Speech to the APEC 2007 Symposium

by Mr Michael L'Estrange, Secretary - Department of Foreign Affairs and Trade

Hyatt Sanctuary Cove Gold Coast, 2 August 2006

Thank you very much Melinda.
Over the years I've learnt one golden rule at conferences like this, and that is after a day's hard conferencing or even half a day's hard conferencing, it's a very brave person that stands for too long between delegates and their main course, and I promise that I won't!

And the other discipline that's constraining me is that I have to leave this resort about 4am to catch a 6 o'clock plane so I don't intend being here for an excessively long period!

I did want to convey a few things tonight. First of all, I genuinely wanted to thank everyone for accepting the invitation to come here and for contributing in the way you are. I know that everybody in this room has a professional interest in the issues we are addressing, but we do appreciate the trouble you've taken, and appreciate the thoughtfulness that's gone into the contributions. And certainly as far as today has gone, our high expectations have been fulfilled and I'm sure that will continue tomorrow. I also wanted to thank the government of Vietnam and their officials for the cooperation which they have given us in this undertaking. And certainly along with all the other members of APEC we commit our support for a very successful APEC Leaders' Meeting in Vietnam later this year. I'd also like to thank David Spencer and all his team at DFAT that have put all of the arrangements in place for today's and tomorrow's event. These things you will all appreciate are complex, and I think they've all been done very well. There was one point when I think the 34th idea for APEC 2007 was floated and David leant across to me and said “Can you get me a new job?”. I won't because I think he'll do a very good job. I think the only mistake that he and his team has made is not to invite Fred Bergsten, but I'm sure if he was invited none of us would get a word in!

From our point of view in DFAT this is an important opportunity for us. From the Australian government's perspective, APEC is clearly the pre-eminent regional organisation and that perspective, as you can imagine, drives officials in a very concerted way. So we are working as actively as we can to make the process of APEC in 2007 as effective as possible. I think there's no doubt there are new realities imposing themselves on APEC, which I want to touch on briefly this evening. But I think Hadi Soesastro put it very well today when he said that we really need to bring to this process a mixture of ambition and discipline and realism. And I think that is certainly the spirit in which we are approaching the task that awaits us in terms of next year.

It's also an important occasion for us here these few days because it brings together people with different perspectives - practitioners, those involved in theory, those in government, those in business, those in industry groups, academia and those from all the member economies of APEC. This is an important opportunity for us to reach out, if I can mix metaphors, to the broad church of stakeholders in APEC. It is a natural constituency, a natural interaction between all these sectors that often doesn't work as well as it should. But this is one contribution to helping make sure that is does in terms of our responsibilities. It's also very important for us, these few days, because all the people in this room bring quite different perspectives to the future of APEC.

I know that there are some of you who believe that APEC's priorities and process need radical surgery. And others of you that think it just needs a nip here and a tuck there. I know that some of you think that APEC is a fading star and others think that it's an organisation for the times. There are people who take the view that APEC has had too much movement without progress, too much theory without practice. There are some looking to the future who want to have another grand vision for APEC: a vision splendid to which we can all aspire, a kind of new and bold complement to the Bogor goals. And there are others who take the view that there should be scepticism about these grand declaratory objectives, and that what APEC now needs in the future is something practical, and concrete, and incremental. And there are those of course who sit on the fence and want a mixture of both the practical and concrete, as well as the grand.

I think that this is a healthy debate for all of us to be exposed to. But the one thing that cuts across all the views that I come into contact with, is that APEC is living through a watershed period in its existence. And I want to come back to that in a moment. I think perhaps above all why we regard these few days as important is because we really do think there are new realities imposing themselves onto APEC. We want to think laterally and inclusively about them, but above all we want to think them through.

In 1989 APEC was an inspired response to a new set of economic and political circumstances which the region was facing. There were the big geo-political shifts at the end of the Cold War. There was a lot of speculation at the time, about competitive and exclusionary trade blocs emerging in Europe and North America, and about what was the best path for engaging the United States actively and positively in the trade and investment flows of the Asia-Pacific into the future. There was a lot of tension between China and the US. There still is a bit. There was a lot of tension between the US and Japan at the time. And there were questions about how do we best ameliorate this through some regional mechanism. Then there was a big debate about how can we establish an institution that can contribute to the effectiveness of the multilateral trade negotiations but also sustain the rapidly expanding economic growth of the Asia-Pacific region which had been built on an export-led boom for about three decades.

I think we have to realise in all of this, in meeting this challenge 17 years ago, there were no footprints in the sand. There were no lessons of history in the region on which the proponents of APEC could draw. People pointed to the geographic diversity of the proposed group, to its cultural, political, economic differences, and a lot of people were making the argument that this was all too hard or even if it worked it would not succeed. And I take some comfort that the voices that articulate some of the same despair today should look back at that history. Because really what sustained APEC over the period after it was established was a shared belief of all of the member economies that outwardly-focused growth, sustained by trade, investment liberalisation and facilitation and technical cooperation would be to the benefit of all of their economies. And I think as we look at the balance sheet or the record of the 17 years, we've had some of these reflections today, there are some gaps, and there are shortcomings. I think some that might exist in the US, which Myron Brilliant pointed to, concerning the involvement of business. I don't think they exist to the same extent in Australia. I think business is engaged quite actively and continuously with APEC. That's the strong impression I have. But there are gaps, there are things that have not fulfilled the ideals of people who founded APEC, or people in this room tonight, and we need to face up to this balance sheet. But there is far more in the positive.

APEC did ameliorate the transition from the old tensions from the Cold War. It did help the multilateral trade rounds. It has evolved in terms of an agenda beyond economics, which I want to come back to in a minute. It has supported very strong growth in the APEC economies, developed and developing alike - stronger growth, significantly stronger growth, than in non-APEC economies. And it has a track record in terms of trade liberalisation that is impressive - not just in terms of average tariff reductions which we're all aware of, but also in terms of trade facilitation. I was delighted today at the attention that so many gave to this issue. People like John Wilson and Michael Crouch. I mean the fact that capital and people now move far more freely in our APEC region owes a lot to the work that APEC has done on issues like: mutual recognition of standards; customs procedures; paperless trading; in all kinds of other ways where the transaction costs of doing business in this region can actually work to the benefit of the region. Someone said today, ‘this is not glamorous, but it is highly effective.' So I think when we look back at the last 17 years we have enough to sustain us. But the future is quite different. The future demands which we face in terms of APEC are quite complex, and in ways are analogous to the challenges which the founders of this institution faced 17 years ago.

I think there are many ways in which we really need to adapt what we have established here in APEC in a way that will create the goals that we want. So when we set this symposium up some months ago and worked towards this outcome, we didn't want, and don't want, a lowest common denominator outcome. And we don't want a forced consensus. Judging by the discussions today I have no doubt that we will have neither. Knowing the depth of feeling in this room on particular issues, this is a good thing, and we want that debate. Because what we are really after is not forced consensus or a lowest common denominator, we're after insight into what should be the priorities of APEC into the future. We want lateral thinking about how we follow through on those priorities and we want a constructive debate about ends and means. How does the institution of APEC support where we want to go? Certainly I think all our ambitions in regard to those outcomes are being fulfilled to a very high extent.

As you can see from the agenda, we are particularly interested in four big issues, and we've touched on two of them today. One is where do we take this trade agenda? And we looked today at Bogor in the context of Doha, and certainly the Australian government shares and in fact led the disappointment of the outcome of the Round. But the Round is not dead. The Europeans and United States leaders have both committed themselves to actually working further on it. From our point of view in the Australian Government, there is a real commitment to maintain as active and as effective a campaign as we can to get a secure and productive outcome from the Doha Round. Trade liberalisation through the WTO has always been Australia's highest trade priority over recent years, and it remains so. And I think this Round to date has actually put more issues on the table, achieved more commitments, particularly in terms of the eradication of agricultural subsidies, than previous Rounds. The great tragedy would be that all of that is lost. Having come this far and with life still in this process, we will pursue it to the final point. And there is no doubt that APEC will have to face up to the final outcome. And in terms of what we were talking about today, competitive liberalisation, there will be paths we'll have to take if Doha does fail, but that point is not with us.

I was also very pleased today with the discussion that was had in relation to Free Trade Agreements. This is something which didn't exist in 1989. Ten years ago I think there were three intra-APEC FTAs. Today there are 20, with about a dozen more in prospect or under negotiation. And we were very keen to have a productive discussion about what this network means for the broader trade liberalisation objectives of APEC, and what these informal proposals about FTAs in the area of the East Asian summit, or in the ASEAN Plus Three Summit context, or even in the APEC context mean to the people represented by your constituencies.

And I think the discussion that was had today was very insightful. I would go so far as to say that I'm not so sure we would have had that discussion two or three years ago. I think that people like Robert Scollay really did bring both a balance of realism and lateralism to this, and it may not well be a productive or a realistic path to go, but I think there are two advantages in looking at this very carefully. One is that we are not ‘surprised', I think Geoff Allen may have referred to that today, in terms of what could happen in Asia, relative to the Asia-Pacific. And the other is that we think this issue through, because although the final destination may not be what we want, one or two steps along the way may well be. And the idea of some higher standard for FTAs, some greater consistency, some common provisions may have given us food for thought today.

The second area we are really interested in, that we got to today, was structural reform. Now, the leaders of APEC have identified structural reform themselves as a key behind-the-border issue for APEC economies and as the essential vehicle they need to fully realise the benefits of trade and investment liberalisation. And we're living through a new growth wave in terms of the productivity gains that are being derived from changes in communication; changes in the services sector; changes in knowledge; changes in industries. And this new productivity growth is driving greater integration and it's also driving a premium on governments to implement policies of transparency and openness, and the removal of unnecessary differences in regulatory, competition, governance and market systems. So, therefore, structural rigidities prevent economies from fully realising the benefits of this new wave of productivity and growth. And I think Alan Oxley did us a favour today in putting this agenda clearly on the table. And I think that Hadi Soesastro again was very valuable in the contribution about the importance of community building from an Indonesian perspective in relation to APEC.

The third issue that we are really interested in, is in relation to the human security agenda, which we will get on to tomorrow. This is firmly on the agenda of APEC, has been since the Leaders' Meeting in 2001 in Shanghai, and has been the focus of every Leaders' Meeting since. So I would have to say to you that people who think, or want that we go back to some pre-2001 arrangement, where APEC had an exclusively economic-focused agenda, I don't think is real. But I think we can walk and chew gum at the same time on this issue. At the end of the day it's very difficult to have economic opportunity and security without human security. So I think APEC does have to face up to the reality that the unprecedented movement of goods and services and people and capital across borders, that has delivered such enormous economic development and growth, has also created much more illegal movement of people, and drugs, and arms, and weapons across borders. It has created grievances among states which for one reason or another do not have access to the full benefits of globalisation. It has increased the problems from pandemics, and it has broadened the challenges that we face in terms of energy, security and the environment. I think APEC has a real agenda here in terms of not only contributing to economic openness and competitiveness, but also to enhancing security and accountability. I think there is a real agenda in terms of the security of infrastructure that supports trade and there is a real agenda, as John Edwards said today, in terms of energy security.

And the final point I wanted to make is that we are really interested in how APEC fits into the contours of regional institutional architecture. Again one of the differences with 1989 is that we now have a number of regional forums: the East Asian Summit, the ASEAN Plus 3 Process, the ASEAN Regional Forum…many of them. And one of the things which this diversity of institutional arrangements in the Asia-Pacific is doing is that it is addressing the reality of the rise of China and India. And this is going to have implications for APEC, and it's going to have particular implications for the role of the US in APEC. Because APEC is the only one of these regional institutions to which the US belongs.

That is really all I wanted to say. I just wanted to conclude these remarks by referring to the paradox that John Edwards referred to today - the paradox of unprecedented economic prosperity and the need to maintain the momentum of regional integration. From my point of view, I think that APEC has the capacity to be even more relevant in the future than it has in the past. I think we are going through a period in which there is such a change in economic and strategic circumstances that it is comparable to 1989, and I think it challenges all of us in terms of where APEC will go, and how it will respond to these new challenges. It will start in Vietnam this year, and it will be very much on our agenda next year. It is a debate not only about ends, but about means. It's about policies and it's about institutions.

The very last thing I wanted to say was to give you an assurance that certainly from the perspective of government officials in Australia, working on APEC, the goal that we have clearly in mind, not only in terms of groups that you represent but in also in our relation with other APEC economies, our clear goal with them is that the best years of APEC lie ahead of us, not behind us.

Thank you.