1~ 1 PRIME MINISTER
SPEECH BY THE PRIME MINISTER. THlE HON P J KCEATING MP
TO THE AUSTRALIA-NEW ZEALAND BUSINESS COUNCIL
AUSTRALIA, NEW ZEALAND AND THE REGION
AUCKLAND FRIDAY. 21 MAY 1993
Few relationships between countries are as close, with s0
much mutual benefit and so few differences. as the
relationship between Austral * ia and New Zealand. It is a
relationship in which we literally take each other's good
will and candour for granted, as I believe we should and
always will.
But where once our fellow feeling arose out of a shared
sense of Isolation In this part of the world, my
discussions today with your Prime Minister and Cabinet,
and with your Opposition leadership, confirmed the
thought I've had for some time: the basis of our
relationship is rapidly changing.
Today we share not a sense of isolation but a knowledge
of opportunity.
Not a suspicion that we are in the wrong part of the
world, but a conviction that we are In the right one.
Not a sense that we can depend only upon each other, but
that we are both part of a great web of production and
t rade f rom your South I slIand up through. East As ia to
Japan's northern islands, and from Indc China to the East
coast of the United States.
You with your Asia 2000 program, we with the rapid
reorientation of Australian Industry, are finally coming
to terms with geography. We both remain determined to
integrate our economies, but we are now conscious that
our future lies not with each other, but In the wider
region not separately, not jointly, but companionably.
Like most Australians, I am well aware of the energy and
rapidity with which New Zealand has been restructuring
its economy, and I have followed your national debates on
economic reform with great interest.
And as New Zealand has changed, so too has Australia. Ii
2
It is most visible in our trade performance. Over a
decade, exports have more than doubled. A decade ago
barely one dollar in eight in Australia came from
exports. Today it is one dollar in five, and climbing.
Today manufactures and services each rival rural exports,
and both are growing. The fastest growing manufactured
exports are elaborately transformed goods and New
Zealand is our biggest ETM market, as we are yours.
As our exports have grown and the nature of our exports
has changed, their destination has also changed. A
decade ago less than half of our merchandise exports
went to East Asia. Today nearly two thirds do and our
exports to Asia are far and away the fastest growing part
of our trade.
The ASEAN countries are now a more important export
market for us than either the US or the EC.
Behind these changes in our trading performance are the
efforts of Australian industry, and deliberate changes to
government policy.
We have opened up the economy by floating the dollar,
abolishing capital controls, and putting in place a
sensible, consistent program of tariff reductions.
We have doubled productivity on our wharves, and reduced
crew levels on coastal shipping to the OECD average.
We have introduced competition into telecommunications
and deregulated air transport.
We have introduced a national system of enterprise
bargaining, which we intend to sustain and encourage
through comprehensive legislation later this year.
We have over a decade maintained an Accord with the trade
union movement which has been a significant factor in
reducing inflation to one of the lowest rates among
industrial countries.
And as a result of tax refo-rms we now have one of. the
lowest ratios of tax to GDP in the OECD.
The change continues today. we are cutting the company
tax rate f rom 39 per cent to 33 per cent. We have
liberalised depreciation provisions to encourage
investment in long lived plant and equipment. We have
Introduced a conditional 10 per cent Investment allowanc6
for plant and equipment, and an additional 10 per cent
development allowance for approved projects with a
capital cost over $ 50 million.
After the recession of the late eighties we are advancing
Into the nineties with consistently higher productivity
growth than we have had for a generation, low inflation,
arnd the lowest level of industrial disputes for decades.
We have a trade surplus, and manufacturing production is
rising.
There is no doubt the structure of the Australian economy
is changing, anid that we have the policies in place and
under development to maintain the pace.
But change is easier and faster when the entire economy
Is growing rapidly, when young people are confident they
will be able to find jobs and older people are confident
they will keep theirs.
Our growth Is still not fast enough to generate the jobs
we need to rapidly reduce unemployment, and I am more
than ever convinced that the package of investment
incentives and company tax cuts and of jobs programs,
together with an Accord which focused on employment, was
the right package to put before Australians in our recent
election.
We are not doing as well as we need to; and the world
economy is not doing well enough. It is troubling to see
Europe doing so little to move out of the economic
trough. It is troubling to see growth moderate at best
in the US and very slow in Japan and Mr Bolger and I
warmly welcomed Mr Miyazawals recent package to stimulate
the Japanese economy.
If there is one thing which I believe can increase
confidence and optimism worldwide, it would be a
successful conclusion to the Uruguay Round this year.
This is Australia's single most important trade
objective. President Clinton has made reaching an agreement a top
priority and asked Congress for an extension of-his
authority to conclude-the negotiation.--
The French Government appears to have recognised the
importance of concluding the round. And I particularly
applaud the decision of the Japanese Government to offer
last weekend a significant package of tariff cuts as part
of the round.
It defies logic that the US and the EC and Japan. so
close to agreement, with so much to gain and with a clear
choice between cheering on a world recovery and
stimulating their own trade, or puncturing recovery and
encouraging the decay of the trade rules which have
created the modern world economy, will let the
opportunity pass them by.
But we cannot take a successful completion of the Uruguay
Round for granted. In fact, there are forces at work
which may mean that the Round will simply fade away.
Certainly we will do all we possibly can to advance an
agreement, and already our Trade Minister Peter Cook has
arranged a meeting of the Cairns Group at the end of June
to register the concerns of fair traders in agriculture.
But the deadlines are now real ones and there Is no
guarantee that they will be met.
We must have by the end of this year an agreement which
can be submitted to the US Congress, which effectively
means we need to see real progress by the G7 meeting In
Tokyo in July.
Over the last decade both our countries have greatly
benefited from the mutual tariff reductions and other
liberalisation undertaken as a result of CER.
In the decade since we signed the agreement trans-Tasman
trade has tripled. The total value of Investment between
our two countries has Increased nine fold.
We have continued to benefit from the free movement of
people between our two countries, based on the Trans-
Tasman Travel arrangement which does more than anything
else to unite us.
Today several hundred thousand New Zealanders are living
in Australia, and might I say, -the issue Iof social.-
security accounting asid e, they are contributing a great
deal to the economic and social life of Australia and
strengthening the bonds which bind us.
In the development of our economic relationship we are
now entering a highly significant new phase.
We are still working towards greater economic
integration, with important achievements in prospect in
areas such as the recognit ion. of occupations and mutual
recognition or common standards In goods. We have also
made substantial progress in developing new arrangements
to facilitate trans-Tasman passenger movements.
But we both recognise that the main game is now our
integration in the Asia-Pacific region a point which Hr
Bolger put forcefully and succinctly in his Tokyo speech
earlier this month.
The new CER phase of integration of standards and
certification has Important implicaio6ns for our
iiif_ 4giia~ tT~ nith the region, as I shall explain later.
My conviction that the 15 member APEC group, which
comprises the major economies of the Asia-Pacific region,
is the right vehicle for Asia-Pacific integration is
based on a few fundamental facts.
The first is that North America anid the Western Pacific
are infinitely better off if they work together than if
they drift apart.
North America is still East Asia's biggest export market.
And East Asia is rapidly becoming more important to the
United States.
At the same time the East Asia region Is accounting for
an increasing share of both world trade and world output.
This has been an extraordinary, historic shift one of
inestimable importance for the conduct of world affairs.
Yet it has by and large occurred in advance of the
sustaining net of understandings upon which trade
conflict can be controlled.
This is why we see today a great contrast between the
mutuality In the actual trade pattern, and the acrimony
in the trade rhetoric.
In reality it is a great cooperative enterprise which is
lifting us all up.
In the rhetoric it is a bitter battle for crumbs.
Given enough tfmte. ' enough ill lull, enou~ h
misunderstanding, and the rhetoric will threaten to
overwhelm the fact.
So there is a contrast between the sophistication of the
success of commerce in the region, and the rudimentary
nature of the political nets which sustain it a
contrast which threatens some day to threaten the
underlying process of integration, and which gives life
to the mistaken Idea that East Asia can go Its way
without North America, -or North America without East
Asia. This is the fundamental reason for the importance of
APEC. But there is another reason too; and that is that
APEC alone is capable of becoming the forum for arranging
the next great leap In trade In the region, for improving
on Uruguay Round outcomes to enhance trade in the region.
As I told a conference in Sydney in February, we should
be seeking as our goal an integrated market which
includes Australia and New Zealand, the ASEAN countries,
the three Chinas, Korea. Japan and North America a
market of two billion people producing half the world's
output, bound together with harmonised trade rules,
harmonised Investment rules. harmonised standards and
certification, and an agreed way of settling disputes
between members.
It would be a market where trade between its members
already accounts for two thirds of their own trade and
where the total exports of the region already account for
per cent of world exports.
It would be an integrated regional market which had a
place for inner markets like the CER and ASEAN's AFTA,
and the North American NAFTA, but which nonetheless works
towards commonality and minimum restriction in all areas
in which these can sensibly be advanced.
We could look at the possibilities for sectoral trade
liberalisation, when the results of the Uruguay Round
become clear.
But quite apart from tariff changes, we ought to be able
to achieve progress towards harmonisation or mutual
recognition of food standards, consumer electronics and
labelling.
We ought to be able to work towards an arrangement where
our different approaches to competition, compan-Y law and.
business practice -are less of a hindrance to trade.
We ought to be able to agree on investment principles to
encourage and facilitate the vast growth of investment
between APEC members.
And we ought to be able to set up a mechanism for talking
through trade conflicts between members.
We should be able -to do all these things and more because
they all share this characteristic it is very easy . to
imagine how many -industries and how -many mil1lions of
people will be better off if we do them. It is much more
difficult to imagine which industries and which people in
the region will be worse off.
All it takes is mutual agreement that it should be done,
and the time and intelligence of governments to decide on
appropriate standards, the appropriate forms of mutual
recognition, the appropriate harmonisation of conflicting
rules. It is something Europe is already successfully doing.
And It is something Australia and New. Zealand are
beginning to succeed in doing.
while the task is obviously much easier for our two
countries, New Zealand and Australia can be a model for
this process of APEC-wide liberalisation and
harmonisation. We have already come a very long way since 1983, not only
in terms of reducing bilateral barriers to goods and
services trade and Investment, but also in creating an
appropriate business environment for Australian and New
Zealand companies.
For example, under CER we are undertaking a significant
business law harmonTiation exercise and we are actively
harmonising our customs and quarantine arrangements. In
some areas such as our 1988 Trade in Services Protocol
CER is at the cutting edge of International trade
pol icy.
A particularly good example of the way in which CER can
reinforce what we want to do regionally is in the area of
standards. Five years ago we signed an agreement on technical
barriers to trade which encourages the harmonisation of
standards and certification procedures.
Further work is underway between our two countries.
Our Cabinet decided at the begi nning of this month that
we should go ahead and do more work on the mutual
recognition of regulations relating to goods and
occupations and on the development of joint standards.
Our National Food Authority and your New Zealand
counterpart are now actively working towards the
establishment of a single standards setting system for
Australia and New Zealand.
So Australia and New Zealand have shown that
administrative impediments to trade can be reduced or
eliminated, and-that It. is worthwhile to do so.
When completed, our integration will be a model of the
success of two countries in making trade between them
nearly as simple and uncomplicated as trade within them.
We can bring to the APEC group some of the lessons of
negotiated mutual recognition and harmonisation of
standards which we are learning in the CER.
These are our intermediate goals, and the APEC countries
have put in place processes which can help us realise
them.
We have established an eminent persons group, for
example, for which New Zealand has provided a
secretariat.
I understand It Is the intention of the group, which is
chaired by Dr Fred Dergeten of the United States, to
produce in good time for a meeting of APEC Ministers in
November In Seattle some thoughts about how regional
Integration should proceed.
Then there Is the preparation for the Ministerial meeting
itself, which many APEC governments are giving a good
deal of thought. My own feeling is that we need to adopt
at that meeting some sort of framework agreement which
outlines our goals, and also an action plan or schedule
which will guide our work over the next few years.
Last year I suggested that a process of periodic meetings
of APEC leaders would also help to stimulate a stronger
sense of regional commonality and mutual interest, and I
have been delighted by the positive response of many APEC
members. I think these are good medium term goals, and of course
they beg the question of what our longer term goals
should be. As I say, we would certainly encourage
progress towards an integrated market. and an integrated
production zone an Asia Paci-fic EconomicCommunjty.
Perhaps some day It will be relevant to think about a
regional free trade agreement and by this I mean an
agreement open to all APEC members, which covers a high
proportion of our trade, and which commits all of us to
substantial liberalisation beyond that already agreed
globally in the GATT.'-
As parties to a very successful preferential arrangement
like CER neither of our two countries can claim to be
opposed to preferential agreements in principle. The
United States, Canada and Mexico are building their own
preferential free trade areas, as are the ASEAN
countries. But I do think the issue of whether a regional
preferential trade arrangement-could one day be given
serious consideration can be postponied uiij we are very
much further down the path of open econoic integration
and of creating an Asia Pacific Economic Community.
The practical and theoretical problems of creating a
region-wide free trade area would of course be Immense.
We need a good deal more practice in economic cooperation
before we contemplate something so ambitious: something
that would change the political as well as the economic
configuration of the globe in fundamental ways.
I remain utterly convinced however, that a gelectiver
trans-Pacific free trade area would fatally undermine the
most fundamental reason we are pursuing KPEC, which is to
knit together the North American and East Asian
economies. The sort of thing I am arguing against is the idea which
the United States seemed to be seriously considering last
year of a network of bilateral preferent~ al trade
agreements which would align some Pacific trading nations
against others.
Whatever slight trade advantages there might be for
individual players on this side of the Pacific a link
with NAFTA would to my mind be at the expense of and
completely overwhelmed by the strategic damage to APEC.
Earlier today in Wellington I said that Australia and New
Zealand stood on the threshold of a new era in our
history. We have the opportunity in this decade to
integrate ourselves with the fastest growing economies in
the world, and in so doing lay the basis for long term
prosperity. As never before it seems to me very much a matter of
making our own history, seizing our time, in our part of
the world.
In Australia more than a decade ago 1. and some of my
colleagues, began to imagine that Australia could become
a successful manufacturing and trading nation: that we
could develop a creative and co-operative industrial
culture: and that we could seize our opportunities to be
a substantial player in this most dynamic region of the
world. It seemed to some of us that, contrary to the wisdom of
generations, Australia need not remain just an exporter
of commodities that we could do both: we could continue
to export the agricultural and rural products and the
minerals, and we could make things for export.
These thoughts -very. rapidly _ moved from the realm of
imagination to that-of necessity.
Like you, we learnt in the 1980s that there was no choice
but to radically change our financial and industrial
culture, to re-orient ourselves to Asia and the Pacific,
and open ourselves to world at large. To add value to our
products. Our economic survival depended on our willingness and
capacity to do these things.
This is the story of the last decade. It will be the
story of the next.-In my view no previous generation of
Australians or New Zealanders lived in a more exciting
era, or one on which their countries' -future so depended.
Along the way New Zealand and Australia have at times
chosen different paths. But the goal has been the same.
And it remains the same. It is no less an imperative now
than It was a decade ago.
Yet for all we do as Governments, our success or failure
ultimately depends upon our people the degree of their
enterprise, the level of their imagination and skill,
their willingness to co-operate, their capacity to
change. In Australia it is the changes we have already made which
convince me of our capacity to change in the future.
Our successes in the arena of industrial relations, the
transformation of workplaces, the move from an
adversarial culture to a co-operative one these have
been revolutionary changes in Australia.
That Is one example. The proliferation of new dynamic
small to medium sized businesses is another. McKinseys
recently identified In Australia 700 companies born of
the new manufacturing and export culture, making products
Australian companies have never contemplated making,
succeeding in markets where Australian companies never
contemplated going.
I have no doubt that New Zealand could point to similar
achievements. On both sides of the Tasman it seems to me
we can take considerable pride and confidence from the
proof of the changes we have made, and the rewards which
are now beginning to f low our way.
And we might also take as a measure of our capacity to
meet the challenges we face the progress we have made
towards Closer Economic Relations between Australia and
N~ ew Zealand. CER, too, has been a response to the
challenge.
CER will give us a better chance in the world. And if,
taking heart from our success with CER, we push on with
the task of creating an Asia Pacific Economic Community,
It will have ' given us much more than that.
It will have given us the basis of prosperity and a good
society: it will have given us the confidence that comes
with knowing that what we have we earned by dint of
imagination and courage, and by believing in ourselves
and in the future of Australia and New Zealand.
Thank you.