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3 October 1991

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MANAGING AUSTRALIA'S ASIAN FUTURE

EMBARGOED UNTIL 6.00 PM, 3 OCTOBER 1991

Attached is the text of the third Asia Lecture, delivered by  Senator Gareth Evans, Minister for Foreign Affairs and Trade,  to the Asia-Australia Institute, University of New South

Wales, Sydney, 3 October 1991.

*  * *

SYDNEY

CO..i!v,O :\>EA,.Ti I parliamentary Library  MiCAH

MANAGING AUSTRALIA'S ASIAN FUTURE

The third Asia Lecture, delivered by Senator Gareth Evans,  Minister for Foreign Affairs and Trade, to the Asia-Australia

Institute, University of New South Wales, Sydney, 3 October

1991.

The great turn-around in contemporary Australian history is  that the region from which we sought in the past to protect  ourselves - whether by esoteric dictation tests for would-be  immigrants, or tariffs, or alliances with the distant great  and powerful - is now the region which offers Australia the  most. It has come to be accepted now almost as a commonplace

that our future lies in the Asia Pacific region. This is

where we live, must survive strategically and economically,  and find a place and role if we are to develop our full

potential as a nation.

But the task for Australia in fully realising its role as an  Asia Pacific nation will not be a straightforward or easy one.  The problem does not lie so much in the "Pacific" component of  the description. We have thoroughly well-established working

relationships with the United States, Canada and the Pacific

Island countries, and are as well placed as any to develop  such links with any of the Latin American nations of the  Pacific rim who may in the future choose to reach out into the

Asia Pacific region. Nobody inside or outside Australia feels  any discomfort in describing us as a "Pacific" country.

But there is a degree of uncertainty whenever the question is  posed as to whether,  or to what extent, we are an "Asian"

country. In practice we skirt the issue by linking the two  components together: Australia being an "Asia Pacific" nation

is easier to manage,  conceptually and psychologically, than us

being an "Asian" one. But the substance of the issue cannot

XXI/91

2

be skirted. As policy makers we should be prepared to

acknowledge that we do still encounter real risks of

misunderstanding and non-acceptance in our relations with the

Asian countries of our region. The management of those risks

in a constructive and productive way - the management, in

fact, of Australia's Asian future - is a central task of  Australian foreign policy.

It is not surprising that there should still be some risk and

uncertainty in our relations with Asia, given that for most of

the two hundred years since European settlement, Australia has

fought against the reality of i^s own geography. We thought  of ourselves, and were thought of by just about everyone else,  as an Anglophonic and Anglophilia outpost - tied by history,  language, culture, economics and emotion to Europe and North

America. In Asian perceptions of us, we still carry some  baggage from that past. Stereotyped images die hard, whether

they be negative (a country with an immigration policy tainted

with racism; a one-dimensional economy; a lazy workforce; an  ignorant and patronising approach to non-Europeans), or merely

vacuous (a country to be appreciated for open spaces, exotic  animals, tennis and surf, and not much more).

There are equivalent problems with Australian perceptions of

Asia. There is still a tendency in some quarters to view Asia

through the distorting lenses of old prejudices and fears,  seeing a vaguely threatening encirclement, and underestimating

the region's adaptability and economic dynamism. The old

Asian stereotypes which live on in muted form - of

intellectual conformity, political backwardness and economic

poverty - were always patronising, and masked the enormous

diversity of the region. To the extent that they have any

continuing life, they are now dangerously misleading in not

equipping us to deal with the reality of modern Asia.

It is, of course, the case that all the perceptions I have

mentioned have been under assault for some time. A long

series of developments,  stretching back now for several

3

decades, has been gradually changing the picture. They

include the Colombo Plan and all the development assistance

programs that followed; the steady growth of substantial

diplomatic relations in both old and newly emerging Asian

nations? the rapid rise of Japan to become our major trading  partner; the overdue demise of the White Australia policy; the

learning of some unhappy lessons from our entanglement with

Vietnam; the building from the early 1970s of a new political

and economic relationship with China; the rebuilding from the

late 1980s of our relationship with Indonesia; and, most

recently, the obvious visibility and perceived success to date

of our initiatives in Cambodias and with APEC. All these

developments, and many others as well, have contributed to  making us both more comfortable and more accepted in our  relationships with Asian countries. We are these days much

less likely than we were to see ourselves, or have others see

us, as nothing much more than an awkwardly transplanted piece

of Europe.

But while there is much less argument than there once might  have been about Australia’s future lying in this region, we  still have to manage that future so as best to protect and

promote Australia's own national interests in an environment  that is not only culturally and economically diverse, but

economically dynamic, clever and competitive, and politically

and strategically fluid. This evening I want to examine the

strategies we should be adopting in this respect in each of

the major dimensions of our relationships with Asia -

political, economic and cultural.

There are some general points that need to made at the outset.

The first is that talk of Australia's Asian future should not

be taken to mean that Australia's relationships elsewhere are  unimportant. Manifestly they are and will continue to be, and

not just '  because of our Western alliance relationships or

because the European Community is our second biggest trading

partner and the United States our third. Australia has, for

instance, an increasingly well-established status in

4

international affairs as a middle power that can, through

effective coalition building and niche diplomacy strategies,

play a significant role in a number of specific areas - for

example, chemical weapons arms control, trade policy, the

Antarctic environment and the struggle against apartheid.

This is not the occasion to spell out how all the various  elements in Australian foreign policy come together - it would

take a book to do that! But it is appropriate to make the

point that, in the conduct of our foreign policy, it is

perfectly possible - if I may modify LBJ’s immortal phrase -

to walk and chew gum at the same time.

x

The second general point to be made is that while it is

convenient for the purpose of discussion and analysis to  compartmentalise the different aspects of our relations with

Asia - into "political", "economic", "cultural" dimensions and  the like - in practice we should be doing our best to

establish resonances between them. If Australia is to fully

realise the opportunities created by our geography to become a  more influential player, politically and economically, in the

region - and to reap the rewards in terms of enhanced

security, trade and investment flows - then we have to

approach Asia in a more deliberately multi-dimensional way  than we have in the past. We have to recognise that

diplomatic initiatives, defence policy, economic strategies,

development assistance, immigration policy, cultural  relations, information activities and human contacts

generally, all inter-react with each other. And if we want to

ensure that Australia’s overall interests are advanced, we

have to work hard to have them inter-react in a mutually

reinforcing way - rather than rub against each other.

The remaining general point I would make at the outset is that

in approaching the management of our Asian future we should  not over-estimate the difficulty of the task. The diversity

of the Asian region is part of its challenge, but it also

makes it potentially more accessible to any other outsider

prepared to make the appropriate effort. As your Director,

5

Stephen Fitzgerald, has pointed out, in the whole sweep of

countries from Japan to Afghanistan there was, before the

Europeans, no word for "Asia", and no "Asian" consciousness -

perhaps not surprisingly given the presence of six or more

important and distinct cultural traditions, dozens of

significant cultures of lesser influence, and a multitude of  living languages.

That diversity means that, while we in Australia are

manifestly not an Asian people, we are culturally and  demographically more or less equidistant from all its

elements. As such we are wel\ equipped to deal bilaterally

with them all, as well as to engage in some region-wide bridge  building. Moreover, as the region itself becomes more

economically focused - or, to pick up former Thai Prime

Minister Chatichai's phrase, as the battlefields of yesterday  turn into the marketplaces of today and tomorrow - questions  of cultural and social identity become less dominant. As the

region itself changes, Australia’s distinctiveness is less  striking. So we no longer need be the odd man out in Asia -  even if we are destined to remain the oddest man in.

Th While not quite as stunning as the events in Europe, the pace  of political change in Asia over the last two years has been  on any view remarkable. Internally, democratic principles  have been reasserted in Bangladesh and Nepal, taken new root  in Mongolia, made significant strides forward in South Korea,  Taiwan and Hong Kong, and have been consolidated - after the  trauma of Rajiv Gandhi's assassination - in India. The  thwarted hopes of change in Burma, the military coup in  Thailand, and the continuing political repression of the now  anachronistic communist regimes in China, North Korea and  Vietnam remain the only real negative elements in what has  been a generally very positive environment. 6 Internationally, the Soviet Union (and, just as importantly  these days, the Russian Republic as well) has buried the  hatchet with South Korea and begun to do the same with Japan;  South and North Korea are proceeding cautiously with political  dialogue and have both joined the United Nations; China has  mended its fences with Indonesia, and - even more dramatically  and significantly - with Vietnam; and all the political  dynamics of the region have at last come together to make  possible the resolution of the tragically long-running  conflict in Cambodia, with the comprehensive settlement  agreement now scheduled to be signed in Paris on 23 October. \ Nonetheless, tensions and trouble spots, actual and potential,  do still abound - including between India and Pakistan over  Kashmir, within Sri Lanka, on the Korean Peninsula, and in the  South China Sea (with six nations of competing territorial  claims over various parts of the Spratly and Paracel Islands).  The decision of the Philippines' Senate to reject the  continued United States occupancy of the Subic Bay Naval Base  has, although not necessarily writing the final chapter in  this matter, manifestly weakened an important link in the  chain of US bilateral alliances which have been for a  generation an important stabilising factor in the western  Pacific region. To the extent that there is any clear pattern emerging in the  overall shape of security developments in the region, it has  three elements. First, there will undoubtedly be some  continuing diminution in the presence and level of activity of  the two nuclear superpowers. (So long as the Soviet Union  continues to possess some 30,000 nuclear warheads - as  compared with 20,000 for the United States and not much more  than 1000 for everyone else combined - it continues to justify  that description.) This is not of course to say that the  United States and the Soviet Union will not continue to have a  formidable role in the region, especially in the case of the  US, which has made clear its intention to stay fully engaged  in the western Pacific. But policy-makers in the region will 7 have to make judgments on the basis that the United States may  not be the all-pervasive stabilising influence in the region  it has been for so long. Secondly, and this is partly a corollary of the first point,  there will be a greater capacity for influence, both  absolutely and relatively, by the region's other major powers  - Japan, China and (subject to the way in which it masters its  current economic troubles) India. And thirdly, the dramatic  economic growth that has been experienced by a number of other  countries in Asia has enabled them to devote substantial  resources to the modernisation^ and upgrading of their own  defence forces:  they are likely to seek, and will be in a  better position to exercise, a degree of influence in  political and strategic matters commensurate with the rapid  pace of their economic development. President Bush's epochal announcement on 27 September of a new  United States nuclear policy will have far-reaching  implications in the Asia Pacific as elsewhere, but not change  any of these fundamentals. Our assessment is that around 20,000 nuclear warheads could be  put out of action as a result of the Bush initiative (if one  adds together the land and sea-based tactical nuclear warheads  that will be unilaterally decommissioned by the United States,  the Soviet tactical nuclear warheads that will be destroyed if  the Soviet Union follows suit as invited, the START-treaty  strategic warheads that will be deactivated on an accelerated  basis by the United States unilaterally and by the Soviet  Union if it follows suit, and the further number of strategic  nuclear warheads that would be deactivated if President Bush's  proposal to negotiate the de-MIRVING of all ICBMs is  accepted). But all this would still leave some 30,000  warheads in existence, making it a little premature to suggest  that we are witnessing even the beginning of the end of the  era of nuclear weapons. 8 Nonetheless It is obviously the case that these measures - and  others that President Bush announced, including the standing  down of strategic bombers from alert status and the  cancellation of a number of new nuclear weapons programs -  will contribute enormously to easing the tensions and risks  associated with these weapons, will give a very positive boost  to the US image internationally (not least in the Philippines,  where this may be helpful on the Subic issue), and hopefully  create a whole new nuclear disarmament momentum that will  result over time in even more far-reaching reductions  involving all the nuclear powers. \  . The most immediately significant measures in the Bush  Statement from a regional security viewpoint were the  decisions to disarm and destroy all land-based tactical  nuclear weapons, and to withdraw (though not in all cases to  destroy) tactical nuclear weapons from surface ships, attack  submarines and naval aircraft. The land-based measures should  be particularly helpful in further easing tensions on the  Korean Peninsular, particularly if North Korea responds by  promptly fulfilling its overdue obligation to sign and  implement its Nuclear Safeguards Agreement with the  International Atomic Energy Agency. The naval measures constitute an extremely important exercise  in confidence-building arms control, and one that has long  been thought appropriate by a number of countries in our  region. When fully implemented this will obviously put into  storage the "NCND" (Neither Confirm Nor Deny) policy - at  least until such time as some future crisis leads to a  redeployment of some of the weapons in question. This in turn  will make it easier for those countries - not least New  Zealand - who have had difficulties in accepting the presence  of potentially nuclear armed ships in their waters and ports,  to rethink their relevant policies and to approach their  relationships with the nuclear powers in a more relaxed way. 9 Taking into account all these various developments one has to  say that the security outlook for the Asia Pacific region is  generally favourable. The Cold War is over and we are  beginning to reap some dividends not only in a reduction of  global tension but in nuclear disarmament and arms control;  there have been important moves towards healing some of the  region’s most long-standing points of conflict; and there have  been heartening internal political developments in many  countries. But there is a sense that the region is in a phase  of transition, moving out of a familiar security framework to  a new dispensation whose contours have yet to be drawn. \ Although there is no comparable threat discernible anywhere in  this region at the moment, the Gulf War showed that naked  aggression and explosive regional confrontations are not,  unhappily, things of the past. The revitalisation of  collective security processes under the United Nations was, by  contrast, a very positive result of the Gulf crisis - but it  cannot be assumed that this response will always be so readily  capable of mobilisation. In the Asia Pacific environment,  where there are a number of powers of considerable relative  economic and military strength, and where the stability -  tense stability though it may have been - engendered by  superpower presence and competition can no longer be assured,  there is as much uncertainty as there has ever been about what  the longer-term future will be. In crafting Australia's policy response to all these  developments occurring within the region or impacting upon it,  the beginning of wisdom is to appreciate that the security and  strategic environment in Asia has always been much more fluid  and complex than that in Europe, and will certainly remain so.  Rather than a single, overriding East-West division, with a  single frontier to match, there has always been multiple  frontiers and multiple divisions in Asia - multiple subÂ­ regions, each with their own particular sources of enmity and  history of conflict. All that means (as I have always  acknowledged - although sometimes this has been lost in the t 10 1 political static) that no simplistic attempt to transfer  European models to the Asian environment is likely to make  much sense. But we can certainly learn from the European experience in  terms of the general approach and habits of mind we bring to  security issues. There is now a total appreciation in Europe  that security is much better guaranteed not in an upwards  spiral of arms development, fuelled by mutual suspicion, but  in a commitment to joint survival, to taking into account the  legitimate security anxieties of others, to building step-byÂ­ step military confidence between nations, and to working to  maximise the degree of interdependence between nations - in  short, to achieving security with others, not against them.  So too is it now appreciated - as Prime Minister Bob Hawke put  it succinctly in the first Asia Lecture here - that "instead  of seeking security from Asia, we should seek security in and  with Asia". There are two basic ways in which we have been doing this:  putting our own policy house in order, and making some  suggestions to the region at large as to how a more secure  total environment might evolve. In terms of Australia’s own  policy, the basic elements of our approach were spelt out in  detail in my Parliamentary Statement, Australia’s Regional  Security in December 1989, as well as in the Prime Minister's  Lecture in May this year. The essence of the Parliamentary  Statement, which I will not seek to summarise in any detail,  was the theme that the policy responses or instruments  available to protect Australia's security are  multidimensional. They go well beyond strictly military  capabilities, essential though these are. They also embrace  traditional diplomacy (of the kind that we deployed to very  positive effect in Cambodia), politico-military capabilities  (in the border zone between defence and diplomacy), economic  and trade relations, and development assistance. And they  extend to immigration activities and a number of other less  obvious areas of government activity. The relative importance 11 of each of this large variety of policy instruments will vary  from situation to situation, but none exists in isolation and  all should be regarded as mutually reinforcing contributions  to our security. The essential point is that, instead of seeing the region  essentially in military terms and acting accordingly, as  Australia did for so many years - looking out nervously,  behaving defensively and turning anxiously to Britain and the  United States for reinforcement - the only possible and  sensible course for Australia to take is to engage with our  region in the most direct and comprehensive possible way. We  have to go on utilising all the dimensions of our external  policy - as we have been in recent years - to shape a  welcoming regional environment. In terms of what we have had to say to the region as a whole -  utilising such forums as the annual ASEAN post-Ministerial  Conference - our emphasis has simply been on the need for a  substantial regional dialogue on security issues, involving a  combination of multilateral and bilateral forums. Dialogue is  both process and outcome, facilitating progress and at the  same time cementing it. Dialogue partners can exchange views  on threat perceptions, for example, and in doing so arrive at  shared assessments which, optimally, reduce their sensed  insecurity and check any trend to competitive arms  acquisition. Dialogue in this way builds general confidence. We have also argued - and other countries have been picking up  these themes with increasing interest in recent months - that  part of the subject matter of a new regional security dialogue  should be the possibility of specific new confidence building  measures. Confidence building measures are basically  arrangements designed to produce a sense of assurance and a  belief in the trustworthiness of states and actions they  undertake: they aim to reduce or eliminate mutual  misunderstandings, suspicions and fears by making security  needs and military intentions explicit, by creating processes 12 to defuse situations at an early stage, and generally to  create a greater degree of interdependence and mutual  confidence in the conduct of nations' affairs. At the ASEAN  PMC in July this year I offered a list of half a dozen such  measures which might usefully be the subject of further  detailed discussion in the series of conferences, seminars and  consultations that are now beginning to occur. What is most fascinating in all of this is that suggestions  that were not much more than a year ago perceived as radical,  and even in some quarters as having the potential to undermine  security to the extent that th^y cut across familiar bipolar  ways of thinking, are now more likely to be regarded as  boringly commonplace. It has come to be fully accepted that  what I and others have been talking about is not some dramatic  overturning of existing security arrangements in the region -  in particular the existing series of bilateral alliance  relationships with the United States in the western Pacific,  with Japan and Australia as the northern and southern anchors  respectively - but rather the supplementation of those  relationships with additional layers and strands of coÂ­ operation, mutual assistance and ultimately mutual dependence.  It is not a matter of cutting holes in any existing security  net, but rather strengthening existing trends, weaving in  additional threads and extending the net's coverage.  I I do not want to exaggerate, here or anywhere else, the role  and influence that Australia has in the region on issues of  this kind. It would be fair, however, to say that our voice  was not unimportant in getting this whole debate started. And  on all the available evidence, the contribution we continue to  make, as that debate takes what is certain to be a quite  lengthy and complex course, will not be an unwelcome one. The Economic Dimension If there is any single unifying element in the sprawling  diversity of Asia, it is probably the pragmatic preoccupation 13 with economic issues which now characterises almost every  country in the region. One simply cannot overstate the economic dynamism of the  region, and both the challenge and the opportunity this  presents for Australia. By the late 1980s the world had  become well aware of what those in the region itself had long  been conscious: that the Asia Pacific in general, and the  western Pacific rim in particular, was the fastest growing,  most innovative and adaptable region in the world. The major  economies there were recording an average annual GDP growth of  about 7 per cent, and an export\growth of 14.5 per cent. In  less than three decades production in North-East Asia alone  had expanded from something less than one-quarter of that of  North America's to one-quarter of that of the world. The  Pacific, no longer the Atlantic, was the centre of gravity in  world production. These achievements reflected several  factors: relative political stability, hard-working and  increasingly well-educated work forces, high rates of savings  and investment, sound economic management, and a crucial  willingness to undertake rapid structural change. The successful economies have also displayed great skill in  taking advantage of the relatively open post-War international  economic order - and the huge demand generated by United  States consumerism in the 1970s and early 1980s - by pursuing  export-oriented industrial strategies. The result has been a  region whose trading instincts are outward-looking, and which  is probably the most committed of all regions to trade  liberalisation. The economies of the region have also become  increasingly linked. As a process of 1  shifting  complementarities' works its way through the region, the  pattern of regional trade and investment, the direction of  technology flows, and inter-linkages in sectors such as  tourism, have all combined to produce a regional economic map  criss-crossed with the ties of interdependence. 14 Â·ÃÂ½ Ã¢ÂÂ  Â· The task for Australia is to lock ourself into this regional  economic dynamism to the maximum degree possible. To some  extent we have already done so: 35 per cent of our total trade  is now with North East Asia, and 8.7 per cent, with South East  Asia (although the numbers are much smaller for South Asia -  just 1.3 per cent, and for Indo-China - only 0.1 per cent).  Trade figures for 1990-91 released last month show that trade  with the six ASEAN countries jumped 23 per cent - from $8  billion to $9.8 billion in that year, as compared with just  $3.75 billion five years ago, with exports in particular  trebling over that time. The countries of North East and  South East Asia between them buy 55 per cent of Australia's  exports, as compared with 49 per cent five years ago. Welcome as these figures and trends are, there is a good deal  more that can be done. Australian investment in North America  and the European Community continues to run at very much  higher levels than in Asia, and with not many exceptions,  manufacturers have not been as active in Asia as elsewhere in  seeking out new markets. The reorientation of the geographic  focus of Austrade will help in this respect, as will  Australian government programs designed to give guidance and  assistance especially to small and medium size businesses.  The market access negotiations being conducted in the context  of the Uruguay Round, and the bundle of bilateral trade policy  issues that ministers and officials persistently hammer away  at, also hold out some prospect of lowering or removing  various barriers to entry. Again, political developments in Indo-China, and the role that  Australia has played in them, have created a ground swell of  goodwill on which it should be possible for Australian  business to ride: there are certainly major opportunities  emerging in Vietnam, with its 65 million people and rapidly  developing economic (if not yet political) liberalisation  policies. Indonesia - on our immediate doorstep, with 180  million people, an established track record of efficiency in  macro-economic management, a highly impressive recent record 15 of micro-economic reform, and currently very friendly  relations indeed with Australia - is an even more obvious  market for Australian business to be getting excited about. All these factors apart, the policy pressure that the  Government has been placing on Australian industry to force it  to become more internationally competitive, and the sweeping  changes now occurring under the Government's micro-economic  reform program, will be the foundations on which a major surge  of Australian business activity in Asia will be based. It was  not charity or altruism that prompted Japan and then Korea to  buy our raw materials on the ^cale they have; it was our  efficiency as a producer. And it will only be on the basis of  our competitive efficiency that we will be able to expand our  exports of simply and elaborately transformed manufactures and  services, and to generate foreign investment here in higher  technology industries. There should be no reason for pessimism about Australia's  capacity to respond to these various stimuli. Australia, for  example, is a world leader in low density, long distance  digital communications systems. We have highly developed  skills in biotechnology, agri-industries, agricultural and  medical research, mining technology, minerals processing and a  whole range of niche product areas. Many of these skills and  technologies are ideally suited to markets in the Asia Pacific  region, and are already the basis of a burgeoning  international services industry. We can justify the label we  have chosen for ourselves as the "clever country", but we are  going to have to show a little more cleverness - and tenacity  - than we have hitherto in translating capacity and potential  into maximum business performance in our own region. While ultimately it is up to business people, not governments,  to do business, governments can obviously do a lot to clear  the ground and set the ring within which business can operate  more effectively. The Hawke Government has been very  conscious of its responsibility to pursue trade policy issues 16 bllterally, regionally and Internationally. We have been,  moreover, by our commissioning of reports such as Ross Garnaut1s Australia and the Northeast Asian Ascendancy, been  consciously Identifying opportunities and setting ambitious  agendas for both the Government Itself and the business  community. The most Important regional economic Initiative we have  undertaken has been unquestionably the Inauguration of the  Asia Pacific Economic Cooperation (APEC) process. Two and a  half decades of statesmanlike rhetoric from various quarters  had led precisely nowhere until Prime Minister Hawke made a  major speech In Seoul In January 1989 calling for the establishment of a regional economic forum and articulating its objectives; this was followed up with an intense round of  diplomatic activity which culminated in the formal launch of  the process at the meeting in Canberra in November 1989  attended by 26 senior Ministers from 12 countries. A follow-up ministerial-level meeting was held in Singapore  last year, and a third is scheduled for Seoul next month. At  the Seoul Meeting, it is expected that we will see the admission to participation in APEC of the three Chinese economies of PRC, Taiwan and Hong Kong. There will be discussion there of progress reports from ten working groups -established to look at data collection and exchange, trade and  investment promotion, and various kinds of sectoral  cooperation strategies. It is also expected that some  attention will be paid to the question of giving APEC a more  formal institutional structure. Contrary to fears expressed in a number of quarters at the  time and subsequently, APEC was not established as a trade bloc, with an express or implied objective to build protective  walls around itself and to wage aggressive economic war  against everybody else. It was designed to give strong  regional support to international trade liberalisation, but  not to be a regional competitor to an American bloc and a 17 European bloc. As various commentators have been quick to  point out, while regional arrangements of one kind or another  can be GATT consistent, trade creating rather than trade  diverting, and while the EC and North American Free Trade  arrangements may fall into this category, any tripolar  division of the global economy - around yen, dollar or DM  blocs - does have the potential to lead to new restrictions on  trade to the great disadvantage of everyone. The deliberate effort made in the inauguration of APEC to  straddle the Pacific and engage the United States and Canada  in the process is simple proof of the desire to avoid just  that outcome. And that spirit continues to be evident in the  very great caution with which the Malaysian concept of an East  Asia Economic Grouping has been greeted - at least in the  original form of that proposal, which was something very  closely resembling an Asian regional bloc designed to do  battle with the giants of Europe and the United States. All the regional economies involved in APEC remain extremely  committed to the principle - echoed in every statement made  since the process began - that the future of all of us is  served by the continued opening-up of the international  trading economy, not by retreats to bilateralism and the lures  and temptations of so-called 'managed *  trade. This is not to  say that APEC's only role in trade matters is as a cheer squad  for the Uruguay Round - although the group has played that  role, and with the Round languishing as it has been, it needs  all the political support it can get. Australia has been  particularly keen to press the notion that there are many ways  in which the Asia Pacific region can lead by example in trade  policy, and that there is scope for developing a strategy of  non-discriminatory regional trade liberalisation which will do  just that. This is something which has only begun to be systematically  considered by governments, and it is too early yet to sketch  out what form this strategy might eventually take. One 18 starting point might be to identify one or more sectors where  a high proportion of the region's trade is sourced from the  region itself, and where gains for regional economies could  accordingly be quite significant. A crucial element of any  such region-based move would of course be that it be non-  discriminatory as against the rest of the world, creating the  potential to benefit countries outside the region as well. Leading by example has its risks as well as its rewards, and  no doubt a central element in any such strategy would be to  develop means of negotiating reciprocal concessions from  others in return for the marketing opening involved in non-  discriminatory liberalisation within our own region. I  certainly do not underestimate the difficulty and complexity  of the issues involved in translating these broadly stated  aspirations into workable policies. But the important thing  is that these issues are now being addressed and that APEC is  the process through which this is happening. From Australia's  point of view it is also gratifying, and helpful in the  development of our longer term role in the region, that we  continue to be recognised and applauded as the founder of the  process. Â· Thft Cultural Dimension If Australia is to engage more comprehensively with Asia in  the years ahead then perhaps the greatest need of all is for  Asians and Australians to get closer, as Ross Garnaut  elegantly put it, "in each other's minds". Garnaut  recommended in his report a number of ways of moving that  objective forward, including the creation of an Australia  Abroad Council to bring together the departments, agencies,  government business enterprises and key private sector bodies  involved in projecting Australia overseas. The idea was to  coordinate and more sharply focus our "public diplomacy" - ie  cultural and information - activities, and to more  systematically attack some of the stereotyped images of the  kind about which I spoke at the outset. We have now 19 established such a Council - comprising the heads of some 22  organisations ranging from the Australian Opera to Qantas,  from Radio Australia to Austrade - and already a better  harnessing of often disparate activities is occurring, eg in  the context of the planned Australia Week in South Korea next  year. A further encouraging institutional development, which I am  sure will bear great fruit in the years ahead, is of course  the creation of this Asia-Australia Institute, here at the  University of New South Wales, with its imaginative charter  designed among other things xto generate a more closely  informed understanding by Australians of Asia, and by Asians  of Australia. In getting Asians to better appreciate the extent and quality  of our commitment to the region, there are plenty of positives  on which to build. For a start, Australia has, to put it  objectively, a more open and tolerant society than any in  Asia. That is clearly reflected in immigration policy, where  the White Australia policy has been dead for more than two  decades; where between a third and a half of our annual  migrant intake (amounting to 40,000-50,000 people each year)  has since the late 1970s been Asian; and where our per capita  absorption of Indo-Chinese refugees, in particular, has been  higher than that of any other country in the world. There are  presently well over 600,000 people of Asian descent living in  Australia; this represents about 3.5 per cent of the  population now, but the figure is expected to rise to 7 per  cent by the year 2010. Furthermore, while older generations of Australians were less  knowledgeable about Asia and Asians than they might have been,  and some wartime prejudices have been slow to evaporate, a  major effort is being made to systematically educate current  and future generations of young Australians about the region  in which they live - not least with the plan now in place,  unmatched anywhere else in the region, to have primary and 20 secondary school students routinely taught at least one of six  Asian languages. Like our immigration practice, this has just  not been fully appreciated in most parts of Asia. But for all these positives, problems continue to arise from time to time. Not the least of such problems in recent years have been those generated by material appearing in the Australian media critical or denigratory of aspects of Asian society, sometimes deliberately so and sometimes quite unintentionally. When expressions of this kind lead to strongly adverse reactions by Asian governments, as has been \  the case on occasion, a very tricky situation is created for  Australian governments.  On the one hand our own cultural  tradition of media freedom inclines us to offer no reaction at  all other than to point to that tradition. On the other hand,  that response may be quite inadequate to protect other  Australian national interests involved. The furthest we can really go in accommodating other cultural  sensitivities in situations of this kind is to respond along  the following lines (as I did at the time of the Embassy  controversy with Malaysia). We can and do criticise the media  when they get things wrong, or behave ignorantly and  insensitively. We can, and do, express the hope in these  situations that they will get things right, or behave more  sensitively, in the future. We can and do dissociate  ourselves publicly from particular reports or programs when it  is our judgment that to do so is necessary to get our own  position clear. And where there is a danger of the report or  program in question being taken as an official Australian  position, we can and do distance ourselves accordingly, but we  cannot and should not be expected to comment on everything the  Australian media says about other countries. On a more positive note in this respect, we have supported a  number of exchange programs designed to give our journalists a  better understanding of other cultures - most of which  cultures tolerate less brashness and public aggression than 21 our own - and of the ways in which at least inadvertent  offence may be avoided. But while there are a number of  things we can do, and are doing, what we simply cannot do  consistently with our own political and social culture is to  direct anyone in the media how to behave, and I believe that  this is well understood in the region. This leads me to address, finally, the question of the extent  to which, if at all, we should as an Australian government  feel inhibited about advancing certain value-based policies -  in particular those promoting democracy and other human rights  - in our dealings with Asia, given that there will always be  plenty of voices to be heard saying that we should mind our  own business. My own clear view is that Australian engagement with Asia - or  enmeshment, to use another term periodically in currency -  does not imply any sacrifice or subordination of our own  distinctively Australian national characteristics. To  approach the region with confidence that we can operate  successfully within it does not mean we have to thwart our  national values and culture, or deny our history. It may well  make sense in Asia to moderate some of the directness that we  might routinely deploy in encounters within Australia, or with  North Americans or Europeans. But that is simply a matter of  learning the business of normal neighbourhood civility. It  does not mean moderating our commitment to values which are at  the core of our sense of national identity and worth - in  particular those of democracy and individual liberty. Australia's disposition, based on our history and culture, has  been to emphasise those rights and values enshrined in the  International Covenant on Civil and Political Rights.  By  contrast our neighbours, with their different historical and  cultural experience, have been more inclined to give primacy  to the rights identified in the International Covenant on  Economic, Social and Cultural Rights. Like many developing  countries, they have tended to argue that an escape from 22 poverty through economic development is a necessary  prerequisite for the application of those political and civil  rights which so preoccupy democratic developed countries.   They point to the economic and social causes of human rights  violations, such as international indebtedness,  deteriorating  terms of trade, threats to the environment and the like. But to give continuing attention, as we do, to political and  civil rights is not to be engaged in the neo-colonialist  imposition of inappropriate values. When frank and serious  discussion does take place, away from the spotlight of public  attention, one rarely experiences in our wider region any  denial of the fundamental, universal nature of the rights set  out in both International Covenants. Moreover, there is an  increasing willingness to acknowledge, at least privately,  that democratic and other human rights are not only  reconcilable with economic development, but on all available  international evidence are extremely helpful in delivering it. The great democratic experiment in India, one of the world's  poorest and most densely populated countries, continues to  work and a whole series of Asian countries have in recent  years strengthened their democracies against the odds.   Despite recent setbacks the urge to go down this path remains  palpable in China. Human dignity is inalienable, and the same  human rights exist in every kind of society. The urge to  democracy is no more than a reflection of these realities.  Again, in pressing its neighbours for recognition of basic  human rights, Australia is not raising doubts abut their  integrity as sovereign states. Of course we recognise the  claims of sovereignty, but we ask that the universal rights of  human beings be also acknowledged and respected. When these issues are properly handled - as I think they were,  for example, in the case of our recent Human Rights Delegation  to China, of which Stephen Fitzgerald was so distinguished a  member - there is no reason why they should put at risk  Australia's regional relationships. While there is no point 23 Ã¢ÂÂ %, in provoking arguments needlessly or counterproductively, and  while we should always understand and respect the real  sensitivities of countries with different cultural traditions,  we should not be afraid to tackle issues which cry out for  attention. Nor should we be trapped into embracing crude cultural relativism - the notion that what is good and  valuable depends wholly on what is accepted as such in a particular prevailing cultural environment. Australia should  make no apology for raising human rights issues - political  and civil, as well as economic and social - and for expecting  others to acknowledge the integrity of our own values,  including, as I have already said, respect for freedom in the  media. To make our views known, quietly and courteously, about values we regard as universal and hold dear, does not  entail condescension or interference in internal affairs. The  question in all these circumstances - as so often in Asia - is  not whether to act, but how to act. So Australia can be an Asia Pacific nation in every sense,  without modifying any of our commitment to values or principles which are crucial to our own sense of self.  Australia will not lose its identify by becoming ever more  absorbed and involved in Asia Pacific regional affairs. On  the contrary, that identity will go on developing, losing  attitudes of exclusiveness and superiority which may have been  part of it in the past, and gaining in the process a new  flexibility, a new capacity to learn and adapt, and a new  maturity. * * *

While not quite as stunning as the events in Europe, the pace  of political change in Asia over the last two years has been

on any view remarkable. Internally, democratic principles

have been reasserted in Bangladesh and Nepal, taken new root

in Mongolia, made significant strides forward in South Korea,  Taiwan and Hong Kong, and have been consolidated - after the

trauma of Rajiv Gandhi's assassination - in India. The

thwarted hopes of change in Burma, the military coup in

Thailand, and the continuing political repression of the now

anachronistic communist regimes in China, North Korea and

Vietnam remain the only real negative elements in what has

been a generally very positive environment.

6

Internationally, the Soviet Union (and, just as importantly

these days, the Russian Republic as well) has buried the

hatchet with South Korea and begun to do the same with Japan;  South and North Korea are proceeding cautiously with political

dialogue and have both joined the United Nations; China has

mended its fences with Indonesia, and - even more dramatically

and significantly - with Vietnam; and all the political

dynamics of the region have at last come together to make

possible the resolution of the tragically long-running  conflict in Cambodia, with the comprehensive settlement

agreement now scheduled to be signed in Paris on 23 October.

\

Nonetheless, tensions and trouble spots, actual and potential,

do still abound - including between India and Pakistan over  Kashmir, within Sri Lanka, on the Korean Peninsula, and in the  South China Sea (with six nations of competing territorial

claims over various parts of the Spratly and Paracel Islands).  The decision of the Philippines' Senate to reject the

continued United States occupancy of the Subic Bay Naval Base  has, although not necessarily writing the final chapter in

this matter, manifestly weakened an important link in the

chain of US bilateral alliances which have been for a

generation an important stabilising factor in the western

Pacific region.

To the extent that there is any clear pattern emerging in the

overall shape of security developments in the region, it has

three elements. First, there will undoubtedly be some

continuing diminution in the presence and level of activity of

the two nuclear superpowers. (So long as the Soviet Union

continues to possess some 30,000 nuclear warheads - as

compared with 20,000 for the United States and not much more

than 1000 for everyone else combined - it continues to justify  that description.) This is not of course to say that the

United States and the Soviet Union will not continue to have a

formidable role in the region, especially in the case of the

US, which has made clear its intention to stay fully engaged

in the western Pacific. But policy-makers in the region will

7

have to make judgments on the basis that the United States may

not be the all-pervasive stabilising influence in the region

it has been for so long.

Secondly, and this is partly a corollary of the first point,

there will be a greater capacity for influence, both

absolutely and relatively, by the region's other major powers

- Japan, China and (subject to the way in which it masters its

current economic troubles) India. And thirdly, the dramatic  economic growth that has been experienced by a number of other

countries in Asia has enabled them to devote substantial  resources to the modernisation^ and upgrading of their own  defence forces:  they are likely to seek, and will be in a

better position to exercise, a degree of influence in

political and strategic matters commensurate with the rapid

pace of their economic development.

President Bush's epochal announcement on 27 September of a new

United States nuclear policy will have far-reaching  implications in the Asia Pacific as elsewhere, but not change  any of these fundamentals.

Our assessment is that around 20,000 nuclear warheads could be  put out of action as a result of the Bush initiative (if one

adds together the land and sea-based tactical nuclear warheads

that will be unilaterally decommissioned by the United States,

the Soviet tactical nuclear warheads that will be destroyed if

the Soviet Union follows suit as invited, the START-treaty

strategic warheads that will be deactivated on an accelerated

basis by the United States unilaterally and by the Soviet  Union if it follows suit, and the further number of strategic

nuclear warheads that would be deactivated if President Bush's

proposal to negotiate the de-MIRVING of all ICBMs is

accepted). But all this would still leave some 30,000

warheads in existence, making it a little premature to suggest

that we are witnessing even the beginning of the end of the

era of nuclear weapons.

8

Nonetheless It is obviously the case that these measures - and

others that President Bush announced, including the standing

down of strategic bombers from alert status and the

cancellation of a number of new nuclear weapons programs -

will contribute enormously to easing the tensions and risks

associated with these weapons, will give a very positive boost

to the US image internationally (not least in the Philippines,

where this may be helpful on the Subic issue), and hopefully

create a whole new nuclear disarmament momentum that will  result over time in even more far-reaching reductions  involving all the nuclear powers.

\  .

The most immediately significant measures in the Bush  Statement from a regional security viewpoint were the

decisions to disarm and destroy all land-based tactical

nuclear weapons, and to withdraw (though not in all cases to  destroy) tactical nuclear weapons from surface ships, attack  submarines and naval aircraft. The land-based measures should

be particularly helpful in further easing tensions on the

Korean Peninsular, particularly if North Korea responds by

promptly fulfilling its overdue obligation to sign and

implement its Nuclear Safeguards Agreement with the  International Atomic Energy Agency.

The naval measures constitute an extremely important exercise  in confidence-building arms control, and one that has long

been thought appropriate by a number of countries in our

region. When fully implemented this will obviously put into

storage the "NCND" (Neither Confirm Nor Deny) policy - at

least until such time as some future crisis leads to a

redeployment of some of the weapons in question. This in turn

will make it easier for those countries - not least New  Zealand - who have had difficulties in accepting the presence

of potentially nuclear armed ships in their waters and ports,

to rethink their relevant policies and to approach their

relationships with the nuclear powers in a more relaxed way.

9

Taking into account all these various developments one has to

say that the security outlook for the Asia Pacific region is

generally favourable. The Cold War is over and we are

beginning to reap some dividends not only in a reduction of

global tension but in nuclear disarmament and arms control;

there have been important moves towards healing some of the  region’s most long-standing points of conflict; and there have

been heartening internal political developments in many

countries. But there is a sense that the region is in a phase  of transition, moving out of a familiar security framework to

a new dispensation whose contours have yet to be drawn.

\

Although there is no comparable threat discernible anywhere in  this region at the moment, the Gulf War showed that naked  aggression and explosive regional confrontations are not,

unhappily, things of the past. The revitalisation of  collective security processes under the United Nations was, by

contrast, a very positive result of the Gulf crisis - but it  cannot be assumed that this response will always be so readily  capable of mobilisation. In the Asia Pacific environment,

where there are a number of powers of considerable relative  economic and military strength, and where the stability -

tense stability though it may have been - engendered by  superpower presence and competition can no longer be assured,

there is as much uncertainty as there has ever been about what

the longer-term future will be.

In crafting Australia's policy response to all these

developments occurring within the region or impacting upon it,

the beginning of wisdom is to appreciate that the security and

strategic environment in Asia has always been much more fluid  and complex than that in Europe, and will certainly remain so.  Rather than a single, overriding East-West division, with a

single frontier to match, there has always been multiple

frontiers and multiple divisions in Asia - multiple subÂ­

regions, each with their own particular sources of enmity and

history of conflict. All that means (as I have always

acknowledged - although sometimes this has been lost in the

t 10 1

political static) that no simplistic attempt to transfer

European models to the Asian environment is likely to make

much sense.

But we can certainly learn from the European experience in

terms of the general approach and habits of mind we bring to

security issues. There is now a total appreciation in Europe  that security is much better guaranteed not in an upwards

spiral of arms development, fuelled by mutual suspicion, but

in a commitment to joint survival, to taking into account the  legitimate security anxieties of others, to building step-byÂ­

step military confidence between nations, and to working to  maximise the degree of interdependence between nations - in

short, to achieving security with others, not against them.

So too is it now appreciated - as Prime Minister Bob Hawke put

it succinctly in the first Asia Lecture here - that "instead  of seeking security from Asia, we should seek security in and

with Asia".

There are two basic ways in which we have been doing this:

putting our own policy house in order, and making some

suggestions to the region at large as to how a more secure  total environment might evolve. In terms of Australia’s own  policy, the basic elements of our approach were spelt out in

detail in my Parliamentary Statement, Australia’s Regional

Security in December 1989, as well as in the Prime Minister's

Lecture in May this year. The essence of the Parliamentary  Statement, which I will not seek to summarise in any detail,

was the theme that the policy responses or instruments

available to protect Australia's security are

multidimensional. They go well beyond strictly military

capabilities, essential though these are. They also embrace

traditional diplomacy (of the kind that we deployed to very  positive effect in Cambodia), politico-military capabilities  (in the border zone between defence and diplomacy), economic

and trade relations, and development assistance. And they

extend to immigration activities and a number of other less

obvious areas of government activity. The relative importance

11

of each of this large variety of policy instruments will vary

from situation to situation, but none exists in isolation and

all should be regarded as mutually reinforcing contributions

to our security.

The essential point is that, instead of seeing the region

essentially in military terms and acting accordingly, as

Australia did for so many years - looking out nervously,  behaving defensively and turning anxiously to Britain and the

United States for reinforcement - the only possible and

sensible course for Australia to take is to engage with our

region in the most direct and comprehensive possible way. We  have to go on utilising all the dimensions of our external

policy - as we have been in recent years - to shape a

welcoming regional environment.

In terms of what we have had to say to the region as a whole -

utilising such forums as the annual ASEAN post-Ministerial

Conference - our emphasis has simply been on the need for a  substantial regional dialogue on security issues, involving a  combination of multilateral and bilateral forums. Dialogue is

both process and outcome, facilitating progress and at the

same time cementing it. Dialogue partners can exchange views  on threat perceptions, for example, and in doing so arrive at

shared assessments which, optimally, reduce their sensed

insecurity and check any trend to competitive arms

acquisition. Dialogue in this way builds general confidence.

We have also argued - and other countries have been picking up

these themes with increasing interest in recent months - that

part of the subject matter of a new regional security dialogue

should be the possibility of specific new confidence building

measures. Confidence building measures are basically

arrangements designed to produce a sense of assurance and a

belief in the trustworthiness of states and actions they

undertake: they aim to reduce or eliminate mutual

misunderstandings, suspicions and fears by making security

needs and military intentions explicit, by creating processes

12

to defuse situations at an early stage, and generally to

create a greater degree of interdependence and mutual

confidence in the conduct of nations' affairs. At the ASEAN

PMC in July this year I offered a list of half a dozen such

measures which might usefully be the subject of further  detailed discussion in the series of conferences, seminars and

consultations that are now beginning to occur.

What is most fascinating in all of this is that suggestions

that were not much more than a year ago perceived as radical,

and even in some quarters as having the potential to undermine  security to the extent that th^y cut across familiar bipolar

ways of thinking, are now more likely to be regarded as

boringly commonplace. It has come to be fully accepted that

what I and others have been talking about is not some dramatic

overturning of existing security arrangements in the region -  in particular the existing series of bilateral alliance  relationships with the United States in the western Pacific,

with Japan and Australia as the northern and southern anchors  respectively - but rather the supplementation of those  relationships with additional layers and strands of coÂ­ operation, mutual assistance and ultimately mutual dependence.

It is not a matter of cutting holes in any existing security

net, but rather strengthening existing trends, weaving in

additional threads and extending the net's coverage.  I

I do not want to exaggerate, here or anywhere else, the role  and influence that Australia has in the region on issues of

this kind. It would be fair, however, to say that our voice

was not unimportant in getting this whole debate started. And

on all the available evidence, the contribution we continue to

make, as that debate takes what is certain to be a quite

lengthy and complex course, will not be an unwelcome one.

The Economic Dimension

If there is any single unifying element in the sprawling

diversity of Asia, it is probably the pragmatic preoccupation

13

with economic issues which now characterises almost every

country in the region.

One simply cannot overstate the economic dynamism of the

region, and both the challenge and the opportunity this  presents for Australia. By the late 1980s the world had  become well aware of what those in the region itself had long

been conscious: that the Asia Pacific in general, and the

western Pacific rim in particular, was the fastest growing,

most innovative and adaptable region in the world. The major  economies there were recording an average annual GDP growth of

about 7 per cent, and an export\growth of 14.5 per cent. In  less than three decades production in North-East Asia alone  had expanded from something less than one-quarter of that of

North America's to one-quarter of that of the world. The

Pacific, no longer the Atlantic, was the centre of gravity in

world production. These achievements reflected several  factors: relative political stability, hard-working and

increasingly well-educated work forces, high rates of savings  and investment, sound economic management, and a crucial  willingness to undertake rapid structural change.

The successful economies have also displayed great skill in

taking advantage of the relatively open post-War international

economic order - and the huge demand generated by United  States consumerism in the 1970s and early 1980s - by pursuing

export-oriented industrial strategies. The result has been a

region whose trading instincts are outward-looking, and which

is probably the most committed of all regions to trade

liberalisation. The economies of the region have also become

increasingly linked. As a process of 1  shifting

complementarities' works its way through the region, the

pattern of regional trade and investment, the direction of

technology flows, and inter-linkages in sectors such as

tourism, have all combined to produce a regional economic map  criss-crossed with the ties of interdependence.

14

Â·ÃÂ½ Ã¢ÂÂ  Â·

The task for Australia is to lock ourself into this regional

economic dynamism to the maximum degree possible. To some

extent we have already done so: 35 per cent of our total trade

is now with North East Asia, and 8.7 per cent, with South East

Asia (although the numbers are much smaller for South Asia -

just 1.3 per cent, and for Indo-China - only 0.1 per cent).

Trade figures for 1990-91 released last month show that trade

with the six ASEAN countries jumped 23 per cent - from $8

billion to $9.8 billion in that year, as compared with just

$3.75 billion five years ago, with exports in particular

trebling over that time. The countries of North East and

South East Asia between them buy 55 per cent of Australia's  exports, as compared with 49 per cent five years ago.

Welcome as these figures and trends are, there is a good deal

more that can be done. Australian investment in North America

and the European Community continues to run at very much

higher levels than in Asia, and with not many exceptions,

manufacturers have not been as active in Asia as elsewhere in

seeking out new markets. The reorientation of the geographic  focus of Austrade will help in this respect, as will

Australian government programs designed to give guidance and  assistance especially to small and medium size businesses.

The market access negotiations being conducted in the context  of the Uruguay Round, and the bundle of bilateral trade policy

issues that ministers and officials persistently hammer away

at, also hold out some prospect of lowering or removing

various barriers to entry.

Again, political developments in Indo-China, and the role that

Australia has played in them, have created a ground swell of

goodwill on which it should be possible for Australian  business to ride: there are certainly major opportunities

emerging in Vietnam, with its 65 million people and rapidly

developing economic (if not yet political) liberalisation

policies. Indonesia - on our immediate doorstep, with 180

million people, an established track record of efficiency in

macro-economic management, a highly impressive recent record

15

of micro-economic reform, and currently very friendly

relations indeed with Australia - is an even more obvious

market for Australian business to be getting excited about.

All these factors apart, the policy pressure that the

Government has been placing on Australian industry to force it

to become more internationally competitive, and the sweeping

changes now occurring under the Government's micro-economic

reform program, will be the foundations on which a major surge  of Australian business activity in Asia will be based. It was

not charity or altruism that prompted Japan and then Korea to

buy our raw materials on the ^cale they have; it was our

efficiency as a producer. And it will only be on the basis of  our competitive efficiency that we will be able to expand our

exports of simply and elaborately transformed manufactures and  services, and to generate foreign investment here in higher  technology industries.

There should be no reason for pessimism about Australia's  capacity to respond to these various stimuli. Australia, for

example, is a world leader in low density, long distance

digital communications systems. We have highly developed

skills in biotechnology, agri-industries, agricultural and  medical research, mining technology, minerals processing and a

whole range of niche product areas. Many of these skills and

technologies are ideally suited to markets in the Asia Pacific

region, and are already the basis of a burgeoning

international services industry. We can justify the label we  have chosen for ourselves as the "clever country", but we are

going to have to show a little more cleverness - and tenacity  - than we have hitherto in translating capacity and potential

into maximum business performance in our own region.

While ultimately it is up to business people, not governments,  to do business, governments can obviously do a lot to clear

the ground and set the ring within which business can operate

more effectively. The Hawke Government has been very

conscious of its responsibility to pursue trade policy issues

16

bllterally, regionally and Internationally. We have been,

moreover, by our commissioning of reports such as Ross Garnaut1s Australia and the Northeast Asian Ascendancy, been

consciously Identifying opportunities and setting ambitious

agendas for both the Government Itself and the business

community.

The most Important regional economic Initiative we have  undertaken has been unquestionably the Inauguration of the

Asia Pacific Economic Cooperation (APEC) process. Two and a

half decades of statesmanlike rhetoric from various quarters

had led precisely nowhere until Prime Minister Hawke made a  major speech In Seoul In January 1989 calling for the

establishment of a regional economic forum and articulating

its objectives; this was followed up with an intense round of  diplomatic activity which culminated in the formal launch of  the process at the meeting in Canberra in November 1989  attended by 26 senior Ministers from 12 countries.

A follow-up ministerial-level meeting was held in Singapore

last year, and a third is scheduled for Seoul next month. At  the Seoul Meeting, it is expected that we will see the admission to participation in APEC of the three Chinese economies of PRC, Taiwan and Hong Kong. There will be

discussion there of progress reports from ten working groups -established to look at data collection and exchange, trade and

investment promotion, and various kinds of sectoral  cooperation strategies. It is also expected that some

attention will be paid to the question of giving APEC a more  formal institutional structure.

Contrary to fears expressed in a number of quarters at the

time and subsequently, APEC was not established as a trade

bloc, with an express or implied objective to build protective

walls around itself and to wage aggressive economic war  against everybody else. It was designed to give strong

regional support to international trade liberalisation, but

not to be a regional competitor to an American bloc and a

17

European bloc. As various commentators have been quick to

point out, while regional arrangements of one kind or another

can be GATT consistent, trade creating rather than trade

diverting, and while the EC and North American Free Trade

arrangements may fall into this category, any tripolar

division of the global economy - around yen, dollar or DM

blocs - does have the potential to lead to new restrictions on  trade to the great disadvantage of everyone.

The deliberate effort made in the inauguration of APEC to  straddle the Pacific and engage the United States and Canada

in the process is simple proof of the desire to avoid just

that outcome. And that spirit continues to be evident in the  very great caution with which the Malaysian concept of an East

Asia Economic Grouping has been greeted - at least in the  original form of that proposal, which was something very  closely resembling an Asian regional bloc designed to do

battle with the giants of Europe and the United States.

All the regional economies involved in APEC remain extremely

committed to the principle - echoed in every statement made

since the process began - that the future of all of us is  served by the continued opening-up of the international  trading economy, not by retreats to bilateralism and the lures

and temptations of so-called 'managed *  trade. This is not to

say that APEC's only role in trade matters is as a cheer squad  for the Uruguay Round - although the group has played that

role, and with the Round languishing as it has been, it needs  all the political support it can get. Australia has been  particularly keen to press the notion that there are many ways

in which the Asia Pacific region can lead by example in trade

policy, and that there is scope for developing a strategy of  non-discriminatory regional trade liberalisation which will do

just that.

This is something which has only begun to be systematically  considered by governments, and it is too early yet to sketch

out what form this strategy might eventually take. One

18

starting point might be to identify one or more sectors where

a high proportion of the region's trade is sourced from the

region itself, and where gains for regional economies could

accordingly be quite significant. A crucial element of any

such region-based move would of course be that it be non-

discriminatory as against the rest of the world, creating the

potential to benefit countries outside the region as well.

Leading by example has its risks as well as its rewards, and  no doubt a central element in any such strategy would be to  develop means of negotiating reciprocal concessions from  others in return for the marketing opening involved in non-

discriminatory liberalisation within our own region. I

certainly do not underestimate the difficulty and complexity

of the issues involved in translating these broadly stated

aspirations into workable policies. But the important thing  is that these issues are now being addressed and that APEC is

the process through which this is happening. From Australia's  point of view it is also gratifying, and helpful in the  development of our longer term role in the region, that we  continue to be recognised and applauded as the founder of the

process. Â·

Thft Cultural Dimension

If Australia is to engage more comprehensively with Asia in

the years ahead then perhaps the greatest need of all is for

Asians and Australians to get closer, as Ross Garnaut

elegantly put it, "in each other's minds". Garnaut

recommended in his report a number of ways of moving that

objective forward, including the creation of an Australia  Abroad Council to bring together the departments, agencies,

government business enterprises and key private sector bodies  involved in projecting Australia overseas. The idea was to

coordinate and more sharply focus our "public diplomacy" - ie

cultural and information - activities, and to more

systematically attack some of the stereotyped images of the

kind about which I spoke at the outset. We have now

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established such a Council - comprising the heads of some 22

organisations ranging from the Australian Opera to Qantas,

from Radio Australia to Austrade - and already a better

harnessing of often disparate activities is occurring, eg in

the context of the planned Australia Week in South Korea next

year.

A further encouraging institutional development, which I am

sure will bear great fruit in the years ahead, is of course

the creation of this Asia-Australia Institute, here at the

University of New South Wales, with its imaginative charter  designed among other things xto generate a more closely

informed understanding by Australians of Asia, and by Asians

of Australia.

In getting Asians to better appreciate the extent and quality

of our commitment to the region, there are plenty of positives  on which to build. For a start, Australia has, to put it

objectively, a more open and tolerant society than any in  Asia. That is clearly reflected in immigration policy, where  the White Australia policy has been dead for more than two  decades; where between a third and a half of our annual  migrant intake (amounting to 40,000-50,000 people each year)

has since the late 1970s been Asian; and where our per capita

absorption of Indo-Chinese refugees, in particular, has been  higher than that of any other country in the world. There are

presently well over 600,000 people of Asian descent living in

Australia; this represents about 3.5 per cent of the

population now, but the figure is expected to rise to 7 per

cent by the year 2010.

Furthermore, while older generations of Australians were less

knowledgeable about Asia and Asians than they might have been,

and some wartime prejudices have been slow to evaporate, a

major effort is being made to systematically educate current

and future generations of young Australians about the region

in which they live - not least with the plan now in place,  unmatched anywhere else in the region, to have primary and

20

secondary school students routinely taught at least one of six  Asian languages. Like our immigration practice, this has just  not been fully appreciated in most parts of Asia.

But for all these positives, problems continue to arise from

time to time. Not the least of such problems in recent years have been those generated by material appearing in the Australian media critical or denigratory of aspects of Asian

society, sometimes deliberately so and sometimes quite unintentionally. When expressions of this kind lead to strongly adverse reactions by Asian governments, as has been \  the case on occasion, a very tricky situation is created for  Australian governments.  On the one hand our own cultural

tradition of media freedom inclines us to offer no reaction at  all other than to point to that tradition. On the other hand,

that response may be quite inadequate to protect other  Australian national interests involved.

The furthest we can really go in accommodating other cultural  sensitivities in situations of this kind is to respond along  the following lines (as I did at the time of the Embassy

controversy with Malaysia). We can and do criticise the media  when they get things wrong, or behave ignorantly and

insensitively. We can, and do, express the hope in these  situations that they will get things right, or behave more  sensitively, in the future. We can and do dissociate

ourselves publicly from particular reports or programs when it

is our judgment that to do so is necessary to get our own

position clear. And where there is a danger of the report or  program in question being taken as an official Australian

position, we can and do distance ourselves accordingly, but we

cannot and should not be expected to comment on everything the  Australian media says about other countries.

On a more positive note in this respect, we have supported a

number of exchange programs designed to give our journalists a

better understanding of other cultures - most of which

cultures tolerate less brashness and public aggression than

21

our own - and of the ways in which at least inadvertent

offence may be avoided. But while there are a number of

things we can do, and are doing, what we simply cannot do

consistently with our own political and social culture is to  direct anyone in the media how to behave, and I believe that

this is well understood in the region.

This leads me to address, finally, the question of the extent

to which, if at all, we should as an Australian government

feel inhibited about advancing certain value-based policies -  in particular those promoting democracy and other human rights

- in our dealings with Asia, given that there will always be

plenty of voices to be heard saying that we should mind our

own business.

My own clear view is that Australian engagement with Asia - or  enmeshment, to use another term periodically in currency -

does not imply any sacrifice or subordination of our own  distinctively Australian national characteristics. To  approach the region with confidence that we can operate

successfully within it does not mean we have to thwart our

national values and culture, or deny our history. It may well

make sense in Asia to moderate some of the directness that we  might routinely deploy in encounters within Australia, or with  North Americans or Europeans. But that is simply a matter of  learning the business of normal neighbourhood civility. It

does not mean moderating our commitment to values which are at

the core of our sense of national identity and worth - in

particular those of democracy and individual liberty.

Australia's disposition, based on our history and culture, has

been to emphasise those rights and values enshrined in the  International Covenant on Civil and Political Rights.  By

contrast our neighbours, with their different historical and

cultural experience, have been more inclined to give primacy  to the rights identified in the International Covenant on

Economic, Social and Cultural Rights. Like many developing

countries, they have tended to argue that an escape from

22

poverty through economic development is a necessary

prerequisite for the application of those political and civil

rights which so preoccupy democratic developed countries.

They point to the economic and social causes of human rights

violations, such as international indebtedness,  deteriorating

terms of trade, threats to the environment and the like.

But to give continuing attention, as we do, to political and

civil rights is not to be engaged in the neo-colonialist  imposition of inappropriate values. When frank and serious

discussion does take place, away from the spotlight of public  attention, one rarely experiences in our wider region any

denial of the fundamental, universal nature of the rights set  out in both International Covenants. Moreover, there is an

increasing willingness to acknowledge, at least privately,

that democratic and other human rights are not only

reconcilable with economic development, but on all available  international evidence are extremely helpful in delivering it.

The great democratic experiment in India, one of the world's  poorest and most densely populated countries, continues to

work and a whole series of Asian countries have in recent  years strengthened their democracies against the odds.

Despite recent setbacks the urge to go down this path remains

palpable in China. Human dignity is inalienable, and the same

human rights exist in every kind of society. The urge to  democracy is no more than a reflection of these realities.

Again, in pressing its neighbours for recognition of basic  human rights, Australia is not raising doubts abut their

integrity as sovereign states. Of course we recognise the

claims of sovereignty, but we ask that the universal rights of

human beings be also acknowledged and respected.

When these issues are properly handled - as I think they were,  for example, in the case of our recent Human Rights Delegation

to China, of which Stephen Fitzgerald was so distinguished a

member - there is no reason why they should put at risk

Australia's regional relationships. While there is no point

23 Ã¢ÂÂ %,

in provoking arguments needlessly or counterproductively, and

while we should always understand and respect the real

sensitivities of countries with different cultural traditions,

we should not be afraid to tackle issues which cry out for

attention. Nor should we be trapped into embracing crude

cultural relativism - the notion that what is good and  valuable depends wholly on what is accepted as such in a

particular prevailing cultural environment. Australia should

make no apology for raising human rights issues - political

and civil, as well as economic and social - and for expecting  others to acknowledge the integrity of our own values,

including, as I have already said, respect for freedom in the

media. To make our views known, quietly and courteously,

about values we regard as universal and hold dear, does not

entail condescension or interference in internal affairs. The

question in all these circumstances - as so often in Asia - is  not whether to act, but how to act.

So Australia can be an Asia Pacific nation in every sense,

without modifying any of our commitment to values or principles which are crucial to our own sense of self.

Australia will not lose its identify by becoming ever more

absorbed and involved in Asia Pacific regional affairs. On  the contrary, that identity will go on developing, losing

attitudes of exclusiveness and superiority which may have been

part of it in the past, and gaining in the process a new

flexibility, a new capacity to learn and adapt, and a new

maturity.

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