Leader of the Opposition

Check Against Delivery

ADDRESS BY

DR JOHN HEWSON, MR  LEADER OF THE OPPOSITION

ON THE OCCASION OF THE  1992 ROY MILNE MEMORIAL LECTURE

"NEW PRIORITIES

FOR AUSTRALIAN FOREIGN POLICY IN A NEW INTERNATIONAL ERA"

MONDAY, 26 OCTOBER 1992  Ã’ÃÂÃÂÃÂ¥ÃÂ¤ÃÂÃÂÃÂ HALL, ADELAIDE UNIVERSITY ADELAIDE

E & ÃÂ E - Proof Copy Only

COMMONWEALTH  parliamentary library j MICAH

Parliament House. Canberra. A C T . 2600 Phone 277 4022

Forty two years ago, here in Adelaide, the Prime Minister of the day, Robert Menzies,  delivered the first Roy Milne Memorial Lecture.

Since then, the Lecture has attracted a succession of Australian Prime Ministers,  Foreign Ministers, Leaders of the Opposition, and a distinguished group of academic  specialists and senior diplomats.

In delivering the 41st Milne Lecture, I am honoured to become part of its great  tradition. ; Ã¢ÂÂ

But the importance of the Milne Lecture goes well beyond the qualifications of those  who have been invited to deliver it.

It also goes beyond the valuable contribution which this Lecture has undoubtedly  made to the quality of debate within the Australian community on significant  international issues.

But, in my view, the real importance of the Milne Lecture is that the Lecture series itself  has become a valuable chronicle of the changing priorities of Australian foreign policy  since the Second World War.

Milne Lecturers have invariably used the opportunity to make important and reflective  statements on how they view Australia's place in a changing world and how Australia's  international priorities should adjust to such change.

In the inaugural Lecture, for example, Robert Menzies chose to address the issue of  "The British Commonwealth of Nations in International Affairs" precisely because he  saw it as an issue of fundamental priority for Australia as it entered the 1950's and  because the debate over Australia's ties with the British Commonwealth and with the  emerging United Nations organisation was a very live one.

Throughout that decade and into the 1960's, Milne Lecturers then focussed on an  appropriate Australian response to international changes such as decolonisation, the  development of a nascent relationship with Asia, and Britain's entry into the European  Common Market.

In 1973 the Prime Minister of the day, Gough Whitlam, chose the Milne Lecture to  emphasise the need for what he called "new directions" and "new definitions" for  Australian foreign policy given that the world had then entered into the post-Vietnam  era of international detente.

Three years later, a new Prime Minister, Malcolm Fraser, reflected in his Lecture on the  strategic implications for Australia of the growth in Soviet military power and the  economic consequences of the "oil shocks" of that period.

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And throughout the 1980's, many Milne Lecturers wrestled with the implications for  Australia of the escalation, and eventual resolution, of the Cold War.

Of course, most of those who have delivered the Milne Lecture over the years have  taken as their starting point the view that the world of their time was one of historic  change or great danger, or both.

And, of course, up to a point they were right.

But in 1992, the magnitude of the historic change we are witnessing is greater than  at any time since 1945.

Indeed, there is a special sense in which it can be said that a new international era  has dawned and that a new kind of international order is evolving. Qualitatively, as  well as quantatively, new challenges and opportunities are emerging for countries like  Australia.

Many years ago, the doyen of American journalists, Walter Lippman, wrote that a  coherent foreign policy is established only when a country's commitments and  capabilities have been brought into balance.

With the end of the Cold War, many nations are currently re-assessing their  perceptions of that balance.

Many of the old rules are being re-written.

New forms of competition and tension are emerging; new patterns of co-operation are  being developed; new balances of power are being forged.

One of the frustrating things for analysts of current international affairs is that the  period of change that we are witnessing is so difficult to label.

The fact is that the international order of the 1990's does not lend itself to description  by the neat labels of a more dangerous, but less complicated, past.

It is no longer possible to compartmentalise nations or groups of nations as was done  for so long over the recent past.

Much of the old terminology has become outdated: terms such as "the Third World"  and the "East-West division" have lost much of their original meaning.

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Furthermore, the established intellectual traditions of studying international politics still  provide relevant and necessary perspective. This is true from the 'realist' tradition,  with its emphasis on power politics and national interest, through to the 'liberal'  tradition, with its emphasis on universal values such as democratic and other human  rights.

But neither tradition can now be sufficient in its own right.

Perhaps the most dramatic change over recent years has been the pervasive influence  of economics in international affairs. A question for the future will be how a new  intellectual tradition for studying the new international order, with its emphasis on  economics, will become established.

It is appropriate, therefore, that the 1992 Milne Lecture should reflect on the nature  and implications of how one international era has ended, and another has begun.

In particular, I wish to address this evening what I see as three critical issues for  Australia as that transformation takes place: first, the forces of change that will fashion  a new international order in the 1990's; second, the implications of those changes for  Australia's interests; and third, the priorities which a Coalition Government will bring  to the conduct of Australian foreign policy to ensure that we respond appropriately to  the new trends, dangers and opportunities.

A New International Era

The precise dimensions of the new international era we have entered are still evolving  and still subject to debate. But what is clear is that Australian foreign policy will need  to adapt to fundamentally changed global and regional circumstances.

These changes are apparent at a number of levels.

At one level, the extent of international change is reflected in the dramatic  transformation in the international political landscape that has so dominated media  headlines over recent years - changes such as the revolutions in the former Soviet  Union and Eastern Europe, the processes of integration in Western Europe, the rise  of the dynamic economies of East Asia, the tensions and pressures of the changing

US-Japan relationship, the challenge of increasing protectionism to the open  international trade system, the changes in southern Africa, and much more.

But there is also change at work at a deeper level - change in the very nature of the  international system itself.

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The global political economy has been transformed.

The accelerating pace of technological change over the past two decades and the  increased mobility of capital have speeded up the internationalisation of production  and the diversification of manufacturing industry to newly industrialised countries.

This internationalisation of markets - including the freeing up of trade, financial and  investment flows - has changed the orientation and operations not just of the major  Western multinational and transnational corporations, but of many smaller firms and  State-owned enterprises as well.

It has led to a greatly intensified competition among states for world market shares -  a development that has been accentuated by the consistent lowering of the real costs  of international transport and communication.

These changes in the global political economy have played a critical role in the rapid  industrialisation of some developing countries (particularly those in our own region).  They also contributed to intensifying the demand for political and economic change  in the former Soviet Union and the rest of Eastern Europe. And they have led to a  decisive international shift in favour of policies that promote export growth,  liberalisation and privatisation.

At a global level, the international system is also being fundamentally altered by other  forces of change.

There is the reality of growing interdependence across a range of international  economic and security issues, such as patterns of economic production and the level  of armaments.

There is the reality of multipolarity among a number of great powers (including the  United States, Western Europe, Japan and China) which has replaced the superpower  bipolarity that dominated the Cold War era.

There is the growing threat to the GATT-based system of open international trade -  from sources such as the European intransigence on its Common Agricultural Policy,  the American expansion of its Export Enhancement Program, the continuing influence  of non-tariff barriers, and a range of other developments.

There is the decline of ideology as a major factor influencing relations between states.

There is the revival in the relevance and role of international organisations, particularly  the United Nations. Indeed, the experience of the Gulf War gave the United Nations  a renewed prominence and gave its supporters new faith that the ideals of its Charter  could be implemented in today's world.

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And there has been a new prominence given by states in their relations with each  other to issues such as refugees, resource management, population growth,  environmental protection and global health issues, such as AIDS and drugs.

All these changes, both structural and attitudinal, have combined to create a new  climate in which relations between states are being conducted.

But in assessing the extent of such changes, there is a need for a sense of  perspective and balance. _

At the dawn of another era, the era known as "the atomic age", it was said that  "everything is changed - except our pattern of thinking".

As we face the 1990's and the beginning of another international era, our patterns of  thinking must change again to accommodate the scale and pace of the historic  transformation in world affairs to which I have referred.

But while we are now attracted and fascinated by the pace of change, we should not  lose sight of the fact that on this occasion not everything has changed.

The "power politics" of individual states is still important - even if it is more ambiguous  in its character, more varied in its form, and a less dominant goal which can be single-  mindedly pursued without reference to other considerations.

Similarly, the use of force is still a vital factor in the international system, even though  its utility has decreased over recent decades.

In addition, longstanding nationalist rivalries, ethnic tensions, racial conflicts and  religious animosities - which were largely subsumed beneath the global ideological  conflict of the Cold War years - now risk being re-ignited in a violent and destabilising  way.

The tragedy of what was Yugoslavia is a particularly powerful example.

Our conclusion should be that the nature of recent changes affecting the international  system as a whole are of such a scale and intensity that we have indeed entered a  new era in international relations.

But the changes are not such that we cannot continue to learn from the past or that  we should pretend that we are navigating entirely unchartered waters.

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We have not witnessed "the end of history", as some would have us believe. But we  have undoubtedly witnessed the end of "the post-war era". And both the patterns of  our thinking and the direction of our policymaking need to reflect that fact.

In addition to changes affecting more broadly based international affairs at a global  level, Australian foreign policy in the 1990's will need to accommodate a rapid pace  of economic and political change within our own region.

The driving force of change in the Asia-Pacific region is the great transformation of  economic power and leadership that ha$ taken place over recent years.

With Japan at the forefront, the market economies of Asia lead the world in terms of  export-led economic growth and the dynamics of their economic systems and  linkages.

Furthermore, China - with its enormous economic potential - may well prove the  economic Rip Van Winkle of the Asia-Pacific region in the late twentieth century.

The commitment of the dynamic economies of Asia to an open system of international  trade is longstanding and clearly in their own self-interest. But, at the same time, it  is important to recognise that there are pressures at work towards greater economic  regionalism and sub-regionalism, and that over the coming years such pressures are  set to grow. ,

Those pressures take a variety of forms.

There are the processes of the Asia Pacific Economic Co-operation (APEC) forum.

There is the long-term agreement to establish an ASEAN free trade zone with its Common Effective Preferential Tariff scheme of reductions to  zero to 5% over the next fifteen years.

And there are more exclusive proposals for a regional trade grouping such as that put  forward by Malaysia's Prime Minister, Dr Mahathir.

There are also pressures building in favour of sub-regional economic arrangements.  There are, for example, a range of proposals for developing Natural Economic  Territories (NETS), such as one between Hong Kong, Taiwan and the Guangdong  province of southern China, or that between Singapore, Johor and Batam Island.

What underpins some of these regionalist and sub-regionalist economic pressures is  what has been described as "the Asianisation of Asia" - a growing awareness and selfÂ­ confidence among regional states about Asia's own identity.

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In a longer-term sense, there are forces of economic change in Asia which have the  potential to significantly affect Australia's interests.

One key process has been labelled "soft regionalism" - a process which lacks formal  structures but which has considerable potential for particular regional economies.

An example is evident among the countries of North Asia which is creating a basis for  a pragmatic longer-term realignment of economic interests - particularly, but not  exclusively, between China, Taiwan, the Koreas; Japan and some of the former Soviet  republics. :

It is a developing association that is unlikely to be formalised - and certainly not in the  foreseeable future. But the clear possibilities for a closer interaction among the North  Asian economies will undoubtedly constitute a driving force of regional change over  coming years, with important implications for Australian trading interests particularly

in raw materials.

Australian foreign policy cannot afford to underestimate the significance of these and  other regionalist and sub-regionalist economic pressures as a dynamic force for  change in our region.

In addition to these various forces of economic change, Australian foreign policy also  needs to accommodate important changes taking place in political and security issues  in the Asia-Pacific region.

The regional security landscape is changing in fundamental, and sometimes  competing, ways.

Among some states in the Asia-Pacific region, there appears to be developing what  analysts such as Karl Deutsch described long ago as "pluralistic security communities" - that is, states among which there have been relatively long periods of peace and  between which there is no expectation that disputes will be resolved by a resort to  force.

ASEAN itself provides an example of such a group of states.

At the same time, however, the potential for regional instability remains significant.  The end of the Cold War may have reduced the possibility of regional conflicts  involving the major powers. But at the same time it has created a more complex and  fluid security outlook in which local rivalries have the potential to escalate and  destabilise the regional security situation.

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There are the uncertainties created by the drawdown of US military forces in the Asia-  Pacific region, and particularly its recent closure of bases in the Philippines.

Despite some hopeful signs of progress over recent years, there is the unresolved  conflict of interests among competing groups within Cambodia, and particularly the  intransigence on the part of the Khmer Rouge.

There is continuing concern about North Korea's nuclear activity.

As I have previously noted, there is uncertainty over China's political, strategic and  economic role in the region.

There are continuing tensions among regional countries over competing claims to  disputed territories.

Differences continue between Japan and the former Soviet republics over the future  of the Northern Territories. Regional states including China, Taiwan and others  continue their dispute over the Spratly Islands.

There are concerns about separatist pressures within some regional states.

And, with escalating regional defence budgets, there is a rising concern about the  prospects for a destabilising arms race within the Asia-Pacific region.

Any Australian foreign policy, therefore, must carefully balance the need to encourage  a greater sense of security community among key regional countries with the need to  face up realistically to the new scope for localised security tensions which the end of  the Cold War has created.

Implications for Australia

The second major issue I wish to focus on this evening relates to the implications for  Australia of the global and regional changes to which I have referred.

This is a matter which the Coalition Parties have considered carefully over a long  period of time.

In our view, there needs to be a much more clearly focussed approach to the pursuit  of Australia's international interests.

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And there needs to be a much clearer recognition of changes that are necessary to  protect those interests in an unpredictable and highly competitive post-Cold War  environment.

Some basic changes are needed.

First, Australian foreign policy needs to give much more explicit priority to those core  national interests which should be driving our foreign policy. And it needs to pursue  them in a much more deliberate and hard-headed way.

For too long Australian foreign policy has aimed to do too much, and not done it well  enough.

Over recent years it has operated in a very activist and high-profile way. But in terms of what it has delivered to advance the interests of the  vast majority of Australians - particularly in terms of jobs and trade opportunities - its  results are far from impressive.

The fact is that Australia has failed to match the pace set by the dynamic economies  of the Asia-Pacific region.

For example, Japan, with two-thirds of Australia's standard of living in 1970, passed  us in 1980 and we are now less than two-thirds of Japan's standard of living.

Countries such as Hong Kong, Singapore and Taiwan - small island economies with  far less natural economic advantages than Australia - are set to match our standard  of living over the course of this decade.

There has been a preoccupation in Australian policymaking with the search for grand  initiatives (typified by our interventionist policy on South Africa).

There has been a distinct reluctance to work at the harder, less glamorous, less public  but vitally important task of developing political confidence and expanding economic  opportunities in our bilateral relationships, particularly those with neighbouring  countries.

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In many areas where there is a need to promote Australia's international economic and  trade interests, our foreign policy has been too much a policy of rhetorical gestures  rather than substantive achievement.

And for too long, our foreign policy has used the wrong criteria for judging its own  effectiveness.

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It has failed, therefore, to use Australia's limited diplomatic and other international  resources in the most effective way.

It has become engaged in a whole range of causes that may be deserving in their  own right.

But it has failed to pursue a clear set of priorities that address Australia's most vital  international interests.

It has failed, particularly, in those vital areas of foreign policy related to Australia's  economic interests - a failure on which I will comment in more detail later.

We in the Coalition Parties have established a very clear set of international priorities.

We believe that the single most important national interest which should drive  Australia's foreign policy is the objective of making Australia a significant economic  and political player in the Asia-Pacific region by the Year 2000.

That objective has, in fact, been the strategic objective of all the Coalition's foreign and  domestic policymaking over the past two and a half years. And it will be the  overriding strategic objective of policymaking by the next Coalition Government.

None of this means that we favour "regional isolationism" in economic or security  terms. Clearly, we need to pursue Australia's interests irrespective of geographic  limitations.

But what we do recognise is that, in terms of the size and requirements of its markets,  the Asia-Pacific region offers Australia special opportunities. And Australia needs a  specific policy approach to take advantage of them.

Second, Australian foreign policy needs to more clearly reflect the fact that economic  issues are driving the international policy agenda. An era of "geoeconomics" has  replaced the era of "geopolitics".

Military and security concerns, of course, will continue to influence the foreign policy  of individual states - as they rightly should.

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But Australian foreign policy needs to reflect more directly the new interrelationship  between technology, wealth and power. It needs to recognise that factors such as  technology, education, communications, and transport are assuming greater  significance in terms of international "security" and "influence" at the expense of  geography, population and many raw materials.

The fact is that because of Australia's relatively poor economic performance over  recent years, our standing in the Asia-Pacific region has been "marginalised".

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That situation can only be turned around when we get our own economic house in  order so that our interaction with regional countries can achieve its full potential.

Third, the changing nature and diversification of world power mean that Australian  foreign policy must go beyond its rhetorical support for closer interaction with Asia-  Pacific countries. It must recognise more clearly the linkage between Australia's  foreign policy and the need for structural reform of our domestic economic

infrastructure if our foreign policy objectives in the Asia-Pacific region are to be  realised. ;

Just as there has never been greater interdependence at an international level, so too  there has never been greater interdependence between the goals of Australian foreign  policy and the direction of our domestic policymaking.

We will simply not be able to fulfil our economic and political potential in the Asia-  Pacific region, or anywhere else, if we do not implement domestic economic reforms  to enable Australian enterprises to match best international practice across the board.

We will not fulfil our economic and political potential in Asia, or elsewhere, if we do not  remove the cost disadvantages imposed on Australian exporters because of  inefficiencies on our waterfront, in our land transport, in our telecommunications and  in many other sectors of our economic infrastructure.

We will not fulfil our economic and political potential in Asia, or elsewhere, if our  inefficient and internationally uncompetitive tax system, with its specific disincentives  for working harder, exporting and saving, is not reformed.

We will not fulfil our economic and political potential in Asia, or elsewhere, if we do not  reform our centralised labour market system and promote a greater sense of shared  interest between employers and employees in their workplace.

We will not fulfil our economic and political potential in Asia, or elsewhere, unless  Australia commits itself, as the Coalition Parties have, to a clear goal such as negligible  protection by the year 2000 in the context of the tax and microeconomic reform to  which I have referred.

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We will not fulfil our economic and political potential in Asia, or elsewhere, if we do not  promote effective competition in Australian industry, and not just phoney or limited  competition.

We will not fulfil our economic and political potential in Asia, or elsewhere, if we  continue to allow government-owned monopolies to corner important areas of  production and services in the economy.

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We will not fulfil our economic and political potential in Asia, or elsewhere, if our  education system remains so unrelated to the pursuit of excellence and to regional  export opportunities.

And we will not achieve our economic and political potential in Asia, or elsewhere, if  we do not achieve a more pro-development stance by bringing environmental and  development interests into a more sensible and predictable balance.

These issues are as important to the pursuit of our foreign policy priorities as they are  to the achievement of our domestic policy objectives. The link between the two has  never been stronger.

Priorities For a Coalition Foreign Policy

The third issue I wish to focus on this evening concerns the priorities which a Coalition  Government will bring to the conduct of Australian foreign policy in the light of the  global and international changes to which I have referred.

A responsible Australian foreign policy should serve a number of particular purposes.

It should enhance Australia's physical security.

It should ensure Australia's economic security through the pursuit of policies that  develop expanding markets for Australian exporters.

And it should promote, to the limited extent it can, the economic development and  democratic aspirations of countries in specific need.

On the first of these responsibilities - namely, the protection of Australia's physical  security - the Coalition Parties have recently released the most detailed Defence Policy  ever produced by a Federal Opposition.

The Policy - titled A Strong Australia - is one which will stand as a major milestone in  the evolution of Australian thinking on Defence issues.

The Policy itself was the outcome of a number of considerations.

I publicly committed the Coalition Parties to the review at the conclusion of the Gulf  War, partly as a response to our concerns about the very limited Australian Defence  resources that could be deployed at short notice to meet such a contingency.

More generally, our concern was that the pace of international change (to which I have  referred this evening) had overtaken the strategic assumptions on which the 1987  Defence White Paper was based and to which the Australian Government remains  committed.

We concluded that there was an urgent need for a comprehensive review of the  strategic circumstances affecting Australia's security outlook, and for a reassessment  of Australia's overall Defence policy in the light of that review.

A Strong Australia commits a Coalition Government to a clear set of national defence  priorities centred on increased independent capabilities, alliance co-operation, regional  co-operation, and an improved network of defence in Australia's North.

We will give a special importance, and additional resources, to enhancing defence coÂ­ operation with our traditional allies (such as the United States) and with regional states  of the South-West Pacific and ASEAN.

We aim to build greater transparency in regional defence policies in order to build  greater mutual confidence.

We will increase training and joint exercises with our neighbours, develop co-operation  in areas such as maritime surveillance and patrolling, and encourage greater coÂ­ operation between regional defence industries.

We will maintain and modernise an effective strike capability while enhancing the  mobility, flexibility and training opportunities of our Defence Force.

We will provide additional resources for the combat elements of our Defence Force  by reducing the Defence bureaucracy, achieving greater commercialisation of defence  support activities and cutting wasteful government spending.

We will give priority to improving Australia's intelligence gathering and surveillance  capabilities, particularly in Australia's North.

We will strengthen the partnership between industry and defence, and support the  development of industrial capabilities needed for our national security.

And we will improve the conditions of service for our most valuable Defence asset -  the men and women of our Defence Force.

We believe that the clear priorities we have identified, and the capabilities we aim to  achieve, will ensure a relevant and responsive Australian Defence policy into the next  decade and beyond.

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A second objective of any responsible Australian foreign policy should be to ensure  Australia's economic security through the pursuit of policies that develop expanding  markets for Australian exporters.

The need to expand our export trade is fundamentally important to Australia's  economic prospects. It is critical for job opportunities, for the future standard of living  of all Australians and for an Australian role in the world that does justice to our  potential. .

A simple statistic highlights the challenge we face. With debt at around $200 billion  and at unsustainable levels, we need to achieve a shift of around four per cent of GDP  into net exports over a sustained four year period just to stabilise the growth in our  foreign debt by the mid-1990's. The fact that Australia has not achieved a shift of this

magnitude over the past 25 years, let alone sustained such a shift, demonstrates the  scale of the task ahead.

At a domestic level in Australia, this task requires a program of major structural  reforms to improve our competitiveness, productivity, investment, savings and private  sector growth so that our exports can grow. The Coalition's Fiahtback strategy spells  out such a program in detail.

But there is an international dimension to Fiahtback that we have also consistently  emphasised - and that is the need to pursue genuine reciprocity in terms of market  access with our trading partners, to ensure an effective anti-dumping regime, and to  open up new markets for our exporters.

Australia has barely scratched the surface of its potential in the Asia-Pacific region.  We have vast untapped potential in terms of exporting more primary products and raw  materials but also in terms of expanding our export of services (such as financial,  educational, medical and legal services), communications facilities, construction

projects, processed foods and many other value-added products.

Yet far too much of this potential export trade remains unrealised.

Australia is being pulled along in the slipstream of the region's dynamic trade growth  rather than making any major increase in our share of key markets.

A few examples of the changing trade patterns of regional markets highlight the point.

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In the Malaysian market between 1980 and 1990, the US share of its imports have  increased from 15% to 17%; the EC has increased from 14% to 15%; the Newly  Industrialised Economies (NIE's) have increased from 17% to 25%; but Australia has  decreased from 6% to 4%.

In the Japanese market over the past decade, the United States has gone from 17%  to 23%, the EC from 6% to 16%, China from 3% to 5%; but Australia's share of the  Japanese market has remained static at 5%.

In the Thai market, Japan has increased its share from 21% to 31% and the EC from  13% to 14%, but Australia has remained static at 2%.

Other countries are actively promoting their exports in the Asia-Pacific region at a  bilateral level far more effectively than Australia. In some cases, our share of particular  markets has been directly affected by the bilateral efforts of other countries.

For example, while Australia was a major beneficiary of the US opening up the South  Korean beef market, Australia's share of that market has since declined because of  subsequent US efforts to increase the export of their beef to South Korea.

In addition, current levels of Australian regional investment are very low. Australian  investment in ASEAN countries, for example, constitute only 2.8% of Australia's foreign  investment, and over 70% of our ASEAN investment is located in Singapore.

An effective trade strategy for Australia requires facing up to some difficult realities.

A successful outcome of the current Uruguay Round of GATT negotiations is  fundamentally important for Australia's trade interests and the Coalition Parties will  remain committed to doing what we can in order to achieve that result.

But we have never had any illusions about the difficulty of that task.

The events of recent days confirm the fact that the Uruguay Round is facing intractable  problems. All the optimistic talk of imminent "breakthroughs" and "historic  compromises", in which political leaders have indulged over recent years, has yielded  no formal agreement. Â·Â·Ã¢ÂÂ

There is no doubt that a comprehensive and successful outcome of the current  Uruguay Round negotiations would greatly advantage Australia's trade interests, as  well as those of the wider international community.

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There has been increasing frustration and disappointment over the failure to complete  the Round successfully after almost six years of intense activity. That frustration and  disappointment have increased trade tensions and created growing doubts about the  prospects for a successful outcome.

As far as Australia's interests are concerned, the competition between major trade  powers, such as Europe and the United States, has created some very serious  difficulties, and threatens to create many more.

The intransigence of the Europeans, and in particular that of France, over the future  of its agricultural subsidisation program has been the root cause of the threat to the  future of the open international trade system.

Today, more than ever, that remains the case.

And the priorities for all countries committed to the future of a GATT-based trade  system must be to get the Europeans back to the negotiating table and to maintain  political pressure on them to agree to an acceptable outcome.

Whatever the root cause of the problem, there is very significant damage that can be  done to countries like Australia by responses to the European policy by the United  States.

It can be damage inflicted as a result of American trade restrictions imposed on  European goods, thus generating a vicious circle of retaliation and counter-retaliation.  Or it can be damage inflicted more selectively and directly by a wider application of  an expanded American Export Enhancement Program.

For all its difficulties, we must not give up on the GATT Round. There is still a  prospect for success if the will exists among all parties to the negotiations. But the  time for complacency about a favourable outcome has long past. In fact, with the  GATT talks now stalled, Australia's trade policy has left us more vulnerable and  exposed than we should be.

Australia's self-interest demands a more activist and more genuinely multi-faceted  trade policy. -Â·.

Whatever the outcome of the GATT round, we need to give a higher profile and  greater urgency to Australia's regional and bilateral trade strategies.

At a regional level, the Opposition has supported the Asia Pacific Economic CoÂ­ operative (APEC) initiative as a means of breaking down regional trade barriers and  encouraging economic growth that benefits Australia. But we have consistently

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expressed our concern about the lack of practical results that have been evident to  date.

APEC needs to get beyond being a debating society or a research unit. It needs to  have specific targets and specific deadlines for eliminating trade barriers. It needs to  involve regional private sector business interests much more explicitly. In short, it  needs to make practical progress towards the goal of free and more open regional  trade from which all countries will benefit.

Without real progress of that kind, pressures will build for more sub-regional trading  arrangements and for more exclusive associations, such as that proposed by  Malaysia. Such pressures could clearly disadvantage Australia's trade interests.

At a bilateral level, much more needs to be done. We must do all we can, in a non-  discriminatory way, to build our export trade with particular countries.

The Asia market is fundamentally important for Australia, but not in an exclusive way.  We need to explore market opportunities wherever they exist and it is a fundamental  mistake to believe that such an approach will disadvantage Australia in any particular  regional market.

It is not a question of Australia choosing between markets in Asia and those in North  America, or elsewhere. Such a choice is a phoney and unnecessary one.

It is a question of seeking the maximum trade benefits for Australia wherever the  opportunity presents itself.

The fact is, for example, that Asia-Pacific countries have rapidly expanded their exports  into North America over recent years. And North American exports into Asia have  grown dramatically as well.

Yet no-one believes that these Asia-Pacific countries have somehow 'turned their  backs" on their own geographic region. It is high time Australia learnt that lesson.

The place of a bilateral trade strategy in an overall Australian trade strategy is not a  new issue for debate. It has been-a focus of attention on both sides of politics.

The problem has been that words have not been translated into action at a  government level.

The Australian Government itself recognised the relevance of the issue as long ago  as 1988 when the then United States Trade Representative, Mr Clayton Yeutter, raised  the possibility of a bilateral US/Australia free trade agreement. Australian Government

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Ministers at the time responded that if the December (1988) review of the Uruguay  Round negotiations did not achieve "genuine progress", then pressure for a bilateral  agreement with the United States would build.

That was almost five years ago, and with the Uruguay Round still in grave difficulty,  the case for a more activist bilateral emphasis in Australian trade policy is even more  apparent.

One element of an effective bilateral trade strategy is for a country to stand up for its  interests where they are being disadvantaged. And that is why the expansion of the  American Export Enhancement Program and the EC's Common Agricultural Policy  should be opposed by countries like Australia in strong and quite unambiguous ways.

But another element of effective trade bilateral trade strategy is to work to ensure that  we do not confine ourselves in any exclusive way to specific countries or to a  particular region. That means not limiting ourselves to particular multilateral, regional  or bilateral negotiations, but fully utilising all three levels.

The trade interests of Australia will not be advanced by our leaders making pledges  to particular major trading partners about not damaging their trade interests in the  misplaced hope that, by doing so, such countries will agree to some kind of long-term  exclusive trade deal with Australia.

Our trade interests will not be advanced by pretending that Australia now needs to  make some kind of "historic choice" between trade with Asia and trade with the  Americas, when there is no need - actual or potential - to make such a choice.

Our trade interests will not be served by misrepresenting the global trade strategy of  major countries, such as the United States and its recently announced intention to  pursue a network of non-exclusive bilateral trade agreements, as some kind of  fundamental threat to free trade or aimed at manipulating the international trade  system - especially when such misrepresentations are made in the hope of winning  short-term advantage in a third country.

Nor will our trade interests be assisted by our Government pretending that access to  particular sectors of particular bilateral markets are open to Australian exporters when  in fact (for one reason or another) they are denied to them.

Australia's trade interests will not be advanced when they are used to serve the shortÂ­ term partisan purposes of domestic politics.

And they are not served when excessive, and almost exclusive, faith is placed in  multilateral negotiations that are beset with growing problems.

19.

An effective trade strategy for Australia requires a very different set of priorities.

It requires a comprehensive, multi-track and integrated approach.

It requires a major domestic economic reform program to remove cost disadvantages  on our producers that will enable them to compete effectively in the world.

It requires a reduction in tariff levels to negligible levels over the course of the 1990's  (in association with the structural reform program) to increase the efficiency and  potential market share of Australian enterprises, and thus to create wealth and jobs  for Australians.

It requires a strict and effective anti-dumping regime that does not become the hidden  hand of a new protectionism, but that protects Australian producers from unfair foreign  competition.

It requires a commitment to the GATT process and to a successful outcome of the  GATT Round.

It requires giving some real "teeth" to the APEC process of trade liberalisation.

It requires more effort being given to the hard, grinding and unrelenting work of  seeking greater reciprocity with established trading partners and of seeking access  to other trade arrangements, such as the North American Free Trade Agreement,  where it is clearly in Australia's interest to do so.

It requires a clear recognition of the expanding network of trade ties between East  Asia, Australia and the United States.

It requires an acceleration of the process of building what will, in effect, be a common  market between Australia and New Zealand.

It requires the setting of specific targets and specific deadlines for the growth of  Australia's share of particular regional markets. And it requires using the progress  achieved as the yardstick against which Australia's trade performance can be  measured. -

It requires administrative and departmental arrangements that reflect the significantly  upgraded priority which needs to be accorded to trade and trade policy issues in the  overall management of Australia's foreign policy objectives.

20.

A Coalition Government will encourage senior ministers travelling overseas to "open  doors" for Australian business by, where possible, leading a trade delegation as a  feature of their overseas trip.

A Coalition Government will retain a single Department of Foreign Affairs and Trade.  But within that structure, we intend to facilitate closer liaison with the business  community, to give clear encouragement to those officers with proven experience and  special skills in promoting Australia's trade interests, to enhance the capacity for  regional and bilateral trade negotiations, and to strengthen policy development and  trade promotion roles.

A Coalition Government will give the highest priority to implementing all of these  requirements for an effective Australian trade strategy. Properly implemented, we  believe they will provide the basis for dynamic and expanding export industries in  Australia, for job growth and for the fulfilment of our national economic potential.

A third objective for any responsible Australian foreign policy is to promote, to the  limited extent it can, the economic development and democratic aspirations of  countries in specific need.

And I wish to conclude this evening with some brief remarks on priorities for a  Coalition Government in the areas of human rights and foreign aid.

In terms of the advancement of human rights, we do not see any need for some kind  of choice between policies that promote "order" and those that promote "justice" in our  region or the wider world.

'Justice' for individuals, in whatever form it is contemplated, can be guaranteed only  in the context of some kind of 'order'. And, conversely, the overcoming of injustices  can be an effective means of strengthening international order and stability.

We believe it is important to put Australian concerns about human rights directly to the  parties concerned, rather than using such concerns, legitimate though they may be,  as a pretext for breaking off high-level political contact.

That is one of the reasons why I decided to visit Beijing in September 1990 at a time  when the Australian Government was actively discouraging such contact. And it is  why, during that visit, I put the Coalition's concerns on human rights directly to China's  leaders.

The reality of cultural differences should not be used as an excuse for inaction in  regard to human rights issues.

21.

But nor should we assume the role of moral schoolteachers, as we tended to do at  times in the recent past.

We need to recognise that minimum internationally recognised standards of human  rights are not given the same meaning or the same priority in all countries. And we  need to approach human rights issues through a broad perspective that embraces  civil, political and economic policies.

We do not see Australia's interests as best served by making bilateral dialogue with  particular countries dependent on their achieving particular standards of political  freedoms, as Australia did over a number of recent years in its relations with Fiji. We  believe a far more productive focus for Australian policy lies in helping to build a  political consensus among all groups in particular countries in favour of democracy  and human rights.

Support for internationally recognised standards of human rights is a responsibility that  has a legitimate and quite proper place in a foreign policy of 'enlightened self-interest'.  A Coalition Government will promote such rights in a constructive way and with a  clear emphasis on regional implications. We will not promote human rights in a  narrow legalistic way, or as an end in themselves, or divorced from any wider concept  of national interest. We will promote them in a principled and a consistent manner  that respects legitimate differences of views.

Like human rights issues, the administration of Australia's foreign aid program is an  important element of Australia's wider international interests. But - like so many other  aspects of foreign policy - it is directly affected by our domestic economic  circumstances.

In order to build a more dynamic, expanding and internationally competitive Australian  economy, a wide range of government expenditure, including spending on foreign aid,  needs to be reduced. The Coalition Parties have been open and honest in terms of  what fiscal responsibility demands in Australia's current circumstances.

Over the longer term, the development of a stronger, bigger and more competitive  economy will allow Australia to contribute more to countries in need.

Over the short term, a Coalition Government will reform the aid program to make it  more effective, more financially accountable, more carefully targeted and more  oriented to real need.

We have consulted extensively with community groups, especially with nonÂ­ government organisations involved in foreign aid work.

22.

A Coalition Government will have a clear focus on the relief of suffering and the  reduction of poverty, and thus on enhancing the opportunities for self-sustaining  economic development.

We will place a strong, but not exclusive, emphasis on bilateral aid and the use of the  best Australian talent, goods and services to help reduce poverty in developing and  under-developed countries.

A particular focus will be on improving Australian business links with the provision of  our foreign aid program. ;

A Coalition Government will seek to expand the role of non-government organisations  (NGO's) in the overall aid program.

We will give particular emphasis to the role of NGO's in Africa and South Asia as  Australia's capacity to deliver aid bilaterally in these areas is limited.

We will also seek greater input from NGO's into AIDAB's country programming  process. NGO's have considerable information networks of their own which can  strengthen the process of defining and pursuing our aid objectives.

We will have a clear focus on the needs of the Asia-Pacific region.

We will recognise the connection between foreign aid programs and the protection of  human rights.

Above all, our approach to the issue of foreign aid is one which we believe will make  Australia's foreign aid program a more important and more integral part of our wider  foreign policy agenda.

Conclusion

At the time when the first Milne Lecture was given in 1950, Australian foreign policy  was largely an esoteric subject of interest to its practitioners (such as politicians and  diplomats) and to a relatively small group of specialists. \

Today, there is a whole new constituency in Australia with a keen interest in foreign  policy. Their interest has been engaged partly because of the drama of recent  international events and partly because Australia's economic future is so heavily and  extensively influenced by developments beyond its borders.

The new international era we have entered calls for new priorities, and for a more  hard-headed pursuit of them by Australian policymakers.

\

The next Federal Election will not see Australians faced with a clear choice between  two radically different foreign policy options.

There has traditionally been in Australia, and there remains, a good deal of bipartisan  common ground on foreign policy issues. ;

But it is equally important to recognise that there are important differences of  emphasis, approach and priorities between the Government and the Opposition.  These are significant differences on which I have touched this evening. They affect  important elements of Australian defence, trade and other international policies.

In foreign policy, as in domestic policy, the Coalition Parties are committed to meeting  the challenge of change. We have set a clear course for doing so based on an  optimistic faith in Australia's future and a fundamental commitment to Australia's  "enlightened self-interest".

23.

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