questions of trade and economic development which I shall
turn to later.
Our involvement is substantial, at bilateral and multilateral
levels, including governments and business, together and separately,
covering questions of trade and economic co-operation, and development
assistance. With the ASEAN countries, we have the annual ASEAN-Australia Forum,
a high level intergovernmental consultative mechanism, our Foreign
Minister meets regularly with all ASEAN Foreign. Miuisters, we hold
regular ASEAN Trade Fairs in Australia to assit those countries to
develop markets here and the Australia/ ASEAN business co-operation
committees meet regularly. / 2
-2-
There is a highly sophisticated pattern of contacts with
Japan, especially through the two parallel business co-operation
committees, and the Australia/ Japan ministerial committee which is
to meet next month.
The Australia/ Korea business co-operation committee is a thriving
body, and is next to meet in Australia in August. There are
annual official disuccsions with China, and the Australia/ China
joint trade committee will meet in Peking later this month.
At a broader regional level, Australia is actively involved
in the Asian Development Bank and the Economic Commission -for
Asia and the Pacific ( ESCAP). Australia was the fourth largest
contributor in absolute terms to the recent replenshmrent of the
Asian Development Fund, which lends to poorer countries, and by far
the largest contributor in terms of relative gross national
product. We will continue to play an active and constructive role
in the financing of the forthcoming general capital increase for
the Bank, and we are encouraging the Bank to diversify its lending
to smaller scale projects which have part relevance to a numrber of countries.
The Commonwealth Heads of Government Regional Meeting, itself
an Australian initiative, brings together the Heads of
Government of Commonwealth countries in Asia and the Pacific; the
next meeting in October in Suva will have a particular focus on
Pacif ic issues as indeed earlier meetings of this particular body has also.
In t he South Pacific region, we were a founder member of both
the South Pacific Commission and the South Pacific Forum, which
comprises the independent nations of the South Pacific and will.
next be meeting in Rotorua in August. There-are a wide range of
practical co-operative bodies and arrangements under the auspices
of the Forum, most importantly S. P. E. C. ( South Pacific Bureau
for Economic: Co-operation), also the Regional Trade Agreement,
SPARTECA, signed in 1980, a unique, one way trade agreement under
which Australia and New Zealand are granting preferential and
duty free access on a non-reciprocal basis to the widest possible
range of island products.
We also have important bilateral relationships with New Zealand.
The draft joint report on Closer Economic Relations has just
been published, and with Papua New Guinea, with which we
maintain a s; pecial relationship in both aid and trade areas,
especially -through our assistance to the sPNG Budget, and
through the Pactra Trading Agreement which has given
PNG goods non-reciprocal preferential access to Austr~ lia' s
markets since 1977.
Australian economic assistance to the Asia Pacific region is
of major importance. We are currently committed to providing
$ 345 million to South East Asian countries in bilateral project
aid; under the current three year program we are
$ 120 million to the South Pacific region which represents the
region of greatest growth in Australian development assistance over the
last 6 or 7 years; and we are
-3
encouraging through our aid program joint ventures between
Australian 6ompanies and Pacific governments. But we
acknowledge that our financial assistance in no way matches
the impetus for development provided by increased trade and
business co-oeration between our nations.
The P acific region has long been a major trading area for
Australia, but in recent years trade in both directions has
increased strongly. Between 1974 and 1980, the value of
trade between Australia and other regional economies
virtually doubled in both directions and, at the end of that
period, 70% of our exports and almost 50% of our imports
were within the Pacific region broadly defined.
It is sometimes pointed out that there is a substantial imbalance
in two-way trade, in Australia's favour.* But it needs to
be recognised that in most of those cases, Australia is
exporting raw materials to countries which process them into
manufactured goods to be sold to the major world markets.
With a population of only 15 million people, Australia
inevitably provides only a limited market for the exports of
the western Pacific countries. But it is worth noting that
by the standards of most other developed countries, imports
already supply a large and growing proportion of our market.
For example, inper capita terms our imports of clothing,
footwear and textiles far exceed those of the United States,
the European Communities or Japan. When people are talking about
whether the Australian' markets or are closed m'arkets, it is worth
noting what wre do by comparison with other advanced industrial
countries. Moreover, in recognition of the importance of trade to the
process of economic development, as well as the special
arrangements for forum island countries,-we provide preferential
access to Autralia's market for a wide range of goods produced
by developing countries. And in the contex * t of a new seven
year program of assistance for our domestic textiles, clothing
and footwear industries, not only will assistance be significantly
reduced over time, and access to the Australian market further
increased, but a new developing-country preference scheme has
been incorporated which extends preference to many goods
for the first time, and which will allow developing countries
to further raise their share of the--Australian market. It is
worth noting that when industries really seek to become
competitive, sometimes remarkable things happen. ' There is one
major textile firm operating in Australia which is now establishing
offices in " long Kong and Singapore because it believes it can
compete and -export effectively into those markets. That is not
something that-anyone would have expected a few years ago.
The economic links between Australia and the region also
extend to in-vestment flows. The development of Australia's
resources, from which the countries of the Pacific as well
as Australia obtain great benefit, requires large amounts
of capital. Foreign investment, in partnership with
domestic capital, has been welcomed by tfte Australian Government
under clear -guidelines that have been understood and accepted
by the international community, and a series of decisions
in recent years relaxing controls on outward portfolio
investment have resulted in strong growth in investment overseas
by Australians, much of it to Pacific countries.
-4
It is particularly pleasing that investment in Australia from
the Pacific region has been increasing strongly. Indeed
in recent years, Japan and the ASEAN countries combined are
rivalling, the United States as the ' second largest source of
foreign investment inflows, and the development of joint
ventures between Australian and other Pacific countryI
businesses has been welcomed by the Australian Government.
The economic links, through trade and investment, between
Australia and other countries of the-Pacific indeed, the
economic links between all countries of the region, are both
a source and a consequence of economic growth, and it is
tihrocogh sustained growth that those links will be strengthened.
Growth rates and economic achievement already seen in this
region must seem miraculous ~ in many other parts of the world.
For when one remembers the condition of the region as little
as 25 or 30 years ago, its economic performance over more
recent yearsc has bqen truly remarkable, particularly against
a background of world economic slowdown wht. ch has prevailed
since the early 1970s. Japan, of course, has been one of the
world's fastest growing nations for over 30 years, and has
contributed in a very real way to regional stability and
development.
Australia too has grown and developed immensely in the
last three decades, and in recent years, we have had
substantial success in swimming against the international
tide of recession. Indeed, in 1981 when the average real
growth rate in the OECD was only about and when some
economies were actually shrinking, Australia's real growth
rate was 5% the highest growth rate of all the OECD
countries. -But even our growth rate-was surpassed by those
inthe! newly industrialising countries of the. western Pacific,
for in in 1981, real GNP expanded in Hong Kong by over
in Singapore by nearly 10%, in Korea by in Indonesia by
nearly 8% 0, and in Malaysia by nearly 7%.
The countries which have done best in recent times have been
adopting outward.-looking policies, they have been willing
to adapt their industrial structure to capture growth areas
of the world market, they have worked hard for their success,
by making the most of their advantages despite the lack of
resources which many of them suffer. Almost all western
Pacific rim countries achieved strong export volume growth
rates through the 1970s. Korea averaged over 25%, Taiwan
province over 18%, Singapore and Thailand both over 12%,
and Indonesia over 10% and this very plainly tells the
story of the basis of their remarkable success.
Economic interelationships between the countries of the
Pacific region have also grown apace. For all regional
counrie, except the United States and Japan, more than
half of their trade is with other aountries within the region, and ZEor
most the proportion is much higher. In the case of Japan,
almost half of its trade is intra-regional; and the United States
States trade with the Pacific is assuming increasing
importance, as-evidenced by the fact that in 1978 its trade
with the west Pacific-exceeded total trade with west and
east Europe for the first time in its history.
It is also worth egphasising that while resource endowments
within. 1the region are unevenly shared, and while the lack
of a resourse base has not inhibited remarkable growth
in several countries, the economic strength of the Pacific
region is underpinned by a rich resource endowment. The
region. contains five of the world's major food exporters,
Australia, Canada, New Zealand, Thailand, and the United
States, and these same countries, together with Indonesia,
Malaysia and the Philippines, produce-between them most
industrial raw materials. Indeed, the region provides
or: nore of : the world market economies production of copper,
lead, nickel, tin and iron ore, and a lesser but nonetheless
significant percentage of many other minerals.
However, despite the regions considerable underlying sources
of strength, despite its growing economic interdependence,
and despite its remarkable ecomomic perform~ ance against world
trends in recent years, it is clear that no region,.' no country can
remain immune forever against sustained recession in Europe
and North kmerica. We are all affected by stagnant world
trade and -depressed commodity prices, and the problems are
especially acute for the Pacific islands, which are
typically dependent on export earnings from one or a small
number of commodities.
I. vwould add that world recession is likely to make it more
difficult for prosperous countries to provide the kind of
assistance, and even pursue the kind of policies, which
will help -developing T1hird World countries to achieve growth.
The outlook for the-world economy continues to be bleak.
Predictions of an imminent up-turn in growth and activity
are repeatedly made, but that predicted recovery repeatedly
fails to materialise. At some point those that
say there will be American recovery in Six months, will have
to be proved right, but they have been saying that for the
last 30 years, and I don't know yet which six months are going
to be the crucial six months. Economic growth in the major
OECD countries continues to decline. Last year, for the first
time in over 20 years, world trade actually fell. Is it any
wonder then that unemployment in the OECD countries will
reach 30 mrillion people during this year? If you asked
any leaders of western countries 10 or 15 years ago could the~ y
envisage the circumstances ' in which unemployment in the
advanced industrial countries would reach 30 million by 1982,
they all would have said no, what nonsense, what stupidity,
we know much better than that how to manage-our economies.
It is going to reach that number of 30 million this year
and I wonder how much higher it will have to go before
western leaders show the kind of imagination that will be
needed to get the major world economies back on a growth path..
/ 6
-6
While tariffs have not increased markedly since the Tokyo
MTN round of a short while ago, they remain high for many
products of importance to exporting developing countries
and non-tariff barriers have risen. That Tokyo round did
not deal fairly with developing countries. That Tokyo round
did not deal fairly with trade in agricultural countries.
The has never given protection to trade in agricultural
goods which it-has sought to give in trade and industrial
goods. These matters were not dealt with adequately at the
Tokyo rounds. There is-' no suggestion that theyare being
dealt with adequately yet.
On some estimates, about 40% of world trade faces non-tariff
barriers and these.. bakriers are far more prevalent for
agricultural than industrial products. Many of the more
recent non-tariff barriers such as voluntary restraint
agreements-which characterise the new wave of protectionism,
fall outside the rules of the game and reflect a greater
recourse to bilateralism. It is not surprising that
significant concern is emerging about the effectiveness of
the open mrultilateral market-orientated international
trading system, as incorporated in the GATT and the MTN
codes. I cannot say too strongly that a breakdown of
multilateralism offers the greatest possible threat to
small or middle ranking couxftries because it is the large
and powerful that can enter into that bargaining game and
make arrangements to suit themselves. If Papua New Guinea,
Thailand or Australia need to get into a competitive subsidy
business to keep an export market, how can they do that
against the combined weight of the European Economic Community
of 260 m:. ilion people? We can be outbid every time and
this is the question of wanting to establish a voluntary
restraint-agreement. Obviously the combined weight of
North Amercica or the EEC makes it much easier for them to
establish a voluntary restraint agreement against Thailand,
or the Philippines, or New Zealand or Australia than the
o . ther way around. If we sought to apply a voluntary
restraint agreement against the great and the powerful, I
suggest tEaat we would find it a good deal harder.
Voluntary restraint agreements are just as much a restraint
of trade as formal quantitive restrictions. They operate
in exactly the same way and it is not good enough for
people who have voluntary restraint agreements and who
apply them, to be pious about it and say they don't have
quantitive restrictions, that they don't have barriers to
trade because the exporter whoever it is, has voluntarily
agreed to limit exports. It is a very effective mechanism.
It happened to one of our major industries in relation to
Europe and it was not an agricultural industry. The
underlYir.. g threat of course is that if you don't accept the
voluntary restraint agreement, you won't have any access at
all. That'is the underlying threat, and that is how
voluntary restraint agreements come into being, it is how
they are applied. Middle ranking countries find it very
difficult: to compete actively inthat kind of game. / 7
I can memernber that John McEwan always used to say that the
only protection in trade for countries such as Australia, the
only protection of trade for the developing world, is an
open, fair, multilateral system whereby bilateral agreements
are outlawed. That has been very significantly and substantially
broken down in recent times. I must say that I am not
entirely persuaded that the recent economic Summit at Versailles
tackled these problems with the kind of vision which I believe
the world currently calls for.
The impact of the current world economic downturn not
only threatens the rising living standards which people in
the westhave come to expect, it is particularly
damaging to the prospects of the countries which are economically
weak.. It was against this whole background that Australia proposed
a number of initiatives for consideration in the context
of last weekend's Versailles Summit. Our proposal focussed
on the importance of trade in generating sustainable
economic recovery, and sought to get growth restarted in the
major economies by proposing a standstill, and a subsequent
winding back of protection devices as well as of export
incentives a~ nd subsidies.
It is the easiest thing in the world for countries to-say
we are not -going to increase protection, but if countries
are not prepared to make that proclamation then obviously
they are reserving themselves the right to increase protection
further. There have been one or two suggestions in Australia
that we speak with two voices in this issue, one at home and
one overseas. That I suggest is not correct and shows a
naive. analysis of whata country acting alone can do. We speak
with one voice, but if the principles of comoaritive advantage
are in fact to work, and if a country is to get any benefits
from lowering its own trade barriers, we have got to know that
we can get better access into other markets overseas. There
is no point. in taking away all protection from a particular
country, whether it is Australia, or New Zealand or whatever
unless at the same time you can get better access to those
things which you know you can do best whether it is in the
agricultural, or the mining or the'industrial areas. That is
why it has to be multilateral, that is why it has to be
many sided and not just one country acting alone.
It applies in particular to countries
that have quantitive restrictions against a very large percentage
of our exports. If you got quantitive restrictions against
a larger percentage of your exports, how can could you possibly
by lowering; barriers into your own markets get better
access in t: he markets overseas unless there is a reciprocal
multilAteral move. It is not just possible.
That is why I believe it is im~ mensely important for nations
acting together to be prepared to move in these directions,
but it is not possible, I don't believe it is possible forp
a great powerful country like the United States, or Britain or
8-
Germany to act in thdae areas alone, unilaterally. It is
possible to act in concert and to act together, and it is
then that the theory of comparative advanqage would truly
operate and it is then that living standards in the countries
concerned in trade around the world would grow and we would
all prosper.
Although the Versailles Summit did not itself take any
specific -action, it has recognised the need for action to be
taken along these lines. While the Communique is of course
only a declaration of broad intent it is to be welcomed and
contains muc(, h with which Australia can agree. It not only
re-affirms the commitment to resist protectionist pressures
and trade diLstorting practices, and to complete the work
of the Tokyo round, including improvements to GATT's capacity
to solve current and future trade problems, it also
undertakes to work towards further opening of markets
to co-operate with developing countries, in particular
NIC's to ex]? and trade opportunities, and it endorses full
participation in the forthcoming GATT Ministerial Conference
in other to take concrete steps to achieve those ends.
Now while that much has been said and that much we can agree
with, the test is going to depend on what happens at that
GATT ministerial conference as to whether concrete action is
in fact taken or whether it is just again a statement that
is a desirable objective, without a political will and a
commitment behind it to achieve that and that is what the world
very sorely needs right at the present time.
While the Summit identified a number of desirable objectives,
and indicated support for a number of desirable actions, the
deferral of specific action until the GATT Ministerial
Meeting in November means that the whole trading world will
now be looking even more keenly to the United States to achieve
an early resolution of its dispute over its 1983 and subsequent
budgets. If I learnt anything in ' theUnited States in my recent
visit, and if there . is any unanimity about the future course
of the United States economy, it was that one, there must
be an agreement about the Budget deficit, there must be
agreement that shows that that deficit will decline not
only this year but in also in subsequeht years. It is only then that
the United States interest rates would start to fall. There
might have been many differences about the level of the deficit
and all thE! rest, but amongst everyone I met there was.
agreement about those two critical elements, the need for
agreement about the deficit and a clear perception that
arrangements that are made which will reducing the.' deficit
in later years and it is only then that there would be a
fall of sicjnificance in the US interest rates.
While this is going to be vastly important for the United
States, it will be vastly important to the whole trading
world, for countries like Australia, because the maintenance
of high interest rates is going beyond a certain point,
established situations which are not sustainable within
any country, within any industry or activity. / 19
-9-
Ainudstursatrliiaal~ wisieldl ccoonutnitnruiees toin prceos-so pfeorra tipoons itbievcea usaec tithoen beyco no-miic
prospects and prosperity of peoples throughout the world
depend upon it, none more than the outward looking, exportoriented
economies of the developing codntries of the
western Pacific.
When I addressed the Pacific Basin Economic Council two
years ago, E* outlined a series-of obstacles in the path
of the Pacific community idea, but I then expressed my
conviction -that at some point, whether sooner or later,
the Pacific concept will be given greater'substance, greater
meaning-. by institutional mear., of one form-or another Since then
the search for the most appropriate means and. practic~ il study
of the issues involved has proglrcssed. Australia
subsequently sponsored a seminar at the iAiitU latk-e in 1980
under Sir John Crawford'Is direction.-A second seminar was held
in Bangkok last week with further encouraging results.. There
was recognition at Bangkok of increasing interdependence,
the importance of Pacific contacts for all Pacific countries.
Task forces have been established to study investment and
technology, transfer between Pacific countries and also trade
and manufacturers in primary products and Indonesia has
invited participants to a further conference in 1983.
I would particularly like to thank the Deputy Prime Minister
of Thailand who is here today for his key role not only in
making the Bangkok seminar the success that it was, but also
in making it possible. The objective of a stronger Pacific
community and economy is one that we obviously all share and
by pursuing it through a variety of avenues, it is possible
to take account of all the factors inolved, including the
regional groupings which have become important in achieving_
economic development.
It is obvio usly a more difficult concept than that of the
establishment of the European Community because in the original
establishment of that community, you had countries that were
more similar either in size or history or from the nature of
. activities, the degree of industrialisation, the stage of their
development., than you would find through the great diversity
of countriE! s in the Pacific. It is that very diversity I
believe which poses the challenge and establishes some
difficulty in determining what the true shape and form of
the Pacific community as it one day will emerge and might
ultimately be.
During my vrisit to Korea, President Chun raised with me the
idea of a s; ummit meeting of heads of government of Pacific
countries. other regions, for example the Europeans,
the Africans, the Americas have arrangements of this kind,
but no single meeting pulls together Pacific countries.
it is an idea worth pursuing, for meetings of heads of
government help to focus minds on issues in * a way that cannot
otherwise I believe be achieved. Heads of government when
they meet, hopefully want the meeting to be successful so they
10
put their officials to work before the meeting saying: " what can
we do that will be positive and well-received?" and it really
does focus the mind on the problems to be solved and solutions
to be reached. So it is an idea worth pursuing and we are
examining it closely.
It goes without saying that for such a summit to take place,
the groundwork would need to be carefully laid and it would
need a consensus to emerge in support of the proposals among
an appropriate group of Pacific countries. The summit could
have a useful place as part of the overall strategy of
evolutionary progress through wide-ranging discussions in
which your convention will, I am quite certain, play a very
significant part.
I wish you every success in your deliberations. You have a
noted group of speakers coming later during the day and
again, I welcome all those that have travelled overseas
to be with you on this occasion. I have great pleasure
in declaring the convention officially open.
oOoo---