Australia in the Asian century: our strategic role in the zone
9 November 2009
University of Western Australia
As a University of Western Australia graduate, and father of a current UWA student, it is my great pleasure to be here on campus taking part in this inaugural 'In the Zone' public policy conference.
The themes being discussed over the next few days have a clear state focus but address core national interests.
They also go to the heart of the work that I do as a Senator for Western Australia and as Australia's Minister for Immigration and Citizenship.
To address the question of 'Australia in the 'Asian Century' and its strategic role in the zone' I will start with the big picture – the historic geostrategic changes taking place in our region.
I will then set out Australia's policy response to those changes and talk about our key relationships. I will conclude with a few thoughts on the historic changes taking place and what they mean for Australia, and Western Australia.
It is fast becoming a truism to talk of the 21st century as being the Asia-Pacific century.
We are amid an historic shift in global economic and strategic influence to the Asia-Pacific region, a shift that the global economic crisis seems likely to accelerate.
This matters to Australia, not only because our key markets are in Asia but because Asia's economic strength is translating into greater regional weight in global decision making.
While international institutions have been largely shaped and influenced by European and North American countries, today countries from our region, and from this zone, are having a greater say in international governance. The G20 most clearly reflects this.
It is hard to argue that the global financial crisis has a silver lining but the transformation of international governance characterised by the emergence of the G20 as the 'premier forum for global economic cooperation' is pretty close.
It's not only good for Australia – we now have a seat at the head table. It's also good for Asia. Japan was the G8's single voice from Asia.
The G20 includes six countries from our region and almost half of the G20 countries are members of APEC.
Australia and Asia
To meet the challenges and take advantage of the opportunities that will flow from these historic shifts, Australia needs different skills and aptitudes from its business people, its teachers, its public servants and its diplomats.
This is why the Prime Minister and our Government places such emphasis on making Australia the 'most Asia–literate country in the collective west.'
The countries of Asia are our closest neighbours and our major trading partners, and it is in our interests to forge closer links with them.
Economic ties with Asia underpin Australia's prosperity, and have helped shield Australia from the worst impacts of the global recession.
Asia-Pacific economies now account for nearly 70 per cent of Australia's total trade in goods and services.
In the education sector, Australian education institutions last year recorded more than 400 000 enrolments by Asian students, creating new job opportunities and supporting Australian growth.
Because of our geography, Australia's continued economic prosperity depends on continuing peace and stability in our region.
Security of trade routes through the Indonesian Archipelago, the Malacca Straits, the South China Sea and the Taiwan Straits is vital.
We keep a close watch on potential regional hotspots, including the situation on the Korean peninsula.
Evolving Regional Architecture
Australia's approach to the development of regional architecture reflects the region's importance to our security and prosperity.
We are working hard to shape the regional agenda through key groupings.
Australia attaches great importance to the East Asia Summit, a leaders-led forum comprising countries representing 49 per cent of the world's population, accounting for nearly a quarter of global GDP.
Last month's EAS meeting in Thailand – attended by Prime Minister Rudd – was significant in that it reinforced the EAS as a key forum for engagement on regional challenges, and strengthened its agenda.
The outcomes included establishing a pathway to an EAS Finance Ministers' process and agreement to detailed consideration by officials of the Comprehensive Economic Partnership in East Asia initiative, including a potential EAS-wide free trade agreement.
As you know, Australia's Foreign Affairs Minister, Stephen Smith, is travelling Sri Lanka today and then on to Singapore for the APEC Ministerial Meeting.
APEC is the pre-eminent regional forum for Australia's economic engagement with Asia and the Pacific - and a driving force for open trade and investment, structural reform and human security in our region.
By connecting our economies more closely, we can help strengthen each other against external economic shocks, and position ourselves for a sustainable recovery once the global economy rebounds.
Australia has also supported ASEAN, as its first dialogue partner, and the stability and regional cooperation it has fostered since its establishment.
ASEAN continues to work to accelerate economic growth, social progress and cultural development in the region, and to promote regional peace and stability.
The conclusion of the historic ASEAN-Australia-New Zealand Free Trade Agreement, which will come into force in January, provides a new platform for Australia's growing economic ties with ASEAN.
It is the largest FTA Australia has ever signed and will reduce or eliminate tariffs across a region that is home to 600 million people and has an annual GDP of A$3.2 trillion.
The ASEAN Regional Forum, the region's primary multilateral security forum, positively contributes to counter-terrorism, disaster relief, non-proliferation and maritime security.
Despite their strengths, none of the groupings in the current architecture is comprehensive in membership, scope or purpose.
That is the thinking behind the Prime Minister's Asia Pacific community initiative.
We want to ensure that institutions within our region evolve, over time, to deal with the shared security, political and economic challenges of the future, in a way that harnesses our sense of community as the driving force, rather than focus on the things which may divide us.
To take the Asia Pacific community discussions forward, Australia is hosting, next month, a conference of key government officials, academics and opinion- makers from across the region.
They will discuss the Asia-Pacific's future, how to meet the challenges ahead, and what shape future regional architecture might take to maximise the prospects for regional peace, prosperity and global influence.
Australia is not the only country in our region thinking about strengthening regional cooperation. The Prime Minister of Japan, Mr Hatoyama, shares our conviction that we can best manage the challenges ahead by strengthening cooperation and building a strong regional community.
I want, now, to talk about some frontline partnerships in our foreign policy, with crucial strategic significance for Australia, and our region. I will speak firstly about Japan and China, and then India and Indonesia.
Japan
Our relationship with Japan has, for decades, ranked among Australia's most important foreign policy relationships.
The comprehensive strategic, security and economic partnership we enjoy with Japan has been built upon the foundation of longstanding trade and investment ties.
These ties started here in Western Australia, with the minerals and petroleum resources industry, especially exports of iron ore, and then LNG.
For more than 40 years, Japan has been Australia's largest export market. Japanese investment, which played such a vital role in the development of many of Australia's export industries, remains a key element of our economic prosperity.
However, we now share many common strategic interests, and have a strong record of cooperation in global and regional institutions such as the G20. We value our growing bilateral cooperation on defence and security issues.
We are eager to work with the new Government of Prime Minister Hatoyama to further expand our relationship in these and other areas.
It is important for both Australian and Japanese governments and business communities to invest in the relationship and to ensure we make the most of new agendas and emerging complementarities.
This new dialogue included discussion ranging from how to move our bilateral FTA negotiations forward, to how to bring the Doha Round of WTO negotiations to an early conclusion.
On the former, while there are sensitivities that must be addressed, we see abundant scope to liberalise in key areas.
The services sector, in particular, is one where potential remains untapped.
Services make up more than 70 per cent of the economies of both countries. But services are under-represented in our trade. In 2008, services accounted for just 6.6 per cent of our trade with Japan.
Our relationship with Japan is ever-broadening.
Our defence and security ties have evolved beyond expectation. The Australia-Japan Joint Foreign and Defence Ministerial Consultations – is the only formal 2 + 2 Foreign and Defence Strategic Dialogue that Australia has in Asia.
It is the basis for broad-based cooperation on defence and security in our region.
Twenty years ago, Australian and Japanese diplomacy was instrumental in the emergence of APEC and we look forward to Japan's chairmanship in 2010.
We collaborated on the emergence and work of crucial regional bodies, such as the ASEAN Regional Forum and the East Asia Summit.
I have already touched on our shared interests in evolving regional architecture and we look forward to working closely with Japan on this.
Last year, Japan and Australia established the International Commission on Nuclear Non-Proliferation and Disarmament, through which we want to make a strong and timely contribution to the prospects for a successful Nuclear Non-Proliferation Treaty Review Conference in 2010.
This is just one example of the broad-based nature of our relationship. We are working closely in other areas, including on green technologies.
Japan is a founding member of the new Global Carbon Capture and Storage Institute, to which Australian is committing $100 million per annum in funding. This will help deliver the G8's goal of developing at least 20 fully integrated industrial-scale demonstration projects.
The Australia-Japan relationship remains one of tremendous significance. It is a relationship with an impressive history of cooperation, but still with tremendous potential.
China
Of course, enormous potential also characterises our relationship with China.
During his recent visit to Australia, Vice Premier Li underscored that China shares Australia's interest in a broader, strategic relationship in which we can ever-broaden our links, while managing our differences.
The statistics of the Australia-China economic relationship paint a vivid picture. In 1980 our two-way trade in goods and services with China was under $1 billion, or two per cent of Australia's total trade. Last year two-way trade had surged to $74 billion, or 13 per cent of Australia's total trade.
China now ranks beside Japan as our most substantial export market, with these two countries accounting for a massive 40 per cent of Australia's goods exports.
On the other side of the coin, our standard of living here in Australia has improved as we have imported more. Buying from producers in countries such as Japan and China has enabled Australians to take advantage of their expertise and economies of scale.
Just as imports from Australia have been critical in the dramatic economic growth of first Japan, and now China, so too Australia has benefited when purchasing industrial equipment, machinery or consumer goods that other countries specialise in.
Buying these goods means Australians have more money in their pockets to spend on other things - translating into a higher living standard.
Mirroring the pattern set first by Japan, success in trade leads to investment success and investment is now a prominent element of our economic relationship.
Despite a contrary view sometimes being expressed in Australia, the facts tell a very positive story about Australia's welcoming policy and posture towards investment from China.
Since November 2007, the Australian Government has approved more than 100 investment proposals, worth than more than $38 billion, from China to acquire Australian businesses -96 were approved unconditionally.
Chinese investment, like investment from any other country, strengthens the Australian economy and supports Australian jobs.
Here in Western Australia we understand that very clearly.
Next year will mark 20 years since China made its first major investment in developing Australia's resources sector, here in Western Australia's Pilbara region.
That investment, Sinosteel's joint investment with Rio Tinto's Hammersly Iron to develop the Channar mine in 1990, paved the way for a range of ventures.
And now, Australia and China have reached an historic agreement over the sale of LNG from Western Australia's Gorgon project, worth a staggering $50 billion in exports to China over 20 years.
It is the biggest single investment ever made in Australia.
Of course, investment proposals from China's state owned enterprises are subject to review processes, and are judged on national interest considerations, in the same way that China has its own foreign investment review arrangements to which Australian and other investors are subject.
We understand that some screening requirements on foreign investors to Australia impose unnecessary costs and the Government has moved to streamline our foreign investment regime, cut red tape and reduce costs to improve our competitiveness as a destination for investment.
Developing in parallel with our shared economic interest are our people-to-people links.
Australia is home to 600 000 people of Chinese descent. Chinese dialects are the second most commonly spoken language in Australia, after English.
China is an important source both of tourists and migrants, and provides nearly a quarter of all international student enrolments in Australia, more than 125 000 in 2008.
As is the case with Japan, Australia and China have extensive and growing interests in supporting stability and prosperity in our region, and cooperating to address global challenges, such as climate change.
India
Increasingly this is also the case with India. In July I made my first visit to India as Immigration and Citizenship Minister. I left more convinced than ever that Australia and India are natural partners, with a strong convergence of interests.
Over the past five years, Australian goods and services exports to India have risen at an annual average of more than 30 per cent.
India is now Australia's fifth largest export market for goods and services, and is rapidly moving to become our third largest export market. Forty per cent of our nearly $19 billion in two-way trade was with this state.
The Government is working hard to take India to the front-line of our international partnerships and to the front rank of our bilateral relationships.
I note the joint feasibility study on a prospective Free Trade Agreement between Australia and India is close to completion.
But we also want to broaden our relationships.
India is the world's fifth largest energy consumer, and its energy consumption is rising at one of the fastest rates in the world, courtesy of its economic modernisation program and continued population growth.
Australia is a reliable and cost competitive supplier of energy commodities.
These complementarities are the basis upon which Australia and India should develop a substantial relationship in the mineral resources and energy sector.
Indonesia
I also want to mention our vibrant and dynamic relationship with our Indian Ocean neighbour, Indonesia.
Today, the Australia-Indonesia relationship is increasingly a partnership between two robust democracies that share common values and see the world in similar ways.
Australia and Indonesia are increasingly working together in key regional fora, cooperating on the challenge of climate change, forging even closer defence and together countering the scourges of terrorism and people-smuggling.
Bilaterally, our governments are considering the possibility of launching negotiations towards a bilateral free trade agreement to achieve closer economic integration between our economies.
A major conference earlier this year highlighted both governments' commitment to improve people-to-people links.
Australia-Indonesia relations are the strongest they have been in decades. They challenge for Australia is to build on this trend – to broaden and deepen our links, and to find new areas and modes of cooperation to tackle shared challenges.
Australia, Western Australia and the Zone
The theme of this conference, 'In the Zone', refers to the strategically significant geographic time zone that runs on either side of Western Australia.
Sixty per cent of the world's population lies in this zone, which also encompasses many of Australia's, and Western Australia's, key economic and political relationships.
Western Australia's economic strength reflects its willingness and success in engaging with these fast-growing economies and major markets in the zone, including China, Japan, Korea and India.
There is no doubt that Western Australia is uniquely well-placed to capitalise on the changes taking place in our region and in our zone.
Since the 1950s, successive state governments from both sides of politics have recognised Western Australia's tremendous opportunity to generate prosperity by embracing opportunities to trade and invest with the world. Our Premiers have led the way.
Premier Colin Barnett has continued this tradition in developing Western Australia's commercial relationships with our partners in the region, especially China and Japan.
As he rightly says, WA has everything to gain from maintaining our open approach to foreign direct investment from our partners in the region.
As a result, Western Australia is an engine of Australia's growth. It is Australia's largest exporting state or territory. Merchandise exports from WA jumped more than 26 per cent in the 2009 financial year, climbing $18 billion, to $86.9 billion*.
* Report by WA Business News (provided by WASO).
Despite accounting for only 10 per cent of Australia's population, WA now generates 38 per cent of Australia's total exports.
The economic performance of this state has helped shield Australia from the most severe impacts of the Global Financial Crisis.
And recent trade deals – LNG sales to China, Japan, India and the Republic of Korea – underscore Western Australia's potential to exploit its mineral wealth, creating new jobs and funding new development in the process. The new Gorgon project, for example, is expected to support around 10 000 direct and indirect jobs.
Gorgon and other LNG developments will transform Western Australia into a regional and global energy hub, in the same way that Perth is already the heart of Australia's mining industry and a recognised global capital for mining.
But opportunities involving Western Australia's partners in the zone are emerging across all sectors of the economy, from software and IT, to food and wine, from education services to tourism.
Our skilled and productive workforce, outwardly-focused business culture, pro-development state government policies, excellent infrastructure and great universities – including this one – are a strong drawcard, as is our unparalleled lifestyle.
Conclusion
Our Government is committed to ensuring that we take full advantage of the shift in geostrategic influence this century to our region.
We know that this transfer of wealth and influence will continue for the foreseeable future, and that it is a critical force shaping our future.
The Government is pursuing foreign and trade policy objectives that will capitalise on these historic changes and reflect our national interests.
This includes:
- pursuing Free Trade Agreements with regional countries to further strengthen our key trading relationships:
- intensifying our efforts to bring the Doha Round of WTO trade negotiations to a conclusion;
- promoting a conversation about the regional architecture that will deliver security, stability and prosperity in our region; and
- working with our partners in this region in bodies such as the G20, to ensure that global decision-making reflects our interests.
There is much work to be done.
But the rewards will be many if we continue to focus on our region and grasp the opportunities.
Thank you.
See:
Index of speeches and transcripts
URL: http://www.minister.immi.gov.au
/media/speeches/2009/ce091109.htm
Last update: 11 February 2010 at 14:17 AEST