It’s a pleasure to have this opportunity to talk about what Australia and Britain can achieve together as open trading nations.
A month ago Britain’s Trade Secretary, my good friend, Liam Fox spoke here and posed some big questions.
Where did Britain see its place in the world?
What sort of economy and what sort of country do the British want to be?
What should their influence be in global affairs and global trade?
These are important questions.
While there’s a lot of work to do, Secretary Fox set out some clear principles.
In its trade policy, Britain will be sovereign, open and free.
Britain will be active and influential globally.
Britain will, in Secretary Fox’s own words, “offer clear leadership, to be a staunch defender of trading rights and freedoms, not only at the WTO, but at other international bodies too”.
Well, that is all music to my ears!
Australia and Britain are already allies in trade policy.
We have fundamental objectives in common.
Australia set them out in the Foreign Policy White paper we published last November - we will resist protectionism and advocate for an open global economy.
We will protect and shape rules that promote economic growth, trade liberalisation and free markets.
This will take determined work with partners and global institutions.
The Australian Government will also ensure the lowest possible barriers to trade and investment, through modern free trade agreements.
I am sure the close parallels with British trade policy are clear to you.
Today I want to talk about the ways Australia is working with Britain to advance our common interests, and where I see this collaboration heading.
I see four main lines of work - building from our own trade and investment settings, out to the impact we can have on the global trade and investment environment.
We can have a big impact over time, if we play our cards right.
Australia is committed to helping the United Kingdom define its trade policy and emerge as a great new liberal voice in the international trading system.
We are working intensively with the Department of International Trade to share lessons and experience.
Britain has an historic opportunity, as it leaves the European Union, to shape its own future through trade.
It is important the UK stays true to its principles at this time.
The path of free and fair trade is strenuous, it is not the easy road, but free trade is the proven path to prosperity and good governance, and we need to make the case for it again and again in our domestic politics as well as internationally.
As I said in Hong Kong earlier this month, protectionism destroys wealth and slows economic growth.
But free trade is not as simple as governments getting out of the way and letting business get on with it.
On the contrary, open trade and investment settings that work, and retain the public’s confidence, require skilful, responsive government.
And for government to do its job, business must also lead in the national interest.
The independent action of governments and the private sector is, obviously, a great strength of the political and economic system we have in common, but like all freedoms, it asks a lot of us.
If Britain is serious about taking the opportunity to liberalise its trade and investment settings, then some business sectors will have to make what are sometimes painful adjustments.
The key is for government and business to steer by the same star.
In our Foreign Policy White Paper, we described our national interest in well-regulated economic openness, so that maximum possible participation in international markets drives competition, productivity and opportunity.
A crucial part of this picture is the support we provide at home through investment in education, training, employment services and assistance to communities adjusting to economic changes.
We in Australia had our own painful adjustment when Britain joined the European Economic Community in 1973.
It was our cue to shrug off the legacies of the Commonwealth preferential trading system, and reorient our economy to our own region and our own destiny.
We lost a decade stuck in an old economic model that sought to protect our industries from the challenges of international competition.
By 1980, Australia’s GDP per capita ranking had fallen to 19th in the world – from 7th in 1950 and 2nd in 1913.
These years of drift and half-hearted adjustments made the real reckoning harder when it came.
And yet, from the mid-1980s, there was a sea-change in Australian attitudes towards industrial policy, and it was embraced by both sides of politics.
Through a number of major policy reforms, we opened our national economy, and accepted that our economy had to respond to international competition, and not industry protection.
Far from killing our national economy, the removal of protectionism made it stronger, changed its shape, and gave it new momentum.
Old industries that no longer made sense, in the emerging world and region that was taking shape, did fall away.
Some people lost their jobs or struggled to adjust to work in the new services industries that emerged.
For those who lost their jobs, we had in place strong social security safety nets, industry transition programs, and a commitment to education and training to help people find new careers.
Government was active and responsive, not shielding the nation from competition, but equipping Australia for it.
The end result was that by 2015, even after the waning of the mining boom, we were back up from 19th in the world - we were the 10th richest people in the world, measured by GDP per capita.
Our economy had become more adaptable and innovative.
We are now in our 27th consecutive year of annual economic growth.
Open trade and investment settings are a crucial part of that success story and we are keen to share our lessons and experience.
The second line of work is on our bilateral trade relationship.
Australia and Britain are ideal partners to build an exemplary trade relationship.
Officials have made good progress, and now that we have dates for the Brexit transition period, it is time for strong support at the political level.
When the time is right, I want to be in a position to act swiftly on securing our future free trade agreement.
We understand the UK must first finalise its new arrangements with the EU.
It is in Australia’s interests for the EU and UK to establish a new, mutually beneficial relationship that sustains the economies and global influence of both parties.
We look to the EU and the UK to show leadership and conclude a comprehensive, trade liberalising agreement that maintains openness to trade, and resists anti-trade policies.
Australia doesn’t want to get in the way of that.
But at the same time, the EU and UK need to take into account the interests and sensitivities of their trading partners.
The Australia-UK trading relationship took a big hit when the UK joined the European Community – especially our agricultural exports.
So it will come as no surprise that Australia is determined to ensure that our limited access to the EU and UK markets is not further diminished as a result of the UK leaving the EU.
Australia is moving surely down our path to a formal launch of negotiations for our own free trade agreement with the EU.
Even so, I believe that Australia and the UK should prepare now, with a sense of urgency, to negotiate as soon as possible a high quality and ambitious trade agreement of our own.
An agreement that will announce the arrival of the UK as a major, modern, global trading nation in its own right.
We are fellow Westminster countries.
We have an outstanding record of close cooperation.
We understand one another at every level: from our trade officials who will fit and fasten the nuts and bolts, to our Prime Ministers chairing cabinet governments that share almost identical objectives at either end of the world.
We should commence formal negotiations on the 30th of March, 2019 – on the day that Brexit implementation begins.
We can break new ground in liberalising trade in services and the digital economy.
An ambitious, comprehensive Australia–UK FTA will create wealth in its own right, and it will be a sure step towards the UK’s wider trade goals.
The third line of work is influencing the global trading environment.
The Australian Government is keen to invest energy and expertise in a Britain that is true to its trading principles because we want to see the UK Government succeed in its ambition to be a global champion for free trade.
As Secretary Fox said here last month, “the prize at stake is not simply the future prosperity of the United Kingdom but Britain’s ability to participate in and shape the world economy at one of the most exciting and important points in history”.
From outside the European Union, Britain should remain an important influence on European trade policy, including through the force of successful British example.
A vigorous free-trading Britain that backs its principles with action will be an important influence in Washington too.
I am encouraged by the UK Government’s interest in joining the Trans Pacific Partnership, in time.
Signed just this month by the eleven participating countries, the TPP is the world’s most significant trade and investment agreement in more than two decades.
As Prime Minister Turnbull said earlier this month, the decision by Australia and Japan to pursue a TPP-11 after the withdrawal of the United States — and that of the other members to pursue it with us — was a clear signal of the continued strength of commitment globally to reform.
It’s important to build on that momentum, and we are focused on bringing the Agreement into force as soon as practicable.
Australia has always said the TPP-11 is an open platform.
An early and high-quality UK-Australia FTA would be an important signal to others of the UK’s capacity to join the wider regional grouping.
But whether or not it joins the TPP, Australia looks forward to a Britain that lends its weight and powers of persuasion even more effectively to the cause of an open and integrated global trading system.
Britain can and should play a bigger part in building the rules in Geneva at the World Trade Organization as an independent trading power.
We can work together to refresh the WTO agenda.
We need to do some hard work on digital trade.
As Secretary Fox said here last month, “the digital economy is growing 32 per cent faster than the wider economy and creating jobs three times more quickly.
“Digital trade is inherently transnational, and e-commerce offers previously unknown opportunities for SMEs and individuals, particularly women, to take part in the globalised economy.”
Australia and Britain are getting out ahead in the digital economy.
Our Treasurer Scott Morrison and Mr Hammond signed the UK-Australia FinTech Bridge Agreement earlier this week.
And in our bilateral trade agreement, we can set the pace for digital trade rules.
However, to fully benefit from the immense opportunities in this area, we also need to play a leading part in global rule-setting.
There is also work to be done on investment, and on behind the border issues, if we are to continue to drive change.
And we need to find a way to break the long-standing logjam on liberalising global agricultural trade, and reducing trade-distorting farm support.
This would boost economic growth globally and, very importantly, would benefit the poorest the most.
In recent decades, the WTO stood out amongst international organisations for its relatively successful dispute settlement procedures.
Australia wants to work with Britain to strengthen the WTO, as a forum for getting the rules right, and for enforcing them.
Fourth and finally, another high priority for Australia is our work with Britain on reinforcing market principles and international standards as we help meet developing countries’ infrastructure needs.
There is vast potential to boost global economic growth, and massively reduce poverty, by providing quality infrastructure in developing countries.
Britain has long been a pathbreaker in this field, notably through the Private Infrastructure Development Group, which has led the way in supporting infrastructure finance that helps build developing countries’ own capital markets.
Australia will continue to support the Group’s work in the Indo Pacific.
Australia is also helping to meet the infrastructure needs in our region in partnership with the Association of Southeast Asian Nations.
At the ASEAN-Australia Special Summit in Sydney this month, we launched the ASEAN-Australia Smart Cities initiative, which draws on Australia’s world-class expertise in green infrastructure, water governance, renewable energy, innovative technologies, data analytics and transportation.
We also built linkages for ASEAN countries into the Global Infrastructure Hub, based in Sydney.
Australia is working with a wide range of partners to deliver quality infrastructure in developing countries in ways that meet international standards, benefit from market principles, meet genuine needs and avoid unsustainable debt burdens.
We are also keen to work with Britain on integrating infrastructure initiatives into international systems.
With the Argentinian G20 Presidency, we’re pursuing the transformative long-term goal of creating a tradable infrastructure asset class – essential to attract the levels of private capital required to meet our region’s 26 trillion US dollar infrastructure financing gap.
We are also working with Britain through the Asia Europe Meeting and elsewhere to ensure that international infrastructure investment aligns with a broader connectivity agenda, such that labour and capital are free to move in accordance with international standards and agreements.
Together we can ensure that developing countries have infrastructure options that are efficient, affordable and designed to suit the host country’s situation.
Earlier this month at Mansion House, Prime Minister May said, “as Britain departs the EU, the world is watching”.
Britain is clearly at a turning point.
Trade and investment is at the heart of it.
Is Britain’s turn symptomatic of an international order in decline, or of a great nation’s determination to provide global leadership on its own terms?
Australia believes it’s the latter, and we want to work with Britain to help make it happen.
We love to compete with the Brits, in commerce, in jest, and in sport.
Our sporting rivalry will be on display in my home town on the Gold Coast at the Commonwealth Games, which opens in nine days’ time.
But the reality is that our shared values and interests run deep, in the big picture, and over the long term, and we want the UK to succeed.
So bring on prosperous, free-trading, global Britain.
- Trade Minister's Office: (02) 6277 7420
- DFAT Media Liaison: (02) 6261 1555