Australia, Asia and the New Regionalism 9789814377270

Table of contents :
CONTENTS
I. Opening Address
II. Australia, Asia and the New Regionalism
III. Discussion
IV. Closing Remarks
MR PAUL KEATING
THE SINGAPORE LECTURE SERIES

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AUSTRALIA, ASIA AND THE NEW REGIONALISM

Mr Paul Keating

Singapore Lecture 1996

AUSTRALIA, ASIA AND THE NEW REGIONALISM

Paul Keating

Institute of Southeast Asian Studies 1996

The Institute of Southeast Asian Studies (ISEAS) was established as an autonomous organization in 1968. It is a regional research centre for scholars and other specialists concerned with modern Southeast Asia, particularly the many-faceted problems of stability and security, economic development, and political and social change. The Institute's research programmes are the Regional Economic Studies Programme (RES), Regional Strategic and Political Studies Programme (RSPS), Regional Social and Cultural Studies Programme (RSCS), and the Indochina Programme (ICP). The Institute is governed by a twenty-two-member Board of Trustees comprising nominees from the Singapore Government, the National University of Singapore, the various Chambers of Commerce, and professional and civic organizations. A ten-man Executive Committee oversees day-to-day operations; it is chaired by the Director, the Institute's chief academic and administrative officer.

Cataloguing in Publication Data

Keating, Paul. Australia, Asia and the new regionalism. (Singapore lecture series) I. Australia - Foreign relations - Asia. 2. Asia - Foreign relations - Australia. 3. Australia - Foreign economic relations - Asia. 4. Asia - Foreign economic relations - Australia. 5. Pacific Area cooperation. 6. Asia Pacific Economic Cooperation. I. Title. sls96-7110 1996 DS501 1597 no. 14 ISBN 981-3055-27-8 ISSN 0129-1912 Published by Institute of Southeast Asian Studies Heng Mui Keng Terrace Pasir Panjang Singapore 119596 @

1996 Institute of Southeast Asian Studies, Singapore

Internet e-mail: [email protected] .ac.sg WWW: http://merlion.iseas.a c.sg/pub.html All rights reserved. No part bf this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Institute of Southeast Asian Studies. Typeset by The Fototype Business Printed in Singapore by Stamford Press Pte Ltd

CONTENTS

II

Opening Address

Tony Tan

Australia, Asia and the New Regionalism

Paul Keating

III

Discussion

IV

Closing Remarks

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29 Chan Heng Chee

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I

Opening Address Tony Tan

Prime Minister of Australia, Mr Paul Keating and Mrs Keating; Prime Minister Goh Chok Tong and Mrs Goh; Honourable Ministers; Your Excellencies; ladies and gentlemen. May I welcome all of you to the Singapore Lecture this afternoon to be delivered by Mr Paul Keating, Prime Minister of Australia. In the last two decades, Australia has made a historic reorientation of its priorities and strategic position. Within the space of one generation, Australia has moved from a country focused on Europe and the United States and known for its "White Australia" policy to a country which sees its future as a partner in the rapidly growing Asian region. Singapore welcomes this new orientation of Australia. Today, we are fortunate that we have the opportunity to recognize and applaud the man who has led the change, for no one has been more instrumental in effecting this remarkable change in Australian attitude than Mr Keating, Australia's most Asia-oriented Prime Minister. Mr KeatL1g saw very clearly a11d before it became accepted wisdom, that Australia needed to strengthen its links with Asia. Towards this objective, he has been a strong proponent of building political, economic and defence ties with Asian countries and encouraging Australians to engage culturally and educationally with their Asian counterparts. The Singapore-Australia New Partnership which was launched by Prime Ministers Mr Goh and Mr Keating this morning is a testament to this change. With this New Partnership, Australia and Singapore are committed to broadening and deepening co-operation and joint activities across the political, economic, security and cultural spectrum.

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As Minister for Defence, I am particularly happy to note the scope and extent of the defence relations between Singapore and Australia, and the good prospects for further co-operation in the defence sector. The effect of Australia's engagement with Asia is shown in the transformation of its trade and investment statistics. In 1974, Australia's trade with Europe and the United States amounted to A$6 billion as compared to A$5.5 billion with Asia. Investments into Australia were primarily from Europe and the United States. Investments from Asia were minimal. Today the picture has changed. In 1994, trade between Australia and Asia amounted to A$65 billion as compared to A$43 billion with Europe and the United States. Investments from Asia into Australia amounted to A$22 billion in June 1994. In education, Australia has traditionally been a major provider of educational services to Asian countries and this role has increased over the years. In the early 1990s, Australia overtook the United States as the top destination country for Singapore overseas students. As Prime Minister of Australia since 1991, Mr Keating's leadership has been of fundamental importance in shaping his country's policies and preparing Australia for the 21st century. Mr Keating's roots are in the Australian trade union movement beginning with his election as President of the New South Wales Youth Council at the age of 22 in 1966. He has been a member of the Australian House of Representatives, since 1969 representing the Constituency of Blaxland, the district in which he grew up. Mr Keating has had no formal training in economics. In spite of this or perhaps because of this, his stint as Treasurer in the Australian Government from 1983 to 1991 was outstandingly successful. As Treasurer, Mr Keating led Australia's economic deregulation of the 1980s and the opening up of Australia's economy to international competition. For this, he has won the respect and admiration

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of the business community and was named "Finance Minister of the Year" by the journal Euromoney in 1984. According to the Australian Parliamentary Library's independent analysis, during the period when Mr Keating was Treasurer and then Prime Minister, inflation was significantly lower and GDP growth higher than under the Fraser and Whitlam Governments. The OECD has also recently ranked Australia as having the second best budget balance in the Western world. Mr Keating has been described by the Australian media as a politician whose policies are based on conviction rather than on expediency. He is known for taking his political opponents head-on. Mr Keating's performance in Parliament and behind the closed doors of committees and caucus leave no one in doubt as to who is in charge. The Asia-Pacific region has grown closer together because of the many initiatives Mr Keating has taken, in APEC and elsewhere, to foster the sense of community in the region. Apart from politics, Mr Keating has other interests. He sails, plays tennis, collects antique clocks, and enjoys listening to classical music. It is a great pleasure for us, this afternoon, to listen to one of the major architects of Australia's re-think of its re-strategic position and economic priorities.

Ladies and gentlemen, I call on Mr Paul Keating, Prime Minister of Australia, to deliver his Lecture entitled "Australia, Asia and the New Regionalism".

II

Australia, Asia and the New Regionalism Paul Keating

It is a great honour to have been asked to give this lecture and I thank Professor Chan Heng Chee and the Institute of Southeast Asian Studies for the invitation. Australia has had a long and productive association with the Institute over many years. I also want to thank the Government of Singapore for its support for the lecture and, especially, Deputy Prime Minister Tony Tan for his courtesy to me in chairing it today. This is my third visit to Singapore as Prime Minister and it is always a pleasure to come here. There is an energy about Singapore which flows from people who are conscious of the inevitability of change and who are trying to shape that change for the better. I admire that Singapore, perhaps more than any other place in the world, teaches the vital lesson that we cannot prepare for the future until we know what we want it to be. This has been the distinctive principle guiding Singapore's modern history: the same principle that some time ago began to guide Australia through the present era. When you face things and begin to do what must be done, you liberate ideas about what can be done. This great era of change has meant that as we approach the centenary of Australia's nationhood a new, stronger and clearer vision of our future has begun to emerge. And it now goes without saying that much of the future we see - we see in the Asia-Pacific. The vision of a future for the region, and of the potential for our relationship to serve our separate and mutual interests, has been the inspiration and the guide for the joint efforts between Australia and Singapore over the past four years, and it is the reason why I have 5

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so much enjoyed working with Prime Minister Goh and his colleagues on issues like APEC and regional security. And although this lecture is not about our bilateral relationship, I want to begin by saying how pleased I am that the Prime Minister and I were able this morning to issue a major declaration on the AustraliaSingapore partnership which will help ensure that this old relationship between us remains relevant and creative into the next century. And it is an old relationship. In Singapore, of all places, the provenance of Australia's engagement with modern Southeast Asia is clear. Indeed, for the generation of Australians before mine, Singapore was interchangeable with what we then referred to as the Far East, although it was really the Near Northwest. Singapore's history and Australia's have been closely linked throughout this century. You need only go to the cemetery at Kranji where so many Australians are buried. After Singapore's independence, the links between us grew through our partnership in the Five-Power Defence Arrangements and the bilateral defence ties which emerged from it. Today, our bilateral defence co-operation is extensive. The Singapore Armed Forces train in Australia and the RSAF has established a Flying School at Pearce Air Force Base in Western Australia. Our close engagement was strengthened through the people-topeople links established under the Colombo Plan and since. Last year nearly 10,000 Singaporeans studied in Australia. And, of course, our growing trade and investment ties underpin an economic relationship which is important to both of us. Singapore and Australia are consistently among each other's top ten trading partners. We have also developed a strong habit of co-operation on regional issues where our views so often coincide - APEC most recently, of course, but earlier with ASEAN, with which Australia was the first country to establish a formal dialogue relationship.

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Now in the declaration we have signed today we have affirmed the strength of our partnership and established a framework to support our continuing co-operation in all these areas. For me this partnership is especially important because, as Prime Minister, one of my central goals has been to see that Australia is better integrated with the rapidly changing region around us, that we have an opportunity to play a role in shaping it and are better prepared to meet whatever challenges the 21st century may offer. I have said more than once before - if Australia does not succeed in Asia it will not succeed anywhere. But success clearly requires more than the traditional tools of foreign policy. For Australia, as I suspect for most countries, our external relations can no longer exist in a separate box marked "foreign relations" or "foreign policy" - largely unconnected with the domestic policies which are needed to build a society which is both open and competitive and cohesive and strong. That was why it was imperative for Australia to dismantle the ring fence of tariffs and protection to open our economy to competitive breezes, and in so doing, lift our gaze to the world. We deregulated our capital and exchange rate markets and opened them to the world for the same reasons. As a result, in the decade to 1994/95, Australia's export to GDP ratio increased from 14 per cent to 21.5 per cent. The level of direct foreign investment in Australia has increased eight fold and the level of direct Australian investment abroad has increased seven fold. It was all there, waiting to be unlocked. It is also why it has been necessary for us to address other challenges thrown up both by our history and the imperatives of the future. One of those has been the injustice done to Australia's indigenous

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people, not least through the lingering pretence that before Europeans arrived on our continent it was a terra nullius - a land of nobody. We have undertaken a huge effort in social justice to see that historic wrong put right. I think it will be equally good for our long-term national cohesion and sense of ourselves if we make the leap to a republic. The time has come for an Australian, rather than the monarch of Great Britain, to be our head of state. I want Australia to be, as Singapore is, a Republic - and a Republic within the Commonwealth. The change will not make us what we want to be, but it will help describe us to ourselves and to others. It will help define our complex identity, help articulate our ambitions and values, help fuse the links between the old Australia and the new. Much the same desire to preserve Australia's egalitarian values and traditions and maintain cohesion and harmony led us, as we made the structural changes to intensify our efforts to strengthen Australia's social fabric. Our economic effort has been matched by an effort to develop sophisticated social programmes which deliver equity and encourage tolerance. The path we have taken leads towards a modern multicultural Australian social democracy, one that is dynamic economically and socially fair. All this change, economic, social and political, has set Australia up for the future. It is also divining our path in the Asia-Pacific. I have always said that the nature of Australia's relationship with Asia has been long and for the most part honourable. But Australian Governments and the Australian people have recently come to recognize the implications of living in and with the region which Gareth Evans describes as the East Asian hemisphere. Australia's closer relationship with Asia is partly driven by economic realities, of course. Already two-thirds of our trade is with the APEC region, more than half of it with East Asia.

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But our engagement with the region around us is not just commercial. And it is not just the result of some crude economic determinism. It goes -

and must go - much deeper than that.

It goes to a genuine desire for partnership and real involvement.

For example, it has changed our thinking about our defence on the basis that Australia needs to seek its security in Asia rather than from Asia. That is why we have so strongly supported the development of the ASEAN Regional Forum. It is why we have worked hard to develop strong defence links with our neighbours like Singapore and Malaysia, as well as new partnerships with countries like the Philippines and Vietnam. And it is why we recently signed with Indonesia a new Security Agreement which builds on the development of our bilateral defence links. This agreement sets out formally for the first time the reality that neither Australia nor Indonesia threatens the other and that we have common interests in the stability and security of the region around us. And it goes further than that, to make it clear that we are prepared to consult if those interests are challenged. The agreement marks a major step not only in Australia's relations with our largest neighbour but also in the outlook for regional stability. It expresses a common understanding that we are stronger together and that we should affirm a common interest. Similarly, Australia's engagement with the region extends much more freely to people-to-people contacts. Language and capacity in language is central to this. Accordingly, the Federal and state governments have committed themselves to a language strategy which aims to have by 2006 sixty per cent of all Australian schoolchildren from years three to ten studying one of four Asian languages - Indonesian, Japanese, Mandarin Chinese or Korean.

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And this change is already well underway. Already more people are studying Japanese in Australia than in any other country apart from China, Korea and Japan itself. And more schoolchildren from Australia spend time studying in Japanese schools than children from any other country. At the same time there can be no doubt that the course of closer engagement with Asia on which Australia is now embarked is having its impact on our culture and outlook as well. The nearly forty per cent of immigrants to Australia who now come from Asia are playing their part in changing the way Australians think about the world and their country; in just the same way that earlier waves of immigrants, ever since 1788, successively shaped and re-shaped Australia's sense of itself. And, it goes without saying, Australia is shaping them and their descendants as it shaped those who have come before. I don't want to enter the debate about "Asian values" here but I do want to say something about Australian values. Although it is often described as a young country, Australia is one of the oldest democracies in the world. We had universal suffrage and secret ballots well before the United Kingdom and before almost any other country. The democracy is old and runs deep. Our sense of ourselves is imprinted with ideas of equality and equity - among them, the conviction that all members of our society not only have a right but a duty to have their say. That is why voting in Australia is compulsory. And despite deep imperfections in our record, including the racism inherent in our immigration policies until a quarter of a century ago, Australia has also been a very tolerant community, absorbing settlers from all parts of the world with remarkably little tension. In many - perhaps most - respects, the values I believe in and most Australians believe in are precisely those that are often referred to in this debate as "Asian". The importance of family, the benefit of

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education, the need for order and public accountability, the inherent value of work - most Australians I know would describe these as Australian values. Indeed the word most Australians would very likely choose to describe as the core Australian value is "mateship" - and "mateship" expresses an ethic of communitarianism and mutual obligation which in other contexts is called "Asian". In other areas - respect for authority, the importance of "face" and the preference for harmony and the avoidance of conflict - the differences between Australia and some other Asian countries is clearer, but the degree to which this is a debate about values, as opposed to cultural practices, is less clear. More important over time, I think, will be where we stand on the larger debate - not about "Asian" or Western values, but about values themselves and what the role of government should be in shaping them. Fundamentally it will be a debate between those who believe the main role of government is to get out of the way and let the market rip and those who consider that government - provided it is operating with the consent of the governed - has a role in shaping and expressing the values of our community. Defined this way, the debate cuts across Asian and Western societies alike. I have never believed that Australians should describe themselves as Asians or that Australia is or can become part of Asia. We are the only nation in the world to inhabit a continent of our own. I have said more than once before, we can't be Asian any more than we can be European or North American or African. We can only be Australian and can only relate to our neighbours as Australians. Our history, including the 40,000 year history of our indigenous people and the histories of the ISO different cultures from which Australians derive, make us unique in the world. Our somewhat unlikely history and geography should not change

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this fundamental conviction and this irrevocable commitment - that Australia is and must always be an integral part of the region around us. Let me turn now from Australia to the issues of this wider region, and to the question of regionalism itself. I want to use this lecture to say some things about the region, about what regionalism means in the post-Cold War world, and especially for the Asia-Pacific. Finally, I want to look ahead at some of the issues we will have to address in the next decade or so. The fact that we describe the present international scene as the post-Cold War world - in terms of what came before us rather than what we have become - underlines how fluid the international environment is at present and how uncertain we are about the shape it is taking. We are living through the greatest period of change in the world since the emergence of the nation state, and we have a very limited time in which to shape the new international structures before nations and institutions settle into new grooves from which it will be very difficult to dislodge them. What we - I mean all of us - do now will lay the foundations for prosperity and security in the 21st century just as fatefully and inevitably as the actions of Europe's leaders did a century ago. And unless we get it right now, our failure might be no less calamitous than theirs. When the Berlin Wall came down, when President Yeltsin and his supporters later stood on the tanks outside the White House in Moscow to defy the coup plotters and brought down the Soviet Union, they also brought down the post war international order. The expectations of a new international order, based on a concert of powers operating to a large extent through a revived and renewed United Nations, have not been fulfilled. In part, I believe, this is because our global international structures

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are incomplete and immature. They still reflect too directly the world into which most of them emerged at the end of the 1940s. Japan and Germany, the world's second and third-largest economies are self-constrained from playing their full part in the international system. Russia will always be one of the world's great powers, but now and over the next few years it will be preoccupied with the consequences of the end of the Soviet Union. China is emerging into the world, and the way that happens will dominate the Asia-Pacific like no other issue over the coming decades. But for the time being China, too, is largely preoccupied with domestic issues and especially developing its economy. Meanwhile, in the United States, the world's only remammg superpower, the struggle goes on as it has since the foundation of the Republic - between those who believe the United States should avoid foreign entanglements and those who want it to be engaged with the wider world. This, as always in the United States, is not only a debate among the politicians and the political elite. Its outcome depends, in the end, on what the American people think, and we should not be surprised if it is harder to engage them with foreign policy now than it was for the high moral struggle of the Cold War. At another level, too, global structures are often too large and rigid to permit productive discussion. The sheer weight of numbers in the United Nations, for example, means that complex negotiations often have to be conducted through increasingly out-of-date groupings which often fail to reflect current economic and political realities. Australia can speak with feeling on this matter. For United Nations purposes, we are relegated to the category of "others", as part of a Western European and Others grouping. It is not just the absurdity of this classification which irritates but the practical consequences.

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More and more clearly, Australia's interests cannot be properly pursued in such a framework. It is a structure which emphasizes North/South divisions. This tends to generate - on the side of the North - a strongly Eurocentric perspective on global problems. But the "South" is where Australia's neighbours are, and it is with the "South" that our interests often coincide rather than diverge. For all these reasons, the present global structure is inadequate. This is not an unchangeable state of affairs. There is much that can be done about it. For example, Australia supports permanent membership of the United Nations Security Council for both Germany and Japan, a position for which Japan's excellent chairmanship of the Osaka APEC meeting further justified it. And we believe it is essential to encourage the United States to play an active and engaged role in the world - not just in the AsiaPacific, but globally. We hope that such outside encouragement - like the joint declaration which Singapore and Australia issued this morning - will strengthen the position of those Americans who share our conviction that U.S. interests, as well as ours, are advanced by their continuing active engagement in East Asia. Nothing is more likely to generate security tensions in this part of the world, or threaten the region's continuing economic and social development, than uncertainty in countries like Japan and Korea about the continued U.S. security commitment. One of the main reasons behind Australia's support for APEC has been our conviction that closer American economic engagement in Asia and the Pacific will reinforce the essential political underpinnings of its security relationships. The other great uncertainty about the international situation in the coming decades, as I said earlier, is China.

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The economic reforms introduced by Deng Xiaoping and President Jiang Zemin have brought profound benefits for the international community as a whole, not just for China. There have been few more significant developments in the past half century. I do not believe China is an expansionist or aggressive power, or that it is likely to become so. It is an essential and central part of the regional community. However, the sheer size of its population and economy raises questions for the rest of us about how we deal with it. For my part, I think there is little doubt about what the broad approach should be. Above all, the answer is to ensure that China is engaged comprehensively in global and regional institutions. This has been a major aim of APEC and the ASEAN Regional Forum - to engage China, not to contain it or isolate it. But the answer also lies in China's neighbours making their own way in the region and taking responsibility for their own future. It is the responsibility of all of us to build what ASEAN calls our national and regional resilience: a region which is self-confident and co-operative, rather than apprehensive and self-absorbed, will be better for all of us - including China. And, in part, that means building institutions and structures which engage all the countries of the region in a dialogue about the future. So, again, we are brought back from the global to the regional. It is a sign of the times - the most important sign of the times, I believe. For the time being, at least, the role of the great powers in shaping the development of the international system is less dominant than it might otherwise be. And this, as I said earlier, is happening at the very time when we are moulding the institutions and processes and ways of resolving problems which will form the pattern of the next period in international relations.

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I think that one outcome of this situation is that regionalism and regional approaches will come into their own as never before. This century was dominated by global struggles. Imperialism and later Communism were of their nature global. Two world wars and the ideological struggle of the Cold War taught us to structure our ways of thinking about the world in essentially global terms. Regional approaches were usually subordinated to this broader competition. The multilateral defence pacts of the 1950s were an example. Even the development of the EEC was driven in part by the need to strengthen Western Europe economically and politically against the Soviet threat. But with the breakdown of the bipolar structure of the Cold War, regional problems no longer automatically form a metaphor for a wider global and ideological struggle as they did in Afghanistan and Angola and Central America. Instead, it is easier now to address regional issues on their own terms. And a degree of flexibility is possible in regional institution building which has never been possible before. Vietnam's membership of ASEAN and the common membership of APEC by the three Chinese economies are important examples. So, for all these reasons, I think that in the immediate future regionalism offers the capacity to generate new ideas, subsume old enmities and provide new ways of doing things. It can let the light in - in a way which global structures are too large or unwieldy or rigid to do. This, in turn, means that the opportunities for small and medium sized countries to shape the international agenda are greater than they have ever been in the past. So long as they know what they want and where they are heading. I am sure that one of the reasons for the success of the AsiaPacific in global terms is the creative way in which regionalism has been embraced in this part of the world.

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It is not a new phenomenon, of course. ASEAN has been an enormous success in transferring the tensions of the confrontation era in Southeast Asia into a habit of working together.

But the next burst of regionalism, including within ASEAN, is growing in range and ambition. APEC has made huge strides in a few short years. When I first proposed the idea of meetings of APEC leaders in 1992, I did so because I was convinced that unless APEC could begin to draw upon the executive authority of national leaders it would remain a modest and essentially peripheral organization, making progress only at the pace of its slowest officials. It is leaders who have the political authority to commit a country to a certain course in pursuit of certain outcomes, and leaders who are charged with the responsibility to recognize the bigger picture and the bigger opportunities that come with it. Once leaders were involved in the development and formulation of policy in APEC, a different dynamic evolved and the pace of action quickened. Most leaders believe that any event in which they participate should deliver a good result: so, from Seattle on, the pressure was on to formulate a strategy and then drive it. At the same time, once the leaders met - and don't forget that the Seattle meeting was the first time leaders from across the AsiaPacific had ever met - the pressing reality of our interdependence generated a new momentum for co-operation. The very feeling of co-operation generated even more goodwill. This happened in Seattle, where we set out the vision of an AsiaPacific community. Then the following year in Indonesia, President Soeharto gave this vision a concrete form in the Bogor Declaration's historic commitment to free trade and investment in the region by 2010 and 2020. And finally, last year, in Osaka, where we put together

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the plan of action for reaching our objective as well as offering specific downpayment s on our Bogor commitments. APEC was conceived as an organization of economies and it is vital that its main function continues to be economic. If the East Asian economic miracle is not to run out of steam - to end up, as some European commentators wishfully predict, as a short-term and unsustainable phenomenon - it is essential that the trade and investment arteries within the region are kept open. It is essential that we do all we can to help the activities of our business people, who make the trade happen. So the pressure on APEC will not diminish. Every meeting, every year has to make progress. Later this year in Subic Bay we will need to take the first steps to implement our individual plans of action. Such progress is critical not only for the Asia-Pacific's continuing economic growth, but for its security as well. Because, although APEC's purpose is economic, it will have, like ASEAN before it, important political and strategic consequences. It is already having them. No one who has participated in those

three successive leaders meetings, or in the Ministerial meetings, can fail to notice the increasing ease with which leaders representing half the world's production now deal with each other. And no one can be blind to the amount of business which is now conducted in the corridors and related bilateral meetings. APEC is in many critical respects a new model for regional cooperation and I believe it shows the way forward. It is "new" in at least three ways. First, its development has been driven as much by the small and medium powers as by the large ones - a fact that has been one of its strengths given the global situation I described earlier. Of course President Clinton's decision to invite APEC leaders to the informal meeting in Seattle was critical, as was the support which the Japanese Government and Prime Minister Murayama gave the free trade agenda

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during their chairmanship of the Osaka meeting. But ideas and energy have come just as powerfully from economies like Korea and Singapore and Indonesia and Australia. In other words, the sense of ownership and participation is broadly spread throughout the organization. APEC gives the smaller and middle sized countries of the region a very direct say in shaping its future. Second, APEC is possibly the best practical example the world has yet seen of co-operation between countries at different levels of development. Developing countries are not just part1c1pants, they are at the core of the organization's activities. President Soeharto's chairmanship of the Bogor meeting was a critical moment for APEC, but it was also an example to the world of the new sort of partnership between developed and developing countries which will be essential as the process of globalization and internationalization proceeds. The world's fifteen most dynamic trading nations between 1980 and 1993 were all developing countries. Third, APEC has offered an approach different from the formal structures and legalisms of other regional approaches like the European Union or NAFTA or, at the global level, from the Uruguay Round and the WTO. Unlike earlier models of trade liberalization, APEC first announced its end point - that is, free trade and investment by 2010 or 2020 - and left the getting-there to a process of concerted liberalization between members rather than to direct negotiation. This approach is not only new, it has aroused considerable scepticism, especially from those whose experience of international trade negotiations has been in the heavyweight boxing ring of the Uruguay Round and its predecessors. I can understand this scepticism, but I am also convinced it is misplaced. The drag out/knock down approach to trade negotiations has surely reached the end of its useful life in an environment where almost every country in the world, rather than just a handful of

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industrialized countries, has a stake in global trade. Few even among the hardiest, trade negotiators can relish the idea of another seven year Round conducted like the last one. And one where the real offers, the real impetus to liberalization, were too often left in the negotiator's pocket to take back home. So I remain an optimist that APEC will be able to deliver on the promises it has made, and that, in doing so, it will offer an example which will be useful to the rest of the world. Drawing on these experiences with APEC, as well as other regional organizations, it is becoming possible to draw up a number of rules for the new regionalism in the Asia-Pacific. Let me try to enumerate them. The first rule: there are no rules. Or, at least there are no fixed approaches and as far as possible we should avoid the nightmare of a bureaucratic and legalistic approach to what we are doing. The Asia-Pacific needs to be a small "c" community if it is to succeed. For the approach to work, however, a high degree of trust will be required - not a commodity which is thought to flow freely through international discourse. The best way of encouraging trust - as ASEAN has shown and APEC will - is through close personal contact between leaders and Ministers and with officials and, beyond that, their counterparts in business. As 20th century European history vividly testifies, contact does not rule out conflict - but it is certainly impossible to develop trust between countries and cultures without it. The second rule is that we need to avoid closing Asia and the Pacific off to the outside world. My argument in favour of regionalism is not an argument against global multilateral approaches when these are most appropriate, as they often will be. Indeed, they are often essential. A comprehensive test ban treaty

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or a chemical weapons convention must be negotiated globally. And although intra-regional trade in East Asia has grown much more rapidly and is of greater volume than extra regional trade, we all have a deep and growing interest in the world trading system. We need a regional approach which can be reconciled with the development and strengthening of that system. This is one of the challenges for the first WTO Ministerial meeting, when it meets, very appropriately, in Singapore later this year. The final rule is that the region must not become complacent with success. The challenges to economic growth and to security in this part of the world remain serious. We will only have a chance of overcoming them if we confront them directly and with a clear-eyed sense of what they mean for us. Let me end by speaking in particular about two of those challenges which I believe should be placed more prominently on the agenda of regionalism in Asia and the Pacific. The first of them is the environment. Sooner than many people expect, environmental problems will begin to affect not only the degree to which people in Asia and the rest of the APEC region can enjoy the fruits of recent economic growth, but, more fundamentally, will begin to impede the extent of that growth. Demand for food and energy in the region will grow disproportionately as standards of living rise and expectations increase. China's demand for food, for example, is growing so fast that its shortage within 15 years could be three to six times Australia's total annual wheat production; just feeding chickens to satisfy China's demand by 2000 will take more grain than Australia currently produces. World food production will have to increase by more than 75 per cent over the next 30 years if global food security is to be assured. But significant questions exist about whether the green revolution responsible for 90 per cent of the great growth in food production

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over recent decades - can be sustained, and whether we can afford environmentally to sustain it. Heavy use of fertilizers, irrigation and pesticides has caused major problems in many countries. Soil erosion, salinity and pollution of water resources increasingly accompany pressure for greater agricultural productivity. The region's ability to sustain high levels of economic growth will also depend on its capacity to meet the growing demand for energy. By 2010, electricity demand across the APEC economies is expected to increase by between 50 per cent and 80 per cent. East Asia's demand for energy is doubling every 12 years, compared with 28 years for the world as a whole. Few people now question the judgement that we are seeing a discernible human influence on global climate. While to date developed countries have contributed disproportionately to this problem, by the year 2000 developing countries are expected to contribute more than half of global C02 emissions. And much of this will be in Asia. Today's global population is expected to grow by 2.6 billion - 45 per cent - by the year 2025. Ninety per cent of this increase will take place in developing countries and 90 per cent of this will be urban. By the end of the century - for the first time in history - more people will live in cities and towns than in rural areas. The absolute growth of urban environments will be greatest in Asia. The United Nations estimates that cities in the region will gain 500 million inhabitants in the next ten years. By 2025 the Asian region is expected to be predominantly urban. This demographic shift will put a huge strain on basic services such as water, sanitation and shelter. Only half the urban populations in Asia currently have access to water supplies and 42 per cent to sanitation. The growth of urbanization is being accompanied by a disproportionate growth in the incidence of poverty in urban areas. Across the Asia-Pacific region, some 25-35 per cent of urban dwellers are

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thought to be squatters. To compound the problem, marginalized urban dwellers often live in ecologically vulnerable areas. The environment has become a sensitive issue in Asia because environmental arguments have sometimes been used as a disguised form of protectionism by developed countries. And developing countries have understandably resented being told by developed countries that they should not do what developed countries did - namely, pass through their period of industrialization without having to consider the impact on the environment. But we cannot deny the reality of the environmental challenges facing the region. We must see protection of the environment in the Asia-Pacific not as an alternative to economic growth, but as the only thing that will ensure its continuation. Sustainable development was neatly defined by the Brundtland Commission on the Environment and Development as "meeting the needs of the present without compromising the ability of future generations to meet their own needs". At its heart this is - or should be - a very Asian issue. Because if there is one characteristic which has underpinned Asia's recent economic growth it has been the willingness of current generations to work for the future good of the community and postpone immediate reward. So the idea of inter-generational equity - a key to the environment debate - is very Asian. With the environment, as with economic liberalization, we will get further in this part of the world if we use a flexible and co-operative approach which takes account of the particular development needs of all the countries in the region. With its mix of developed and developing country members which have already demonstrated the political will to co-operatively tackle some difficult issues, APEC may help us find a way through the developing/developed country divide which has hindered progress

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on environment issues at the international level. The advantage we have is a set of goals and aspirations shared by both developed and developing countries. A regional approach to environmental management will also help us to respond effectively in international forums to European approaches which, while appropriate to their economic and environmental circumstances, too often ignore the environmental differences in the Asia-Pacific and the different demands of industrializing and fast growing economies. It is important that we work together to ensure outcomes on international negotiations reflect not only northern but southern hemisphere realities. APEC has already adopted framework principles for integrating environmental considerations into its overall programme and into the activities of its working groups and committees. This integrated approach is essential if environmental issues are not to be marginalized. This was the thinking of the leaders at Osaka when they decided on joint action to deal with the demand for food and energy and the pressures that will be put on the environment. The region's economic expansion and accompanying high rates of investment are taking place at a point in history when energy efficient technologies and processes are widely available. This presents a unique opportunity to get it right the first time - to put in place upto-date technologies that use materials and energy efficiently, minimize emissions, improve product quality and reduce costs. Developing APEC economies currently use 50 per cent more energy to produce a unit of GDP than developed APEC economies. So, clearly, the potential gains from improving efficiency are very substantial. And significantly, if the region doesn't take up this opportunity it will face not only an investment bill exceeding US$1.6 trillion to build the infrastructure for its growth in energy demand by 2010, but the additional costs of fixing avoidable environmental damage. Australia is committed to working with countries in the region to avoid this - for example, by addressing emissions, including through

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the use of energy-efficient or renewable energy technologies. One area with considerable potential is the replacement of fossil fuel-based power with photovoltaic (solar) energy systems. We are already co-operating with Indonesia on solar energy and the feasibility of using Australia's leading edge clean coal technology and HI Smelt technology for its future steel plants. Integrated management of our natural and urban environments will become more important as urbanization intensifies, particularly where hazardous and industrial wastes have the potential to impact on marine and coastal environments and fisheries. Managing urbanization in a way which is ecologically and socially sustainable is one of the key challenges confronting the region. If we succeed, we will see continued improvements in our quality of life. If we fail, we risk slowing economic growth and having to divert resources to deal with waste and pollution, increased vulnerability to natural disasters and, eventually, social unrest. In preparation for the UN's Habitat II conference in June, Australia is looking at how we can better utilize our aid programme to address the challenges of urbanization. Key issues include low cost housing, assistance for squatter settlements, land-use planning, human resource development, support for micro-enterprises, and infrastructure development. We need in general to have a much better sense of what is happening to our land cover. The preparation of Australia's first National Greenhouse Gas Inventory showed that we were still clearing substantial areas of native vegetation for agriculture, and thus contributing significantly to our greenhouse gas emissions. This came as a surprise. It would not have, had we been monitoring overall changes in land coverage. We have now embarked on a major project to monitor agricultural land cover change using remote sensed data from the Landsat satellite. As far as I know, it is the biggest project of its type undertaken anywhere. The data, including maps, resulting from this project will improve our greenhouse gas emission calculations, providing a basis for better catchment planning, dryland salinity management

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and conservation of biodiversity. This is something that should be done region-wide if we are to improve the quality of global data and provide a more accurate and comprehensive information base for global policy-making on climate change. No Australian Prime Minister is going to claim that getting the balance right between the immediate needs of economic growth and the longer-term requirements of the environment is easy or painless. We have been wrestling with it in many areas, most recently in our forest policy. But it has to be done and it will be easier if we can co-operate regionally - not just because so many environmental problems have no regard to national borders, but because we can make greater progress if we learn from and draw on the experiences of our neighbours. A second challenge the region faces is in meeting its human resource development needs. President Ramos has already spoken of his hope that APEC will address this challenge directly during the year of his chairmanship. The Asia-Pacific already faces serious shortages of skilled workers who are vital for economies that are moving into export-oriented manufacturing and service industries. Thailand, for example, produces only half of the 10,000 engineers it requires each year. Malaysia estimates it has a shortage of 9,000 engineers and 18,000 engineering assistants. China needs to find two million technically qualified workers each year, but produces only one million. Many APEC Governments are already addressing these problems individually. Malaysia, for example, is reviewing its entire education structure. And Hong Kong and Singapore as well as Malaysia are giving higher priority to vocational training in secondary schools. Australia, too, has dramatically increased its investment in education. More than three quarters of young Australians now complete

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twelve years of schooling, and since 1983 we have increased the number of students at university by 70 per cent. We are linking education much more closely to industry through a new nationwide vocational education and training system. A regional approach can help strengthen what each of us is doing nationally. We can make the temporary movement of professional people easier. We can strengthen existing exchange schemes and cross-accreditation arrangements for students in different countries. We can improve the mutual recognition of professional qualifications, and Australia has proposed the establishment of an APEC regional skills centre to facilitate this. More fundamentally, the resources invested in education and training will need to grow throughout the region. And this will be easier if we can encourage cross investment in education and training among APEC members, as Malaysia is doing now. As I noted earlier, I am quite convinced that we are living through the period of the most fundamental change in the world for the past century and a half, and possibly longer. We may live at the end of the millennium, but we do not live at the end of history. And that history - the world in the 21st century: the structure and shape of its international system, the nature of its conflicts, the forms of its co-operation - is being decided now. And here.

III

Discussion

Chairman: Prime Minister Keating is ready to take questions. Those who wish to ask questions, please state your name, your organization and your position in it. Thank you. Question: Leonard Sebastian, Fellow, Institute of Southeast Asian Studies. Mr Keating, Sir, my question is in two parts. First, Australia has spent a great deal of time and effort on multilateral security initiatives. What has prompted the sudden desire to engage in bilateral security arrangements with Indonesia? On that note, considering Indonesia's traditional reluctance to sign security treaties, what, in your opinion, has motivated Indonesia to accede to the Australia-Indonesia agreement on maintaining security? Thank you. Keating: I don't think it is accurate to describe Australia's interests in security arrangements as simply multilateral. In fact, its central security arrangements have been bilateral such as the ANZUS treaty between Australia and the United States. We have other multilateral treaties - the FivePower Defence Arrangements, in this context, springs immediately to mind. But the Five-Power Defence Arrangements themselves reflect in part the history of the Confrontation period. The years have gone by and regional co-operation in Southeast Asia is now the norm. Yet Australia was a party to and remains a party to and has affirmed this very day its commitment to the Five-Power Defence Arrangements. The period of Confrontation brought many suspicions to Australia about Indonesian intentions as it brought the same suspicions very obviously to Singapore and Malaysia. As a consequence, the relationship which Australia had with Indonesia from its founding in 1946, where we were the first country to recognize its independence, who took a leading role in the United Nations in its independence and

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who claimed proudly some very direct and influential association in the birth of its independence - this confidence and friendship was muted over the years as a result of events in the 1960s and because of Timor and other things in more modern times. Yet the advent of greatest positive strategic significance to Australia in the post-War years was the election of President Soeharto's New Order government. So it seemed to me and to my government that we should make clear that we regard the Government of Indonesia and Indonesia as an influence of positive strategic significance to Australia. We do not hold Indonesia in suspicion. We accept its statements that it has no territorial ambitions in conflict with Australia and I am sure President Soeharto accepts my declaration that we have no territorial ambitions towards Indonesia. Therefore, we are neighbours locked together by geography and in some respects, by very happy history surrounding the birth of their country. We thought the time was right to make that declaration to declare our friendship, to banish forever any lingering suspicions. I believe it's the best way of doing that - which is to say we share a common regional perspective on matters of security and we should engage one another on that subject. These are all the elements of the treaty. The second part of your question was why did Indonesia agree to the treaty when it has a history of non-alignment. I think it is for this reason that Indonesia does regard Australia in a friendly way, and that declaring such an arrangement between countries in friendship doesn't offend any non-alignment principle. There is also the whole issue of the strength of our position. Australia is an island-continent as I remarked in my address. We are in the fortunate position of sharing a border with no one. We are the only nation on earth with the continent to ourselves. Our nearest neighbour is a nation of 200 million in, I believe, the largest archipelago in the world. There are very large teething issues to be considered in that kind of geographic environment. So I think on the basis of a friendship and a common view of the things we are doing bilaterally and multilaterally, and also in juxtaposition to the Five-Power Defence Arrangement, it gave the region more solidity, more security, and more confidence for Australia to make this arrangement with Indonesia, and I believe Indonesia thought that too.

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Question: I'm Chia Siow Yue, economist with the National University of Singapore. I would like to ask Mr Keating two very simple questions. One, you make constant reference to the region. As Australia's Prime Minister, what is the geographical boundary of this region you are referring to? Two, you're a very strong advocate and of course initiator of APEC, yet in your lecture on regionalism you were singularly silent on EAEC, Dr Mahathir's proposal, as well as on the Indian Ocean Association. In the case of the EAEC, I understand many Australians are averse to it but in the case of the Indian Ocean Association, I understand that many Australians are strong advocates. Could I have your views, please? Thank you. Keating: I think there will be all sorts of definition of the "region". I mentioned in my speech my Foreign Minister's definition which is the East Asian hemisphere, from East Asia and through Australasia. Perhaps you could call it the Pacific Rim, too. One thing we are all clear about, I think, is that it's good for us to have the largest economy, the largest liberal democracy in the world, economically and strategically engaged in East Asia and that's the United States. The United States' strategic protection of Japan and Korea which is embodied in their treaties remains more convincing to everyone in the region if it is underpinned by a higher level of United States' economic engagement. This is perhaps the distinguishing feature between the EAEC proposal and APEC. It is also a fact that the United States represents the largest market for the greater number of the developing countries of East Asia. It's the largest market, and it's the largest strategic power and the largest strategic influence. So APEC, as distinct from East Asia, includes, of course, the United States which has a boundary on the Pacific Ocean. It's a trans-Pacific body and the I think that's the distinguishing feature between the two. As to the Indian Ocean Association, I think some good may come from some clarity about common interests in Indian Ocean trade patterns and trading trends, or even trading facilities. But I don't see the Indian Ocean as being part of APEC or the APEC region which is distinguished by the coincidence of its trade sinews and its strategic alliances. The Indian Ocean is altogether different.

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Chairman: Thank you. Now, before we have the next question, can I request that you pose one question at a time to give more people a chance.

Question: Kanwaljit Soin, Nominated Member of Parliament. Mr Prime Minister, Sir, this defence security treaty that Australia has signed with Indonesia - is it a bilateral confidence-buildin g expression, or is it a concrete defence arrangement whereby if Indonesia feels threatened in the matter of Spratly Islands, Australia will have to respond to this challenge?

Keating: You should be writing for an Australian newspaper! No, it is not a security pact. It's a treaty about maintaining security and adverse challenges to what we perceive to be our mutual security. Those challenges may be military, but more likely not. We would discuss with one another how we would respond to those challenges. They could be environmental. They could be in all manner of fields. But the fact of the matter is, that above everything else it is a declaration of the trust between us. It is a statement that we do see ourselves having a common strategic outlook and common strategic interests, and that we are prepared to consult and discuss them whenever they are challenged. That's what it is.

Question: Lee Yuan, former APEC-EPG member. Mr Keating, Sir, could you please give a definitive definition of APEC's commitment to open regionalism? Does this mean that APEC would extend its free trade obligations to others on a reciprocal basis, on a unilateral MFN basis? Does it mean a simultaneous lowering of its barriers towards nonmembers as it lowers its barriers towards members? Thank you.

Keating: You might recall I said in my address that one of the rules should be that we don't close the Asia-Pacific area off, that we don't get complacent about it, that we are not smug about it, were we to keep it growing, and that we should engage with the rest of the world. I extol

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the virtues of the WTO and the multilateral trading arrangements that came from the Uruguay Round. That is the position I hold fairly firmly. The other thing is that Australia did some substantial economic modelling on APEC to examine who receives the greater benefits. The benefits total, we believe, up to one trillion US dollars of additional wealth from the APEC reforms. That's the Australian and Korean economies together in additional value. Obviously some countries will secure more of that trillion of benefit than others, but one thing that the study did reveal is that there is a very minimal free-rider effect from countries outside the Asia-Pacific. In other words, the notion that the European Union, for instance, would in some way be a free-rider on the reforms in APEC were really not borne out by the study. This reinforces in my mind the view that the issue of whether APEC is a preferential or MFN area is really not much of an issue at all. Even if we were to make it a preferential area - indeed, under the GATT rules, it was a free trade area - each individual country could independently decide whether it wanted to extend the preference anyway. I think more likely, we will all decide that we do want it to be an open system but of course this is a matter of debate in the United States. I think if the United States is convinced that there is no free-rider effect, but a much more harmonious world effect, they'll probably share the view that I would take, and I suspect your Prime Minister takes, about where we see APEC and free trade arrangements in the Pacific going.

Question: Robin Ramcharan, Visiting Associate with Institute of Southeast Asian Studies. It is quite clear that economically and geopolitically, Australia is part of Asia, yet historically and culturally, it has been affiliated with the Anglo-Saxon world. To what extent do you see this as a hindrance or a handicap on your efforts at integrating within Asia? Keating: I don't see it as a hindrance or a handicap. The point I made in my speech is that Australia is unique. Australia is unique in many ways. For a start, as a nation, let me repeat the point, we share a border with nobody. The continent is geologically old. Australia is a very old place. Evidence has been backed by the fact that the indigenous civilization has been there for 40,000 years. The important thing for

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Australians of European origin or Asian origin is that they understand that it is imperative that to become part of the region - let's call it that rather than Asia - it has to come to terms first with its own indigenes so that we are at peace with ourselves, that we move together forward as a nation, and that the tolerance and diversity I mentioned in the text is the defining quality that marks out the Australian nation as a unique nation. If it is unique, therefore, why would it want to be Asian? It would have a crisis of confidence if it wanted to be any other than what it is, and whatever else Australia has, it has no crisis of confidence. What we want to be is part of the region. We don't want to be Asian though of course over half of our intake in migration now comes from Asia and the culture of Asia is having a very large impact within Australia and upon Australia. But the fact that 75 per cent of our exports go to the Asia-Pacific area underlines that we are integrated with the region and that's what we want to be. As I said, it would be foolish for us to describe ourselves as Asians because we are not. Whether we are part of Asia or the Asia-Pacific is a debating point. Whether we are part of the East Asian hemisphere is another debating point. But we are not European, we are not African, we are Australians. I believe we can play not just an active role in this region but a very constructive and supportive role which will enhance the quality of life of people in the region - Asian people in the region as well as people who have come from Europe.

Question: Mr Prime Minister, Sir, I'm Elizabeth Nair, National University of Singapore, Senior Lecturer in Psychology. You have made it very clear that Australia is not Asian, but you have also told us that you are in the "others" category and it's a bit difficult to be one country in a single category. I would like to invite your comments on a possible grouping which is not Asian but Oceania which could include New Zealand and the other islands around Australia and New Zealand and in the region. I would like to invite your comments on this as a possible grouping, and with the Chairman's indulgence, a related question - what are your comments on an Asia-Oceania community? Thank you. Keating: I'm not sure I'm the one to decipher or divine the ways of the United

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Nations. In that mirror-maze and mismatch of interests, who am I to say what grouping we should belong to? Let me make this point: it doesn't overly exercise our mind. We are engaged with the region and we are playing that role, I think, conscientiously, because we are here, we live here and we want to be with our neighbours. Our principal focus is with our neighbours. It seems incongruous to us that we are with Europeans and others, but I can assure you that we are not wandering around saying "Where are we?" It's no burden to inherit a continent. When they were giving them out, not too many people got one. And when you've got one, you don't wonder about it. You just be grateful for it.

Question: I'm Dr Philip Eldridge, currently Research Fellow in Australia-Southeast Asia Relations at !SEAS. The question is about human rights. How do you see, Mr Keating, the role of regional organizations, in particular, APEC which is the one regional organization Australia is part of, in promoting dialogue about human rights. What we mean by human rights, I guess, is another question. Keating: I think it is another question for many people. I made a point in the speech that Australia is one of the oldest democracies in the world. We had the universal suffrage in the secret ballot before the United Kingdom for instance. Egalitarianism and equity have mattered in our country, and the rights of individuals have mattered. I think the reason for Australian tolerance of a very multi-cultural population, or the degree of tolerance within that population, comes from a deep sense of democracy which Australia has. That sense of democracy gives everybody a lot of intellectual space. Therefore, human rights, the liberties, and all the issues of the social contract have always been in our mind. And they always will be. That's not to say that we can impose our values on others, but invariably whenever we think human rights are being violated, we say so. And when they are perpetually or consistently violated, we keep on saying so. But I think we know that dialogue is the answer, and economic growth and prosperity generally will liberate many societies or individuals oppressed in this way. It is impossible to grow economies and societies without growing their politics as well. It's not possible to liberate them and yet constrain

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liberty, freedom and the mind. Economic growth and prosperity have been great liberalizing forces in breaking down ideology and lifting opportunities and at the same time, one hopes adding a premium on human rights and good values. These are the things we have been supporting as well as forthrightly putting a view whenever we think those human rights are violated. I'm often asked, "Is the Australian sense of democracy and liberty a handicap in dealing with Asia?" I never believe that it is because I think Australia can contribute a lot to the region. It is a very democratic state and people's liberties are very obviously clear. Taking that sort of inheritance and tradition to the region, I think it must be a good thing.

Question: My name is David Koh. I'm from the Australian National University. Recently, the two Defence Ministers of Thailand and Vietnam met in Hanoi and they said that a way to keep peace in the region of Southeast Asia, is to have a defence alliance in the region. May we have your views regarding what are Australia's views towards such a proposal and whether Australia will participate if such a proposal is endorsed by the whole region? Thank you. Keating: I didn't know of this but you have informed me this has happened. I think that a commitment to security and respect for the affairs of others is a good thing. A web of declaration saying so is, I think, a good thing. Consider the discussion we have had in the last few minutes about the declaration between Australia and Indonesia; about the affirmation today between the two governments of Australia and Singapore on our arrangements; the discussions which I have just had with Prime Minister Mahathir on some of the same subjects in his country, a member of the Five-Power Defence Arrangements. That constitutes something of a web, and whether the web moves through Thailand and Indochina, I guess, is a matter for those countries. The main thing is, I think, that none of this should be discerned as, in any way, a policy either seeking to contain China or needing to, because I make clear in my remarks, I don't believe China is an expansionist power; it is a country focused on its internal development, and we should be doing everything to fully engage it and to co-operatively bring it into the world. That's the way to respond to China. But again,

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China or Vietnam or Thailand or Indonesia or Australia or Singapore are entitled to make prudent arrangements or to have prudent structures that have an eye to their security. The security of one's people is the first duty of any government, and so I don't have any problem with this at all. This general commitment to a stable situation and respect for others is a kind of healthiness I think we've always wanted to see.

Question: I'm Gary Lim from the Gary Lim Consultancy. Mr Prime Minister, in your talk this afternoon you touched briefly on China but one issue that you have missed out is the China-Taiwan relationship. Now, I have two questions, if you don't mind, Mr Chairman. Chairman: Well, keep them short. Question: Mr Prime Minister, what is your position on this issue? The second question is, in the likelihood of a flare-up across the Taiwan Straits, and as Australia becomes an increasingly significant player in the Asia-Pacific region, what do you think the role of Australia will be? Keating: Taiwan is a highly-developed competent economy as is Hong Kong. One of the points I made earlier with regard to APEC is about flexibility within regional structures in the context of inflexibility in the bipolarity of global arrangements. Remember I made the point about Afghanistan and Angola - how they were dressed up as being regional issues that were really global ones. They were subsumed into the global discussion, the bipolarity that existed in the Cold War. What we are seeing in regional arrangements here, say, with ASEAN, with APEC, and particularly we can see it in APEC, is that you've got China sitting there, with Hong Kong and Taiwan represented there. The point I was making is there is flexibility. You can get flexibility in the regional arrangements, you might be able to get into global arrangements. Taiwan operates as an competent, effective economy. But we accept China's view about Taiwan's status. We also accept the fact that there are going to be a number of Chinese economies - Hong Kong will

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remain one, Taiwan will remain one, and there will be parts of China growing at different rates than other parts. We may see discernible parts of China being more prosperous than others - I think we are already seeing that - in other words, the development of regional/ subregional economies within China. I don't have any problem with that. But I do have a problem with Taiwan having, say, government status, at head-of-governme nt leadership level within APEC. So our position is pretty clear, it's always been clear.

Question: Hemant Amin, Director of the Steel Tubes of Singapore Pte Ltd. Prime Minister Keating, despite any number of treaties that countries may have, either unilateral, bilateral or multilateral, it is only when push comes to shove, effectively when there is war, that the commitment to these treaties is tested out, but particularly at that time, it seems the World Security Council has a bigger say in things than anyone else. Mr Keating, what is your view of the present constitution of the World Security Council and how, if at all, could it be changed to better serve the interests of everyone concerned? Keating: Reform in the United Nations is a very big subject and there are people who have more specialist views about it than me. Indeed, my Foreign Minister has written a book on it. So I am not going to say too much about it other than to repeat what I said in my remarks. When the second largest economy and the third largest economy in the world are not a part of the governing structure of security, we have an immature structure. It's fifty years now since the War in the Pacific and the War in Europe, and the time has come, I think, for Japan and Germany to take their proper place in these forums. And I think that would do much to improve the Security Council. As to its broader Charter, I don't know. At this point, I think for whatever reason the United Nations has not garnered, not drawn to it, not drawn down the national authorities that one might have expected it to when the Berlin War came down in the post-Cold War period. This hasn't happened. That's why I believe that a far superior way of dealing with problems is to eliminate them at their source. One of the ways we are doing that here is that we are co-operating together. I talked about the sort of sense of fellow feeling and goodwill

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at APEC meetings when the leaders sit down. The chemistry at the meetings is quite interesting. There are 18 leaders without officials and they all now know one another well; they have bilateral meetings; they have occasional casual meetings; they have a good feeling together. They know they are co-operating in a bigger undertaking in opening up their economies and lifting prosperity. This is a much better way of dealing with problems than relying on some structure within the United Nations, no matter how modern or how adaptive it might be.

Question: Mr Prime Minister, Sir, Koh Kim Seng, Marplan Pte Ltd. I am curious as to what you consider to be a priority, in as far as the progress equation of Australia goes, whether it is risk management or opportunity seizing, and I am curious as to how you feel your recent perambulations in the region might have helped one cause or the other? Keating: I think that the primary one is opportunity seizing as you put it. The way to keep East Asia growing is to keep it properly resourced. It won't keep properly resourced unless the avenues of resource availability are open and the impediments are taken away, be it tariffs or non-tariff barriers or other traditional policies. The efficient commitment of resources of the region to our respective economies is the way to best guarantee that the East Asia growth phase continues. That's what essentially APEC is about, it's essentially what a lot of Australian foreign policy is about. It's a lot of what our bilateral relations are about - how we create better trade and investment opportunities, how we create a climate of confidence, and in doing that, how the region prospers. In a prospering region, these questions about risk management become much less important - compare your own country or Malaysia with thirty years ago. Look at the attendant risks then and now, and what has been the intervening influence. It has been economic growth. Many countries don't have resources or adequate resources, or they don't have skills, or they don't have other things. I think what all of us in the region are trying to do is open the flows, to let the flows happen naturally and to keep the growth phase continuing. In that way, we all seize the opportunities and the emphasis on risk then becomes greatly diminished.

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Question: Mr Paul Keating, Sir, I am Roy, a retiree. You earlier mentioned your opinion as to who should be the new members of the Security Council of the United Nations. This debate on the increase of membership of the United Nations has been going on for years and years. The problem is because there are far too many members in the United Nations, and each continent is advancing their own members. Don't you think it would be better to have an agreed criteria - of course, the important word is "agreed" and that will be a problem - on which the members could be appointed. Thank you. Keating: The United Nations exist on the principle of universality, I think. It was the great attempt in the post-War years to develop a new order of collective security and that had to be representative of the growth of nations as people threw off their colonial yoke and took their independent status. Obviously, the numbers within the United Nations have grown. I don't think that's what has made it ineffective. Any argument about its effectiveness was probably overshadowed by the influence of the Cold War and the bipolarity of those two powerful nations, the United States and the Soviet Union. That's not to say there is no place for a healthy debate about the future shape of the United Nations or how it'll work and work effectively. All I'm saying is that the second and third largest economic powers should certainly be in the business of the Security Council. What I'm not saying here is what the design of some of these instruments should be. What I am saying is that regional arrangements and regional solutions are going to be more important, and can be very effective. And I made the point in this region. The arrangements are between developing and developed countries - there is no hierarchy. If you look at our multilateral bodies, be it ASEAN or APEC, there is no hierarchy. The developing countries, indeed, look at the Bogor Declaration that came from one of the largest developing countries in the area. Regional bodies can do good and effective things. Where many regional problems in the past have been glossed over or papered over by the bipolarity which has existed, the tensions are now coming to the fore. And they are best dealt with regionally. If they spill over, they may spill over to the UN. But I think there are other solutions to the world's problems, other than the UN, despite the fact the UN remains a very useful body.

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Chairman: Thank you. I think time is running on. We have time for two more questions. Question: Mr Keating, Sir, I'm Jack Cook, Humanities Department, Victoria Junior College, Singapore. I would like to ask you about exchange rates. It's not been mentioned at all this afternoon. A number of impediments have been offered that might stand in the way of further APEC, Pacific Rim, or whatever developments in the next twenty or even thirty years. European experience suggested when a number of other problems have been cleared out of the way, currency, then starts to rise towards the top of the list as being something which simply stays in the way. Do you feel we might see any kind of developments on currency harmonization in this region over the next even ten or fifteen years? If we do see a regional unit, I might dare to suggest a name for it - the regional unit of course will be called a RU. Thank you. Keating: A ru. Maybe hooroo? Who can say in ten to fifteen years, what will happen in these things? I doubt very much that any of us will ever be in a position of being able to design something which provides so-called stability to exchange rates. Since the days of fixed exchange rates broke down in the 1970s, we have now got a very large flux of international markets and flows of funds. Where each country's characteristics are different, where they are assessed differently, and where their levels of wealth and prosperity are different, the value of their currency will reflect that. In the reflection of it, it will adjust the parameters within the economy as well as those outside of it. So I'm not one for managed exchange rates. I don't believe in them. And all that happened in the Plaza Accords, which we often hear about, in the 1980s was a lucky break at the end of a long period when a correction was overdue, and if the Plaza Accord partners today sought to do what they did then, I think the markets would trample on them. If you run a good country with good policies, you can always stand in the market-place and get a fair price on your currency. It might be a bit overdone some days, a bit underdone on others, but by and large, the fundamentals will come out. And I think tricky

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management by central bankers trying to pick the rate has been the cause of much of the world's problems in the post-War years. It's a habit we have all kicked, and I think should stay kicked.

Question: Good afternoon, Prime Minister Keating. My name is Lee Kam Chi, the MD of Innovation Pharmaceuticals in Singapore. Earlier on, you mentioned there is significant increase of Asian migrants into Australia. I think it has been well documented that that has caused some problems and some Australians have been rather upset about this trend. Does this worry your government? Will you please comment on what is your government going to do about that? Thank you very much. Keating: I don't want to correct your assumptions in any strident way but let me assure you, there is very little tension or adverse comment on Australia about the make-up of the migration intake. Half of it now is from Asia, and the settlement of people in Australia is as harmonious now as it was five years ago or ten years ago or earlier. In fact, I think it's more harmonious now than perhaps it has ever been. And Australia is singularly devoid of racial problems, be it around Asians or Muslims or any other categories of persons. By and large, it's not issue there. The issue in Australia, if ever there is an issue, is just on a population basis - how large the migration programme should be, not what its composition is. I'm very happy to report to you that what may be perceived perhaps in some places, maybe here in Singapore, that there is some resentment - if that's the implication of your question about a high proportion of Asians in the intake, that is not so. I represent a constituency which has a very cosmopolitan make-up and I have a very good feel of these issues in Australia. I can assure you that there is almost complete equanimity about the character of the cosmopolitan make-up of the country. I think people are very happy with Asian migration to Australia as it has brought wealth, business experience, diversity, and strength. If there is, perhaps, one phrase that I can borrow, is that many Australians feel that in diversity, there is strength, vitality, and interest. It's no longer really an issue for us to manage our country or our society in some exclusive way to Asia. It's not on and hasn't been on for twenty-five years.

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Chairman: Ladies and gentlemen, thank you for your questions. We have come to the end of the Singapore Lecture. It remains for me to call on Professor Chan Heng Chee to thank Prime Minister Paul Keating for his stimulating Lecture, with all his display of wit and wisdom. Thank you.

IV

Closing Remarks Chan Heng Chee

Australia is not Asian, but Australia has always been in Asia as far as I can remember. Australia shares a precious piece of history with Singapore and Malaya. Australian troops fought side by side local forces and the British when Japanese troops invaded the peninsula and the island colony. They also fought the communists in Malaya in the 1950s during the insurgency years. They were with us, too, during Confrontation and participated in the military operations. ln the sixties, they fought in the Vietnam War. Today, Australia is one of the powers in the Five-Power Defence Arrangement, as a defence partner of Singapore and Malaysia. In the last two decades, Australia has been an active dialogue partner of ASEAN, a staunch supporter of APEC, having been the catalyst for its formation, and, in the immediate post-Cold War years, an active proponent for the establishment of a security forum for the region. Economic links in the meantime have been deepened, especially with Japan and Southeast Asia. We have just heard Prime Minister Paul Keating outline a thoughtful vision of Australia-Asia relations and a pathway to further strengthen regionalism and regional order. All of us find this a congenial vision, and we will leave this hall mulling over this important speech. Yes, Australia's interest is very much in Asia, and without wishing to enter into a domestic debate, I would, if I may, boldly assert as a Southeast Asian and as an Asian, that Australia's future is very much tied up with Asia - and after Prime Minister Goh Chok Tong's statement yesterday, conceivably tied up with ASEAN. Australia's interest in Asia is reciprocated by Singapore's interest in Australia and in Prime Minister Keating. We have an impressive turnout at this Lecture - an audience of almost 1,500. We have had 45

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to turn many away. Australia is the top choice of Singapore students studying overseas, and quietly and without fanfare, Singapore has become the seventh largest investor in Australia. The cumulative figure of Singapore investments in Australia has far surpassed Singapore's investments in any other country in the region, including China and Indonesia. These facts clearly say something about Singapore's interest in Australia. On behalf of the Institute of Southeast Asian Studies and of you, the audience present this afternoon, I thank Prime Minister Keating for taking time off his crowded schedule to share his thoughts with us. We would also like to thank Deputy Prime Minister, Dr Tony Tan, for so graciously agreeing to chair the Singapore Lecture. We are grateful for all the support we have received, particularly the presence of Prime Minister Mr Goh Chok Tong and Mrs Goh and members of the Singapore Cabinet who are with us today. Ladies and gentlemen, I would like to thank all of you for being a good audience and I invite you to join me in thanking our special guest, Prime Minister Paul Keating. At this point, I would like to mention that Prime Minister Keating has very generously donated to the Singapore Community Chest, the honorarium that goes with the Singapore Lecture. Prime Minister Keating, the Singapore Community Chest thanks you, and we thank you.

MR PAUL KEATING

Born on 18 January 1944, Paul Keating became Prime Minister of Australia on 19 December 1991 and was re-elected to a second term on 13 March 1993. Mr Keating joined the Australian Labor,Party at the age of fifteen and became President of the New South Wales Youth Council, the forerunner to the Young Labor organization, in 1966. From September 1979 to February 1983 he was President of the New South Wales branch of the Australian Labor Party. Elected to the House of Representatives in 1969, Mr Keating was appointed Minister for Northern Australia in October-November 1975. He then served in the Opposition Shadow Ministry from January 1976 and held several portfolios, including Agriculture, Minerals and Energy, Resources and Energy, and Treasury. When the Australian Labor Party was elected to government in March 1983, Mr Keating became Treasurer. During his term, he implemented the most far-reaching economic reforms in Australia's post-war history, and was named "Finance Minister of the Year" by the financial journal, Euromoney. Among the most significant reforms were the progressive deregulation of the financial sector, the float of the Australian dollar, the extensive reform of the taxation system and the achievement of a budget surplus. He was appointed Deputy Prime Minister in April 1990, but resigned in June 1991 after being unsuccessful in a ballot for the Prime Ministership. In December 1991, he was elected Leader of the Australian Labor Party and Prime Minister by the Federal Australian Labor Party Caucus. As Prime Minister, he was able to pursue the micro-economic reform agenda he set as Treasurer, including the deregulation of the airline and telecommunications industries. He also turned Australia's focus towards Asia, its nearest neighbours and the fastest growing region in the world. Educated at Belmore Technical College and Sydney Technical College, Mr Keating is married to Annita Keating and they have four children.

THE SINGAPORE LECTURE SERIES

Inaugural Singapore Lecture 14 October 1980 The Invisible Hand in Economics and Politics by MILTON FRIEDMAN

1981 Singapore Lecture 30 October 1981 American Foreign Policy: A Global View by HENRY KISSINGER

1982 Singapore Lecture 2 December 1982 Peace and East-West Relations by GISCARD D'ESTAING

1983 Singapore Lecture 10 November 1983 The Soviet Union: Challenges and Responses as Seen from the European Point of View by HELMUT SCHMIDT

1984 Singapore Lecture 8 November 1984 The Western Alliance: Its Future and Its Implications for Asia by JOSEPH M.A.H. LUNS

1985 Singapore Lecture 5 December 1985 Deficits, Debts, and Demographics: Three Fundamentals Affecting Our Long-Term Economic Future by PETER G. PETERSON

1986 Singapore Lecture 25 November 1986 Trends in the International Financial System by RAYMOND BARRE

1987 Singapore Lecture 27 November 1987 The Challenge of Change in the Asia-Pacific Region by BOB HAWKE

1988 Singapore Lecture 14 December 1988 Regionalism, Globalism and Spheres of Influence: ASEAN and the Challenge of Change into the 21st Century by MAHATHIR BIN MOHAMAD

1989 Singapore Lecture 15 October 1989 Trade Outlook: Globalization or Regionalization by BRIAN MULRONEY

1991 Singapore Lecture 3 April 1991 International Economic Developments by R.F.M. LUBBERS

1992 Singapore Lecture 4 January 1992 U.S. Policy in the Asia-Pacific Region: Meeting the Challenges of the Post Cold-War Era by GEORGE BUSH

1994 Singapore Lecture 8 September 1994 India and the Asia-Pacific: Forging a New Relationship by P.V. NARASIMHA RAO

1996 Singapore Lecture 17 January 1996 Australia, Asia and the New Regionalism by PAUL KEATING