CHECK AGAINST DELIVERY EMBARGOED UNTIL DELIVERY
SPEECH BY THE PRIME MINISTER
LUNCHEON OF COMBINED BUSINESS COMMITTEES
BANGKOK 3 FEBRUARY 1989
Ladies and gentlemen,
As part of my visit to the United States last year, I had
the pleasure of addressing a luncheon hosted by the Economic
Club of Chicago.
After I spoke, the Chairman of the luncheon thanked me and,
as was fitti. ng in an international forum, hie produced a
classic definition of diplomacy.
Diplomacy, he said, was the art of saying " nice doggie, nice
doggie", while you look for a big stick.
That line came to mind when I read the recent important
speech your Prime Minister, General Chatichai, delivered to0
the Foreign Correspondents Club of Thailand last December..
The Prime Minister made the crucial point that diplomacy i~ s
changing. In the past, he said, when battlelines were clearly drawn
Obetween friends and foes, diplomacy was all about strategic
management to use the Chicago analogy, it was all about
looking for the big stick to fend off the snarling dog.
Now, as Prime Minister Chatichai said, diplomacy has become
" tthe art and science of managing peace"
We see t.-he proof of this critical transformation clearly in
our region.
It is true that in the past the nations of the Pacific Rim,
including Thailand and Australia, were greatly preoccupied
with strategic issues, most notably during the Vietnam war
years. But it is equally true that those preoccupations are no
longer paramount. I
They are being replaced by difficult, but far more rewarding
issues: how to remove the obstacles to economic growth and
maximise the opportunities to raise the living standards of
our people.
It is on that issue that I want to concentrate today.
Indeed, it is that issue that underpins my visit to your
country.
For no-one in our region can ignore the fact that Thailand
today is set to join the ranks of Asia's most dynamic
countries. Quite simply, the economic miracle that you have performed
in recent years is impossible to ignore.
The rapid growth and structural change of the Thai economy
over the last decade led to a crucial point of transition in
the mid-80s from a primarily agricultural economy to one
where a greater proportion of GDP and export income derives
from the manufacturing sector.
There are three specific lessons that your success teaches
us.
The first concerns Australia, the second the region, and the
third the global economy. Let me discuss each of them in
turn.
First, it is crystal clear to me that Australia and Thailand
can do a lot more business together than we are doing now.
0 Compared with our trade with other ASEAN nations, two-way
trade with Thailand is surprisingly small.
Our two-way trade with Singapore is worth $ 2.1 billion, with
Malaysia $ 1.2 billion and with Indonesia $ 1.1 billion. With
Thailand it amounts to only $ 650 million.
However even this figure represents a significant expansion
in our relationship.
In 1985, our two governments set a target for two way trade
of $ 500 million by 1988. That target was achieved twelve
months ahead of schedule.
In my talks with the Thai Government yesterday, we have set
a new target of $ 1.3 billion by 1991. It is certainly an
ambitious target it would represent a doubling of our
two-way trade in just over three years from now but I
believe it is certainly achievable.
Indeed those talks have, as I said yesterday, created a new
framework for our relationship, with a number of agreements
underway to facilitate our shared economic development.
This new framework is an unequivocal statement of the
political will on both sides to further develop our economic
relationship, and it is a clear lead to the private sectors
of both our countries.
Private sector involvement in the Thailand/ Australia Joint
Trade Committee, which began last year, is a valuable
contribution.
O I pay tribute also to our hosts today, the Australian-Thai
Chamber of Commerce and the Australia-Thailand Business
Council, for their steady promotion of closer commercial
ties between our two countries.
Australia sees particular opportunities to assist a rapidly
growing Thailand with its infrastructure development in
areas such as coal, power, ports, telecommunications,
railways and agriculture.
We are also proud of our capacity to provide raw and
processed material, manufactured components, consumer goods
and services. More than 3000 student visas were issued in
1987 for Thais wishing to study in Australia.
Australia's private sector expertise and competitiveness is
supported by my Government's major program since 1983 to
implement more outward-looking economic policies. We have
floated the Australian dollar, deregulated our financial
markets, liberalised foreign investment guidelines, reshaped
our tax system and achieved historic cuts in protection.
In other words, Australia and Thailand make natural partners
for a much wider range of commercial activities. We should
make sure, both of us, that we don't miss the opportunities
that lie before us.
Ladies and gentlemen,
I didn't come here solely to advance Australia's direct
bilateral commercial interests as important as they are.
For the -second area I wish to address today is a broader
message, of relevance to our region as a whole. I
We have become familiar with the glowing predictions that
are frequently made about the Pacific Century predictions
that the next era of international economic growth will be
dominated by the nations that border the Pacific.
We have seen example after example of nations proving they
have the capacity, through flexible and competitive
policies, to capitalise on the pervasive dynamism of the
region.
This process saw Japan become an economic superpower, with
nations such as Korea and Singapore following in its wake,
and now with Thailand following in turn.
O All have recognised the truth of the complementary and
interdependent nature of our region, and all have prospered
as a result.
This dynamism has been sustained heavily in the past by US
demand, but regional trading and investment patterns are now
undergoing significant changes, particularly as a result of
the increasing role played by Japan as an engine for growth
in its own right.
Not all nations in the region have been able to exploit the
opportunities available. Vietnam stands out as an isolated
and relatively backward economy but even there, evidence
is emerging that the leadership, encouraged no doubt by the
positive attitudes of the Thai Government, is willing to
explore closer economic links with its neighbours.
It is clear from all this that we should as a region be
Sworking at ways of improving our co-operation so as to
expand the opportunities for regional prosperity.
In Korea earlier this week I urged the region to look
closely at the model provided, in a different context, by
the OECD.
What Australia seeks is for the region to develop a capacity
for analysis and consultation on economic and social issues,
so as to help inform policy development by our respective
governments.
We are currently assessing regional attitudes towards the
possibility of creating a more formal intergovernmental
vehicle of regional co-operation and we believe a
ministerial meeting would be a useful forum to investigate
the question. I
The Korean President, Roh Tae Woo, endorsed these proposals
and enthusiastically supported the idea of pursuing them
further through regional consultations.
I am particularly pleased that the Thai Prime Minister,
General Chatichai, yesterday also welcomed the proposals.
This leads naturally to my third point the implications
for the global economy.
For given the impasse at Montreal, a prime focus of any new
institution of regional co-operation must be to foster a
fair and open multilateral trading system.
Let me describe the significance of this task in this way.
I have already referred to the potential of the
Australian-Thai relationship as significant.
We are both ~ undertaking substantial adjustment programs to
improve that relationship, and to exploit the poteritial of
the region as a whole.
But there is a limit to the extent that any country or any
region can determine its own fate in this increasingly
interdependent world.
All those efforts we are making, and all those efforts of
our regional partners, will be put in jeopardy if the
world's multilateral trading system is allowed to
disintegrate.
The GATT system has provided the backdrop to decades of
sustained post-war growth.
But it is clear that the major economies today are unwilling
to be governed by the spirit of multilateralism that
inspired the original GATT parties more than forty years
ago.
There is now a wide recognition that the GATT system is
unfair. For the main players, the United States, the
European Community and Japan, whose main exports are of
manufactured goods, the GATT system has rules which, whi: le
not always clear and comprehensive, at least provide a
recognisable framework within which trade can prosper.
For other players such * as Australia and Thailand, and many
less developed countries, agricultural goods form a large
part of our exports. And for these exports there are few
formal rules to restrict blatantly unfair trading practices
and to prevent massive subsidies, sometimes amounting to
many times the market price, from perverting the trading
system. It is the subsidies provided by countries whose main exports
are manufactured goods those who benefit most from the
GATT system that are so polluting trade to the detriment
of large agricultural producers.
The dumping of agricultural surpluses on world markets by
the European Community, and policies of retaliatory
sbsidisation adopted by the United States, have severely
depressed and destabilised world agricultural prices and
contributed to massive inefficiencies in the world economy.
A study by the OECD estimates that the t axm policies of the
European Community, Japan and the United States have cost
taxpayers and consumers in these countries $ US200 billion a
year over the last few years.
The European Community and the United States talk of their
low tariffs on manufactured goods. That is commendable.
But it is not a relevant response to the complaints of those
who export predominantly agricultural goods.
It is disappointing not to mention paradoxical and
irrational that at a time when international financial
markets and exchange rates are being freed up, and many
domestic economies are adjusting to become more efficient
* and competitive, international trade is being subjected to
ever more restrictive, inefficient and fundamentally
short-sighted measures.
These measures including non-tariff barriers and other
means of restricting market access, escalating subsidy wars
in agriculture, and the exclusion of whole product groups,
such as textiles, from effective international competitionare
all clear examples of the diminishing commitment by the
major economies to the spirit and objectives of the GATT
system.
This deterioration appears now to have reached a critical
stage. We are at a turning point.
The recent Mid-term Review of the Uruguay Round in Montreal
saw the process of GATT reform stall primarily because of
the impasse on agriculture between the European Community
and the United States.
Progress in all 15 GATT negotiating groups, covering the
spectrum of GATT activities, is now suspended.
The GATT Trade Negotiations Committee is to reconvene in
April to attempt to break the deadlock.
By general consensus, agriculture is now the central issue
of this GATT round.
Without substantial progress towards reforming agriculture,
it appears no progress will be made.
Without such progress the GATT system must, slowly but
surely, disintegrate.
Anyone who has heard me address an international audience in
the past couple of years would know the importance I place
on this issue.
Quite simply, I see it as fundamental not only to the
maintenance of economic growth but also, ultimately, to the
continued stability of international relations into the
1990s.
When I last visited Thailand in 1983 I initiated a series of
Regional Consultative Meetings designed to promote a
stronger regional voice in, and commitment to, the
Multilateral Trade Negotiations.
Strong support by Thailand for this concept has greatly
contributed towards its success.
SIndeed, Thailand and Australia have been close partners in
seeking to restore and extend the multilateral trading
system. I pay tribute to your contribution, through membership of
the Cairns Group, to the collective effort of fair traders
to get the major powers to see sense, particularly on this
vital issue of agricultural trade.
As Australia and Thailand have consistently argued,
liberalisation of agricultural trade is in the longer term
interests of us all.
It would of course have direct benefits to producers of
agricultural goods.
It would also make important inroads into the United States
twin deficit problems.
It would also significantly boost real incomes of developing
countries, allowing them to reduce their debt burdens.
So what is the way forward?
The impasse in Montreal reflected the inability of the
United States and the European Community to move from their
diametrically opposed starting positions.
The European Community was unable to commit itself to
substantial reform.
Tehvee nUtnuiatl edc oSmtpalteetse wliabneterad liaslalt iopanr tiocf ipaagnrtisc utltou rcaolm mitrta dteo
bee discussion of detailed issues could commence.
Both used the intransigence of the other to justify their
own inflexibility.
The solution, surely, is clear.
The stand-off must be broken by simultaneous action by both
sides.
Simultaneously the European Community must commit itself to
reforming substantially the support systems underlying the
Common Agricultural Policy; and the United States must agree
to discussion on this basis.
This can be achieved but political leadership is needed.
That is why I have, very recently, written to President
Bush, European Community Commission President Delors and
hads of a number of governments in the European Community
urging that they follow this path.
And we are also proposing that a further Cairns Group
ministerial meeting be held in Wellington in March.
Ladies and gentlemen,
I have seen reports that the MIT economist Lester Thurow
believes " GATT is dead".
GATT is not dead.
But if the current deadlock is not broken, then we will have
moved not to the end of GATT but quite possibly to the
beginning of the end.
Ladies and gentlemen,
The problems which I have discussed today are difficult arid
at times may appear intractable.
What is required to solve them is vision, leadership and a
high sense of responsibility.
As I look at Thailand, and the courageous and creative way
in which it is approaching the difficult and, as we used to
think, apparently intractable problem which it has faced in
Indo-China, I believe that your country sets an example
which should inspire us all.
During my talks in Bangkok I have been deeply struck by the
far-sighted vision being shown by Thai planners and
decision-makers, as they contemplate a South-East Asia in
which the wound of Cambodia has been healed.
Prime Minister Chatichai has talked of turning Indo-China
from a war zone into a peace and trading zone.
It is precisely that vision which has led my Government to
offer to build the Mekong Bridge between Thailand and Laos.
With the same spirit of friendly co-operation, Australia and
Thailand must work together to build our own economic
wellbeing, to build economic relations throughout the region
and to build a world of prosperity, stability and peace.
0 I