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John Howard Speech: Australia’s Relations With Japan

The Prime Minister, John Howard, has discussed Australia’s relationship with Japan in a speech in Sydney today.

Howard spoke to the Australia-Japan Conference at The Quay Restaurant.

Text of speech by John Howard to the Australia-Japan Conference.

Prime Minister John HowardI am delighted to be here today. The genesis for today’s conference came about during my visit to Japan in July 1999. I well recall the late Prime Minister Mr Obuchi’s immediate and enthusiastic endorsement of the proposal when I first raised it with him.

In agreeing to hold such a conference – involving not only our political leaders but also key business and academic figures – Mr Obuchi and I recognised a need to reflect upon the character of the bilateral relationship as we move into the next millennium.

No one can doubt the great strength of the relationship between Japan and Australia and the many benefits each of our nations gain from it across a wide spectrum of areas. Yet we would be foolish to take it for granted by not exploring opportunities for even closer links in the future.

The relationship between Australia and Japan does have a very special quality. It is a magnificent model to the rest of the world of how two countries with vastly different cultures and very different histories can come together and achieve, through the recognition of their common objectives and their common goals, a great friendship.

In the last fifty years, we have built a relationship that has developed far beyond our obvious economic complementarity. It is now the most broadly based relationship that Australia enjoys in our region – because of shared strategic interests, political cooperation, and the interaction between our societies.

This bond is being strengthened by growing contact and better understanding between our two peoples.

For instance, in 1978 there were 116 Japanese students in Australia. In 1999 there were 9,825. Conversely, the number of Australians studying Japanese has grown from less than 1,000 25 years ago to more than 10,000 today. Japanese was the most popular foreign language among Australian Year 12 students in 1999 and through their studies, these young Australians are gaining an insight into Japan’s ancient and special culture and its way of life.

Australia receives more visitors from Japan than from any other country except New Zealand, with more than 720,000 visitors in 2000 and in a recent survey, Australia rated the most liked and trusted foreign country by Japanese people.

Exchanges in the arts are thriving in all areas, aided by Australia-Japan Arts Network and other promotional activities.

Scientific cooperation underwritten by government and private sector agreements is also increasing in the areas of e-commerce, agribusiness, environmental science, engineering and radio astronomy. I understand that agreement has been reached between the Australian Academy of Sciences and the Japan Society for the Promotion of Science to promote exchange of research sciences.

However, the real success story underpinning the relationship remains our economic ties and the immense trade that flows between our two countries.

As I said earlier, there is a complementarity about our two economies which it is rare to find amongst two countries in the world.

For many years, Japan has been Australia’s largest trading partner and the largest consumer of our exports. Put simply, Japan is our best customer with merchandise exports to Japan of $21.8 billion in 2000, up a staggering 31% over 1999.

To this can be added an increasing number of service exports, mostly in tourism and transport, which last year totalled a further $2.3 billion.

Australia is Japan’s fourth largest source of imports and we’re proud that, in a very real sense, we’ve provided and continue to provide, the energy and raw materials needed for Japan’s economic development.

Australia is also increasing its direct investment in Japan in areas vital to every modern economy such as financial services, telecommunications and information technology.

For our part, Australian imports from Japan were over $17 billion in 2000, again a considerable increase over previous years.

Japanese investment in Australia in 1999 was $44 billion, making Japan our nation’s third largest foreign investor. It’s also significant that Japanese affiliated companies directly employ about 50,000 Australians and are responsible for an additional 200,000 jobs through the supply chain and as subcontractors.

We look forward to an even closer economic relationship. As a result of my Government’s reform measures over recent years, Australia’s standing as a competitive exporter, reliable supplier and as an attractive place to invest will continue to grow.

We are stronger because of clear economic and social policy directions and because of the increased confidence of our society. This makes us a valuable bilateral and regional partner for Japan.

Within the region, Japan and Australia have a tremendously important role to play. I continue to believe that the Australia-Japan partnership is one of the most important foundations of the region’s stability and economic prosperity.

We have worked together on a number of key regional issues. Australia and Japan were the only two countries to provide support to all three crisis affected countries in 1997. We worked together to bring peace to East Timor. We share a common interest in maintaining US engagement with the region and are both significant supporters of Indonesia’s transition to democracy. Japan has played a particularly constructive role in the South Pacific.

The region needs a strong and confident Japan that can give a lead in dealing with the serious challenges we face. The recovery of its economy is not only important to the Japanese people but is vital to build prosperity throughout Asia and indeed the entire world.

Equally important is Japan’s capacity, as a central player in the strategic and political as well as the economic structure of the region, to exercise leadership in policy directions and regional institutions.

Australia supports wholeheartedly a greater role for Japan in global affairs, including a permanent seat at the UN Security Council.

In exercising those global responsibilities, however, Japan must play a leading role in ensuring the start of a new comprehensive global trade round and in ensuring its ultimate success.

In past decades, Japan’s success in modernising its economy has been a model and an inspiration to all other nations. That success has been founded on an ability to sell its products into large markets such as the United States and areas of Europe. For that reason alone, we would urge Japan in the period ahead to show leadership by progressively opening up its own economy and demonstrating faith in an open world system.

Australia and Japan, as two international economies, have important shared interests in this respect.

The evidence is compelling that open economic policies improve prosperity. Open economies grow faster, are more robust, and deliver improvements in living standards for their citizens. More open trade delivers greater choice for consumers, greater industry efficiency and, as Australia can well attest, can mean resilience in the tough times.

The collective responsibility we all hold, in government and in business, is to convince people of the advantages of open trade and to effectively communicate that benefits are attainable for both developing nations and those like our own.

Currently many developing countries are denied the opportunity to trade their way to sustainable growth and higher core labour standards because of the barriers in much of the developed world to their agricultural and other exports.

For all these reasons, the launch of a new round of multilateral trade negotiations at the Fourth WTO Ministerial Conference in Qatar in November this year is Australia’s highest trade priority.

We know that a new round offers the best prospect for opening markets worldwide for Australian exports. It would deliver better access for exports of Australian agriculture, services and industrial products in a relatively short time.

Equally, better market access would benefit not only Australia, but all other countries including Japan. For instance if all trade barriers were removed, it’s been estimated the annual gain to the world economy would be some US $750 billion.

In short, reducing trade barriers through a new round of multilateral trade negotiations would remove some of the more perverse elements in the international trading environment while providing real benefit to developing countries.

The current anomalies relate particularly to trade in agricultural produce. Developed country protection against agriculture imports is five times higher than protection against manufacturing imports.

Our views on market-distorting agricultural subsidies are well known. It is clear that such subsidies, particularly high both within both the EU and Japan, corrupt world agricultural markets and provide justification for other countries to subsidise their producers. In addition, the cost of these subsidies is invariably transferred to other sectors of the domestic economies of the nations involved.

Further opening of agricultural markets is vital for a comprehensive and balanced WTO package from which everyone will benefit.

Developing countries would be among the major beneficiaries. OECD Farm protection is 7 times the total OECD development assistance and 13 times the debt forgiven under the Heavily Indebted Poor Country initiative.

It is crucial to address the imbalance in international trade rules that favour most of the world’s rich countries, including the US and the EU, against efficient agricultural exporters such as Australia.

In short, to be fully effective, all sectors need to be adequately covered by the WTO rules.

Notwithstanding our support for further multilateral liberalisation and a strong multilateral trade system, Australia has and will continue to actively pursue free trade agreements and closer bilateral economic partnerships.

This approach in no way conflicts with our unwavering support for multilateral agreements. However, bilateral FTAs have the potential to significantly improve access for Australian exports in a shorter timeframe than would be possible under the WTO.

For instance, some market barriers can be removed faster in FTAs than in the WTO since they involve fewer negotiating partners.

Furthermore, countries can address complex issues such as e-commerce and trade and competition more easily in bilateral or regional trade agreement than in WTO negotiations.

I’m also convinced that they can act as a catalyst to multilateral WTO negotiations by maintaining momentum for trade reform.

Whatever the means, our aim is to simply reduce barriers to Australia’s export markets and, more generally, to build greater international competitiveness among all nations. I know that’s a goal that our friends in Japan fully share.

There are many more areas where we can work together in the coming years. I believe both Australia and Japan are beginning to gain a better insight into the full potential of their relationship.

For a long time I suspect Australian and Japanese firms had outdated perceptions of each other. So both were losing out by not discovering the newer goods and services produced by the other. This hopefully is changing.

Areas such as information technology certainly offer great potential. We have strong and, again, complementary industries that are well placed to take advantage of rapid changes in this sector.

Australia has often been described as the lucky country because of our rich natural resources and our lifestyle. We also have a reputation for inventiveness and high quality research far out of proportion to the size of our population.

Our goal now is to become what we might call the “can-do” country. We want to become more successful in translating these endowments into widespread practical application and commercial products. Through tax and labour market reform and the ‘Backing Australia’s Ability’ science and innovation package announced in late January, the government is encouraging risk-taking, rewarding innovation and increasing the opportunities for higher education and research. Our reforms are also designed to attract higher levels of venture capital, both from within our own domestic economic and from nations such as Japan.

Other potential areas of mutual benefit to explore in the near future could include such issues as climate change and ensuring stability in the global financial system.

I’m sure that this gathering of eminent Australians and Japanese from such a diverse range of backgrounds will identify many more. I wish you well for the next few days and I look forward to learning of the outcomes of your discussions.

In closing, whilst among so many of his countrymen, I’d like to take this opportunity to congratulate Mr Koizumi for his recent election as Japan’s Prime Minister.

I know he is familiar with Australia, having visited here three times.

I am pleased that Mr Koizumi has signalled his intention to pursue strong economic reform. As I said earlier, the strength of the Japanese economy is of vital importance to all within our region. His success will depend on some difficult decisions, requiring widespread support.

I look forward to developing as close a working relationship with Mr Koizumi as I had with Mr Mori and to meeting with him at the APEC leaders’ meeting in China this October.

Once again, I wish you all the best for the conference.

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Malcolm Farnsworth
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