Trade, Investment and the US-China Relationship

• Speech, check against delivery

Minerals Council of Australia Webcast Address

10 November 2020

Thank you Tania [Minerals Council CEO] for that introduction.

I am very glad to be able to take part in this webcast today, at a complex time for Australia’s international engagement and indeed a time of great complexity right across the world.

Scheduling this event whilst the Senate is sitting was an ambitious arrangement but I’m delighted we’ve been able to make it happen and I do acknowledge that MCA has moved this event a number of times during the course of this year.

It’s a year like no other and we’ve run out of ways to acknowledge the unprecedented and challenging nature of this year.

We’re just off the back of a remarkable U.S. election. We see degrees of unrest in different parts of the world, the raging impact of COVID on health and economic consequences; the lockdowns that are now back in place tragically in the United Kingdom and Europe, usual challenges of natural disasters but again the rise in some parts of the world of further heinous acts of terrorism.

In the midst of all of this challenge and a very messy and difficult year – and indeed a tragic year for so many people throughout the world. Here in Australia, we have weathered the storm and our Government has been focussed, very much on getting on with the job of protecting lives and livelihoods. Supporting Australians, theirs families, their safety and most of all their jobs.

All of our efforts to support the local economy, local businesses have been about sustaining them through this crises and helping to drive their recovery to come.

We’ve still got lots of Australians who are out of the country at present and we’re working hard to get them home.

And with case numbers so low, pleasingly we’ve been able to start taking certain steps to open up again to international travel for the first time since the pandemic.

• We now have at least one-way quarantine bubble welcoming New Zealanders to Australia,
• The first people coming back to Australia from the Pacific under our labour mobility schemes, and even
• small numbers of international students trickling into the Northern Territory and South Australia as part of their pilots.

We’re just seeing the small steps of progress that are getting us to at least a new COVID normal if not back to normal altogether.

So well done to Tania and the team at the Minerals Council of Australia for your perseverance through this challenging year and for being heard above all of the noise and challenges of everything else.

Among other things we’re here today to launch this important new report on the opportunities in ASEAN region, which I’ll come to in a moment.

But the title of today’s session brings us straight to the nub of two of the most important fault lines we face as a global community in late 2020, even as we struggle with the immense health, social and economic problems caused by COVID-19.

“Trade, Investment and the US-China relationship”.

As the Minerals Council knows well, trade and investment are critically important to our national prosperity.

In a globalised, joined-up world – even one in temporary lockdown – trade and investment underpin the prosperity and success for many societies across our planet.

Of course it’s true of Australia – a small nation on a large continent with a big economy, but small domestic markets – that we thrive best in an open trading environment, where we can sell our quality products on fair terms on global markets, and access what we don’t produce locally from overseas.

And where Foreign Direct Investment creates jobs and allows us to access capital and resources from across the world.

Australian mining has shown that over many decades, as a minerals sector how it can play a leading role, fuelled by open markets and the open flow of investment. And indeed during these troubling times it is our resources sector that has shown perseverance, resilience, adaptation to help mitigate the effects of COVID-19 on our economy.

It’s also true that those principles of trade and investment, flow not just through mid-sized economies like ours or smaller ones but for the biggest of economies.

There’s a reason why the United States and China, despite some of the rhetoric at times, are as entwined as they are – and it isn’t because they have small markets, shallow investment pools or few industrial advantages.

It’s because global trade and investment work to the benefit of all countries.

In a time like this, though, we can see it’s easy for some people to think doubtfully and question the benefits of international trade and investment.

Why shouldn’t we be producing for ourselves first, people ask?

Why should we allow foreigners to invest in Australian businesses?

Why shouldn’t we look after our own?

These questions are all understandable.

But the answer to it all, is that we do look after our own.

We do it best by working within a global trading and investment environment, where we allow Australian know-how and expertise to flourish, wherever we are operating.

If we didn’t have global trade and investment, Australia’s extraordinary mining assets would by and large have been left in the ground, and this world-leading industry would barely have left Broken Hill.

While we are of course reviewing global supply chains and our reserves of critical stocks in the wake of COVID-19 – there are always lessons to be learned from a big event like this – we do know, from the very outset that protectionist instincts never actually get us very far.

Open and fair trade and investment, on the other hand, works to open national economies up to competition and growth. It is through that competition and growth that we secure productivity benefits that drive employment outcomes, wage outcomes and ultimately the standard of living that allows us in a country like Australia to have the services that we all value and rely upon.

It’s globalisation that in decades past has helped drive our economy forwards and to lift hundreds of millions out of poverty across our region that will also best drive the economic recovery from COVID. Is that engagement across and between nations.

It will do the same for the United States, for China, and indeed for all nations around the region, like the South and Southeast Asian nations discussed in the report we’re launching today.

Written by some of the great minds to have served Australian trade policy over the last four decades, this Minerals Council publication is a refreshing reminder of the great opportunities for Australian industry in the world around us.

This report points out the long term opportunities that abound across South and Southeast Asia, particularly in those countries that make up the Association of Southeast Asian Nations.

Importantly, that includes Australian mining and energy businesses.

We know Southeast Asia’s economic recovery will be closely linked to our own. 

ASEAN is Australia’s second-largest trading partner when treat its ten nations as a bloc.

2019 saw more than $122 billion in two way trade with ASEAN partners – or more than 13 per cent of Australia’s total trade. 

Australia wants – and needs – the ASEAN nations to rebound strongly. 

Their future, their enormous upside potential is a key driver of our future and the way in which we respond to recovery.

This is why we are working with ASEAN to conclude and sign the Regional Comprehensive Economic Partnership – the largest trade agreement outside the World Trade Organisation itself.

RCEP will be a momentous breakthrough and one that we hope to secure in the coming weeks and months.

The best road to recovery is through trade and investment, and that we need to pursue opportunities that will help Australian companies do more business in the region.

Lots of those opportunities are spelled out in this report.

Indeed, in a multipolar world, one with multiple centres of economic power – and in a post-COVID world, one which will see economic recoveries at very different speeds – Australia or any other nation would be crazy to focus only on a few markets and ignore the opportunities that exist elsewhere.

Yes, naturally the US and China have very significant place in our trade and investment environment. China as our largest trading partner, the United States as our largest investment partner. And indeed we can anticipate that China will remain our largest two-way trading partner well and truly for the foreseeable future, just as it is so across virtually all of the economies of our region, very much as a function of its size and scale. But I know Australian businesses while working, including through some of these troubled times to maintain access and to deal with practical challenges in the China market are also alive to the other opportunities that are out there.

We are actively encouraging Australian exporters and investors to consider their options in emerging markets like India, Vietnam and Indonesia.

In an environment of growing strategic competition, particularly competition driven by rapidly evolving regional economies, one thing that is critical is that nations work together to support our rules-based international order.

We look forward to the engagement of the Biden Administration in helping to deliver a more effective, a more timely, a more disciplined World Trade Organisation in the way it attacks, and manages and helps to drive rules based international trade in a successful format.

It has served us and our regional trading partners well, and has lifted hundreds of millions of people out of poverty across our region through this opening up under a rules based format. Cutting oneself off from the world, not competing on fair terms and denying importers or consumers choice is not good for anyone.

So I think this is a very welcome report, one that reminds us of the truest, widest range of opportunities out there.

In launching it today and opening this webcast, I’d like to urge everyone to take that true, broad perspective on global affairs through this session – because I believe that is the perspective that will help us most as we frame the post COVID recovery as we continue to help those outward looking Australian companies, particularly those in our resources sector that have achieved so much in contributing to our prosperity, to keep taking those leaps and steps forward in the years to come across all of the markets that are available to them.

Thank you to Tania and the Minerals Council and we look forward to continuing to work with you on these important issues.