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Major challenges for foreign and trade policy

Speech: Australia's Foreign and Trade Policy Agenda
3 August 2000

SPEECH by Dr Ashton Calvert, Secretary of the Department of Foreign Affairs and Trade, to the National Press Club

I am delighted to have this opportunity to address the National Press Club today on Australia's foreign and trade policy agenda.

In discussing this agenda, it is not my intention to set out in exhaustive detail a compendium of current activity in all main policy areas.

Rather, I thought it would be more useful for today's audience if I concentrated on a selection of major issues which characterise some of the more important and interesting challenges in this area of government policy.

Thus, I will talk today about relations with Asia, relations with the United States, developments in the South Pacific, Australia's policy towards the United Nations, our primary trade policy objectives, and the environment.

In making this selection, I want you to understand - and especially those members of the diplomatic corps who are kindly attending today - that a great deal of the Government's attention and resources is also devoted to our important relationships in Europe, our rapidly expanding ties with regions like South America and the Middle East, and the close ties we enjoy with particular countries in Africa.

To set the context for my remarks today, I should like to make a few observations about Australia's place in the international system, and the sort of credentials we bring to bear on the prosecution of an effective foreign and trade policy.

In terms of GDP, Australia ranks fourteenth in the world.

We have a modern industrial economy with a sophisticated manufacturing and services base.

Agriculture accounts for an important share of our export earnings, but only around 3 per cent of GDP.

Manufacturing makes up around 12 per cent of our GDP, and services around 64 per cent. Indeed, the contribution made by services to our economy is similar to that in the US economy.
And the Australian economy has been performing strongly, especially through the challenge of the East Asian financial crisis.

Over the last decade, Australia had the fifth fastest growing economy in the OECD, outperforming the United States, Canada and most of the EU.

The experience of the East Asian financial crisis showed that Australia is well positioned to succeed in an era of globalisation - both to handle its challenges, and to take advantage of its opportunities.

Our strengths in this regard include our robust national political institutions, high standards of corporate governance, an open and increasingly internationalised economy with a wide diversity of overseas markets and investment linkages, and a private sector and wider community that is confident in dealing with the new information age.

Information and communications technology now represents 7 per cent of the Australian economy, larger than either our mining or agriculture sectors.

Australia ranks sixth in the world in terms of computers per capita, and fifth in the world for numbers of adults accessing the internet - technology which over two in five Australian adults are currently using.

Australia also compares well on other counts.

We have a well-educated, technically sophisticated population with ties to just about every national grouping on the globe - more than 17 per cent of our population speak a language other than English at home.

Australia's defence force also contributes to our wider international posture.

Although relatively small numerically, their quality and professionalism are high.

The ADF's outstanding performance in East Timor, and also in the evacuation work done in the Solomon Islands, has been widely recognised, and has further enhanced our international and regional standing.

If these are some of the credentials that Australia brings to its international role, a great deal still depends on the effectiveness with which our representatives perform as advocates for the Australian cause.

I think it is fair to say that Australia has consistently achieved more influence internationally and regionally than our size and other objective attributes would suggest.

The task before us now is to maintain this high performance at a time when fluidity in our regional security environment and a complicated interplay between globalisation and regionalism make the task of protecting and advancing Australian interests even more challenging than normal.


Having returned last weekend from Bangkok where I assisted Foreign Minister Downer in his participation in the annual ASEAN Regional Forum and the ASEAN Post Ministerial Conference process, I am happy to report to you that Australia's relations with our Asian neighbours are in very good shape overall.

One of the features of this year's process was the participation for the first time of the Democratic People's Republic of Korea in the ASEAN Regional Forum.

Australia has been very much part of the process of seeking to engage the DPRK more constructively with the regional and international community.

Our decision to re-establish diplomatic relations with the DPRK was announced in May, and our Ambassadors each presented their credentials last month.

Mr Downer's meeting with representatives of all ten ASEAN countries was especially positive with all participants registering their appreciation of Australia's technical and economic cooperation programs with ASEAN, and our broader diplomatic support for their activities.

Among Mr Downer's numerous bilateral meetings four are worth highlighting.

The meeting with Japan reaffirmed the close partnership we enjoy with that country based on a congruence of strategic, political and economic interests as well as the strong bilateral relationship that has grown up over the past fifty years.

The meeting with India reinforced the forward momentum that has been injected into our relationship with that major Asian power through the visits in March by Mr Downer and in July by Prime Minister Howard.

The meeting with Thailand underlined the highly productive partnership we have established with that country, particularly since the coming to office of the Chuan Government.

The meeting with Indonesia reaffirmed the commitment of both governments to work to overcome the strains and distrust on both sides caused by the East Timor crisis last year, and to continue our joint efforts to rebuild a constructive official relationship.

Given all this constructive activity, and given the excellent bilateral relations that Australia currently enjoys with other key players such as China, the Republic of Korea, Singapore and Vietnam, a casual observer might find difficulty in understanding why relations with Asia continues to be a subject of such lively debate in this country.

Let me offer some broad thoughts on this issue.

The first thing to say is that close engagement with Asia is an abiding priority in Australian policy because of the fundamental strategic, political and economic interests we have at stake in the region, and because of the important relationships we have developed with Asian partners.

The interplay between the basic Western make-up of Australian society and its institutions and our wider international associations, on the one hand, and the imperative of close engagement with Asia, on the other, lies at the very heart of Australian foreign policy.

This challenge is hardly new for our country.

Indeed, in order to help provide some long-term perspective on this question, my Department has commissioned, for publication next year, a historical study named "A Hundred Years of Australia's Engagement with Asia" as our contribution to the commemoration of the Centenary of Federation.

The second thing to say is that Australia's role in East Asia is one that continues to evolve and mature as our bilateral relationships acquire greater depth and resilience, and as the region's institutional architecture continues to develop.

Australia's participation in newly emerging forums in East Asia is made more complicated than it otherwise might be by the preference of some participants to restrict membership of forums like ASEAN + 3 strictly to East Asian countries, at least for the foreseeable future.

In these circumstances, it is important that Australia show sensitivity towards the aspiration in a number of East Asian countries - particularly in the aftermath of the financial crisis - that East Asia develop its own distinctive mechanisms for dialogue and cooperation.

As Mr Downer made clear in Bangkok last week, Australia welcomes the emergence of the ASEAN + 3 grouping, we recognise the potential significance of the forum, and we would be happy to join it at some later stage if invited to do so.

In this regard, we were interested to see that Singaporean Deputy Prime Minister Lee was reported two weeks ago as welcoming Australia's future participation in the ASEAN + 3 process, and predicting that this would happen in five to ten years.

In the meantime, Australia will take up energetically every opportunity that presents itself to play ourselves into the new dynamic of dialogue and cooperation in East Asia.

Australia's contribution and intellectual input to regional bodies, such as APEC, the ASEAN PMC, the ASEAN Regional Forum, the Executives' Meeting of East Asia Pacific Central Banks and a host of other specialist and second-track linkages, is widely recognised and appreciated.

The other big issue in Australia's relations with Asia which warrants specific comment is Indonesia.

There are two main points I should like to register.

First, Australia needs to recognise the historical significance of the democratic transition now unfolding in Indonesia, and the prospect it holds over the longer term for a closer and more broadly based relationship between our two countries than was ever possible in the past.

At the same time, we need to show understanding of and sympathy towards the major challenges that Indonesia currently faces in returning its economy to a sustainable growth path, and in managing the political pressures generated by continuing unrest in several provinces.

Australia led the move at last week's ARF meeting to have the chairman's statement express unequivocal support for Indonesia's sovereignty, territorial integrity and national unity.

As well as using our membership of the IMF Executive Board to support Indonesia's economic rehabilitation, Australia is continuing a large-scale bilateral program of economic, technical and humanitarian assistance.

The other point to make about relations with Indonesia is that the Government is realistic in appreciating that the official relationship will take some time to recover from the strains caused by last year's East Timor crisis.

The Prime Minister had a very friendly meeting with President Wahid in Tokyo in June and reaffirmed that we would warmly welcome a visit to Australia by the President at a time of his choosing.

So far during this year, two Australian Ministers have visited Indonesia, and three Indonesian Ministers have come to Australia.

The Government will continue to work steadily to rebuild a constructive relationship with Indonesia that is based on mutual respect, supports wherever we can improved governance and the growth of democratic institutions, recognises Indonesia's strategic weight in regional affairs, and seeks to maximise the mutual benefits from bilateral cooperation in a wide range of practical areas.

In East Timor, Australia is playing an important role in support of UNTAET and its peacekeeping operation.

We believe that UNTAET is performing creditably in the face of enormous challenges and tight resources.

It is important that the international community stay committed over the long term to East Timor's economic and social rehabilitation, and to assist in nation-building.

Australia has been active in encouraging East Timorese leaders to develop constructive relations with Indonesia, and we welcome the conciliatory attitude that President Wahid has shown towards East Timor.

While the UNTAET peacekeeping force has been successful in stabilising the overall security situation, militia activity near the border has continued and resulted ten days ago in the tragic death of a New Zealand soldier.

And you will be aware of a further incident yesterday involving Australian forces.

These events demonstrate even more clearly that Indonesia needs to do much more to crack down on the militias.

There is also an urgent need for Indonesia and the international community to work together to wind up the refugee camps in West Timor, and thereby remove the base of activities for the militias.


The United States is the world's largest economy, leading trading nation, leading military power, and primary source of technological innovation.

It is a fundamental element in the security and economic growth of the Asia-Pacific.

The alliance we enjoy with the United States is based on shared strategic interests, shared values, and a long and impressive tradition of defence cooperation.

Next year will mark the 50th anniversary of the entry into force of the ANZUS Treaty.

It will be an occasion not only to reflect on the history of the alliance and the contribution it has made to Asia-Pacific stability, but also to remark upon the vitality and relevance the alliance has demonstrated since the end of the Cold War.

Australia benefits from privileged access to US defence technology and from valuable intelligence-sharing arrangements.

Australia contributes to strategic stability and US earlywarning and intelligence capabilities through our hosting of the Joint Facilities at Pine Gap.

While Australia and the United States often see regional and global issues in similar terms, Australia always brings its own distinctive and independent perspective to the table.

The United States is Australia's second largest trading partner, after Japan.

While we benefit from this large commercial relationship, we don't always see eye-to-eye in the area of trade policy.

We often need to defend our interests vigorously particularly with regard to US subsidies for farm products and market access issues such as lamb.

In the period immediately ahead the key challenge for Australia - as the US election cycle runs its course and a new administration is installed - is to ensure that our voice continues to be heard strongly and clearly in Washington, particularly in pursuit of our trade objectives and in sustaining an effective dialogue on Asia-Pacific issues.


As you well know, the South Pacific region, a region in which Australia has been closely involved for a long time, is undergoing a period of uncertainty and change.

What we have been seeing this past couple of months in Fiji and the Solomon Islands and, over a longer period, in Bougainville has very deep roots; problems produced by a combination of traditional communal frictions, colonial-era decisions and mistakes, and the global pressures which bear especially heavily on small, isolated states.

They are problems which will not be solved easily or quickly.

In the period since the South Pacific's political independence, no country has done more than Australia to support the island countries.

We shall continue to do this.

We currently provide over $500 million annually to the independent countries of the region in development assistance - more than any other donor - and we, along with New Zealand, maintain an extensive diplomatic network in island capitals.

Our engagement will remain both broad and deep, and we will continue to support local efforts both to advance development and, where necessary, restore stability.

We continue, for example, to provide extensive support for the Bougainville peace process.

We have, for some months now, been providing extensive support for peace-building initiatives in the Solomon Islands.

Last night, those efforts resulted in a ceasefire agreement between the disputing factions.

We shall now be working with the parties in the Solomons to turn this into a lasting peace arrangement.

We support programs of reform, where they seem likely to increase the ability of island countries to sustain themselves socially and economically, and we help them to take best advantage in areas of relative strength, such as fisheries and tourism.

But as the recent crisis in Fiji serves to illustrate, we cannot determine the course of events in the region, nor should we seek to.

We want to see an early return to constitutional, democratic government in Fiji, and the measures we have recently taken are designed to help its leaders move in that direction.

It is not our role, however, nor is it in our interests to try to step in and run South Pacific countries in times of trouble.

We will continue, as occasion demands, to advise and encourage - and, as in the recent case of Fiji, to warn - and to provide substantial, constructive support to them.

We look to do so in cooperation with those other countries and institutions which have their own long-term relationships with the region.

But we do so on the basis that the island countries' futures must be for them, not us, to determine.


The striking growth of the multilateral security and political system is one of the features of the past half century, and there is always the risk of its getting caught up in its own momentum and complexity.

Australia, however, engages with the UN system for clearsighted reasons of national interest.

Our overall objective with the UN system is to use it to leverage better national outcomes than could be secured by other means.

This requires a keen sense of national priorities, a commitment to secure and defend them, and quite careful harnessing of national resources.

These features characterised our interaction with the United Nations over East Timor last year.

As soon as the post-ballot violence developed, we saw the need for international intervention to restore order and mounted a major lobbying effort, led by the Prime Minister, in many capitals and at the United Nations in New York.

The result was strong UN backing for the Interfet operation in the form of a robust Chapter VII mandate which, in turn, provided the base for the current UN operation in East Timor.

Our interaction with the UN over East Timor directly reinforced our national security, but there is a larger point to make here as well.

We cannot look at our own security in isolation.

Our contribution to wider UN deliberations on international peace and security issues, and our commitments to peacekeeping operations contribute to global security and, thus, also to our own security.

This was recently reflected in the UN Secretary-General's appointment of Major-General Tim Ford as his Military Adviser - the first time that an Australian has been named to the UN's top military position.

Australia is actively engaged in negotiating and strengthening disarmament and arms control treaties within the UN system.

Our own security - and that of our region and the globe - is enhanced by legally binding regimes to prohibit or control the proliferation of weapons of mass destruction and other weapons of concern.

Australia also actively participates in the promotion of human rights standards through the UN system.

We have been concerned, however, that the UN treaty committee system is in a state of drift, paying too little attention to egregious breaches of human rights in many countries, and taking at face value input from unelected and often partisan lobbies.

These concerns prompted the Government's decision to review Australia's participation in the committee system which is in line with our broader desire for reform of the UN.

The UN now operates in a world far different from that at the time it was established in 1945, and it is not clear that the organisation is as prepared as it should be to meet current and future challenges.

We commend the reform efforts of Secretary-General Annan and others, but much more needs to be done.

Australia is part of that process and our Ambassador's chairing of the UN's Fifth Committee, the administrative and budget committee, has been the subject of particular praise.

The forthcoming session of the UN General Assembly, which includes the Millennium Summit, presents a chance to review the UN's priorities for the 2 1 st century and to ensure that the UN remains a central player in the pursuit of peace, security, development and human rights.


Australia's key multilateral trade objective is to launch a new round of trade negotiations in the WTO at the earliest opportunity.

Australia, like all WTO members, has a vital interest in the global trading system, and the potential benefits of a new round for both developed and developing countries are enormous.

The OECD estimates that a new round would boost world economic output by 3 per cent, and DFAT's own analysis finds that global welfare gains from halving current trade barriers would be about US$400 billion annually.

Last year, we worked hard to build support for a new multilateral trade round, but not all differences could be bridged, particularly in new and contentious areas.

Significant differences remain over anti-dumping, investment and competition policies, labour standards and the inter-relationship between trade and the environment.

Achieving convergence on these matters will require leadership from the United States and the EU, more effective dialogue with developing countries about their particular concerns, and flexibility on all sides.

There has been some recent momentum favouring an early round - in APEC, the OECD and the G8.

Trade Minister Vaile has been in close contact with Commissioner Lamy, USTR Barshefsky and his ministerial counterparts in Asia and the Cairns Group in an effort to forge a consensus.

However, with the approaching US presidential elections, a launch of a new round is now unlikely until next year.

In the interim, Australia will press ahead vigorously with mandated negotiations which have resumed in Geneva on agriculture and services, and will encourage further preparatory work on industrial tariffs and non-tariff measures.

Mr Vaile will chair a meeting of the Cairns Group in October in Canada to develop new proposals for negotiations on agriculture.

The successful settlement of the Howe leather and Canadian salmon disputes has served to focus attention on the WTO dispute -settlement process and how it can be used to protect and pursue Australia's trade interests.

Our record in initiating dispute action - on US lamb, prawns and music copyright protection, on Canadian dairy assistance, Indian quantitative restrictions, Hungarian export subsidies and Korean beef - highlights the active role Mr Vaile intends to pursue in this area.

The Department has established a dispute investigation and enforcement mechanism to help exporters identify where WTO challenges can advance their interests.

Domestically, issues such as Australia's relationship with the WTO, prospects for a new round, trade liberalisation and globalisation more generally have continued to feature in public debate.

At Mr Vaile's initiative, the Department has been active in analysing and explaining the benefits improved market access will deliver to regional communities in Australia.

DFAT has a key role in broadening domestic understanding and support for trade liberalisation, and I place importance on continuing industry and public consultation in the formation of Australia's multilateral trading policies.

APEC continues to mature in a way that reflects well on its Australian parentage, and is now the major forum for AsiaPacific leaders, ministers and officials to pursue strengthened regional linkages.

APEC played a particularly successful role in maintaining commitment to trade liberalisation during the East Asian financial crisis and remains a strong coalition in support of the multilateral trading system.

Ministers at the recent Trade Ministers' meeting in Darwin reinforced their commitment to the launch of a new round of negotiations in the WTO, including through a strategic plan to develop the capacity of developing APEC economies to implement VVTO agreements.

Behind the headlines, the 'nuts and bolts' work of APEC is facilitating business in a very concrete and direct way.

Looking to the future, APEC will, of course, maintain its focus on liberalisation and facilitation of trade and investment and provide economic and technical cooperation in pursuit of these goals.

But issues like economic and corporate governance, competition policy and legal infrastructure are also being pursued.

Finally on the trade front, I want to comment on the growth in interest in Free Trade Agreements in the Asia-Pacific region.

Australia takes a pragmatic and flexible approach to FTAs.

Although we continue to believe that the multilateral system offers the most benefits for a medium-sized economy with diverse exports to a wide range of markets, we will not be hidebound by an ideological attachment to multilateralism.

We will pursue bilateral or regional agreements where they deliver substantial gains across the Australian economy which could not be achieved in a similar timeframe elsewhere.

As part of Australia's commitment to deepening its regional engagement, we are currently involved in a feasibility study of an FTA between Australia, New Zealand and the ASEAN Free Trade Area.

This is an important priority for the Department.

A report by a Task Force on which the former Trade Minister, Mr Fischer, is participating, is expected to be considered by governments in October.

We are also in active discussion with Japan and the Republic of Korea on ways of enhancing and broadening our economic and commercial relationships.

We are looking, in particular, at initiatives in the area of e-commerce, services, competition policy and trade facilitation.

A proposal has been made for a regional FTA spanning the Pacific involving the United States, Chile, New Zealand, Singapore and Australia.

Australia is ready to look constructively at any initiative which can benefit our exporters.


Another area of growing international activity for Australia is the global environment agenda, which has major implications for our economy and trade as well as our environmental interests.

Climate change is arguably the greatest international environmental issue for the foreseeable future, and one of the biggest public policy challenges that the Government has ahead of it.

Since signing the Kyoto Protocol in April 1998, Australia and other countries have been negotiating on key outstanding issues, including emissions trading, carbon sinks and the participation of developing countries in reducing global greenhouse emissions.

We are seeking outcomes that will minimise the cost to Australia of achieving our Kyoto target and preserve our competitiveness.

Negotiations at the Hague Conference in November will be difficult.

international environment and trade agendas are becoming increasingly interlinked, with the EU as a key driver.

The recently adopted Biosafety Protocol on trade in living genetically modified organisms is an environment agreement that could affect market access for Australian agricultural exports.

While DFAT assesses that the Protocol does not require a country to act inconsistently with its WTO rights and obligations, we are alert to the possibility that some countries might try to use it to distort trade.

The Government has made no decision on whether to sign the Protocol, and is now in the process of consulting domestically with interested parties including state governments.

Our objective in negotiating, and participating, in multilateral environment agreements is to protect Australia's unique environment without opening the door to trade - distorting outcomes.


In drawing my remarks to a close, I should like to leave with you four broad propositions about Australia's foreign and trade policy agenda which run across all the issues I have discussed today.

First, Australia has great diversity in its international interests and relationships.

We correctly accord priority to close engagement with Asia, but need also to bear in mind that Australia's reputation and access in Washington, New York, Tokyo and London matter just as much as our standing in South-East Asia.

In our diplomacy and advocacy we need to be sufficiently versatile to cover all these angles.

Second, at a time of increasing interaction between countries at all levels, the Australian public quite reasonably wants greater access to consular advice and information on Australia's international relations.

My Department is keen to respond to these demands and seeks to disseminate relevant and up-to-date information through our website, pamphlets, monographs and other publications.

In recent months, the Department's main website has been recording more than a million hits per week.

Third, the prosecution of Australian foreign and trade policy requires highly motivated staff with a right mix of expertise and specialist skills.

One of my core responsibilities as DFAT Secretary is to nurture a corporate culture which continues to attract and retain the highly professional men and women we need to carry forward this important area of government work.

Fourth, Australia and Australians will succeed internationally if we are comfortable in projecting ourselves as we are.

We are neither Asians, Europeans nor Americans.

We are Australians with a record of national achievement which should encourage us to feel confident about the international challenges that lie ahead.


The Department of Foreign Affairs and Trade website is located at -

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