7 March 2012
Members of the Tokyo Rotary Club,
It is a pleasure to have this opportunity to join this weekly meeting of the Tokyo Rotary Club.
At the onset, I would like to express my sincere condolences and heartfelt sympathy to the people of Japan, who will commemorate the first anniversary of the Great East Japan Earthquake in a few days. The earthquake and tsunami caused tremendous damage and deep sorrow.
On behalf of the Australian Government and people, I would like to reaffirm our commitment to continue supporting Japan's recovery efforts, as a true friend.
Australia-Japan relationship - importance of people-to-people links
I have had a connection with Japan for more than 35 years, ever since I first visited the country on an exchange program sponsored by the Japan Foundation.
Japan genuinely is my second home, and the Australia-Japan relationship is not just a professional interest: it is something about which I am also personally passionate. Now, I represent Australia in Japan, and I feel very lucky indeed.
Today, I would like to start by talking about the importance of the people-to-people links that serve as a cornerstone of the Australia-Japan relationship. Japan and Australia have built close ties in a wide range of fields, from trade and investment to security and defence cooperation.
However, without having forged a relationship of trust over many years, we could not have achieved such close cooperation in addressing economic and security issues.
The important foundation of our bilateral relationship is the strong bond nurtured through grass-roots exchanges between our two peoples. I strongly believe that it is this underlying deep trust that allows Japan and Australia to cooperate today in a variety of arenas – as genuine friends.
Rotary Club and international exchange
The Rotary Foundation, and Rotary clubs around the world, provide a range of excellent scholarship programs, including the Rotary Foundation Ambassadorial Scholarship and the Yoneyama Memorial Scholarship, in order to promote international people-to-people exchanges and to shape the global leaders of tomorrow.
I understand that the Rotary Foundation Ambassadorial Scholarship is one of the world’s largest privately-funded international scholarship programs, and Rotarians all over the world have supported more than 40,000 students from approximately 100 countries and regions since 1947.
These scholarships are an important investment in future leaders. They are one of the most effective ways to promote mutual understanding and goodwill between the countries of the world. I would like to take this opportunity to ask you to continue supporting young students full of potential.
In Australia, too, there are approximately 34,000 Rotarians and 1,164 Rotary clubs, although admittedly these numbers fall a long way short of the size of Rotary Japan.
Nonetheless, the University of Queensland in Australia is one of six universities worldwide to host the Rotary Centre for International Studies, and many Rotary Peace Fellows come to Australia from around the world to pursue their Masters' studies.
The Centre at the University of Queensland is one of two in the Asia-Pacific region – the other is at the International Christian University in Japan. It is no exaggeration to say that this is proof of the strong presence of Rotary Japan and Rotary Australia in the international community.
I hope that activities led by charitable organisations such as Rotary, and active support from Japan-Australia societies in Japan and their counterparts in Australia will help to further deepen the people-to-people links and strengthen the Australia-Japan relationship.
In promoting grass-root exchange, education also plays a vital role.
It was rare in the late 1970s, when I was doing so, for Australians to learn to speak Japanese. But now, Japanese is taught from primary school through to university, and is, in fact, still the most widely studied foreign language in our school system.
Last year, as part of our continuing efforts to build people-to-people exchanges, the Australian Government announced special scholarships for Japanese students to study in Australia, and a program to encourage exchanges between Japanese and Australian educational institutions.
We are also working on a feasibility study for a program similar to the Japanese Government's excellent JET program, to bring young Japanese people to Australia as Japanese language teachers.
Reasons for the success of the Australian economy
Now, turning to our trade and economic relations, I would like to talk about the Australian economy, which remains robust thanks to the booming resource industry, and some of the success factors behind its prosperity.
As many of you may know, Australia was one of the very few countries which weathered the effects of the Global Financial Crisis relatively well, while the United States and many other countries around the world faced a serious economic slowdown.
Our abundant natural resources are often cited as the key to Australia's strong economic growth, but if you take a closer look, you will notice that the resources bonanza is not the only factor that supports the economic prosperity of Australia.
In the 1980s, the Australian Government took a series of decisions, which included floating the dollar, opening the financial sector to foreign competition, and lowering tariffs.
These decisions were as hotly debated in Australia then as trade reform is being debated in Japan right now. Many feared that an influx of cheap imports would destroy Australian industry.
However, the result has been the opposite. Cheaper foreign imports prompted industry to adapt, and many did so faster and more easily than analysts had expected. Indeed, the reform in manufacturing breathed new life into the Australian economy and helped revitalise industry.
Since then, over the last 30 years, the Australian Government has implemented a range of trade liberalisation policies based on the belief that more open markets will lead to increased trade, and that, in turn, will result in mutual benefits.
These trade policies helped enhance the competitiveness of the domestic industry and establish a stable business infrastructure.
In addition, Australia has the technology and expertise to utilise natural resources efficiently and effectively. Our emphasis on technological development and the accumulation of know-how is another key to success that enables us to make the best use of coal, LNG and other resources to achieve steady economic growth.
And today, the Australian economy receives a boost from a combination of many other factors, including its proximity to Asia – the engine room of growth for the 21st century – and population growth bolstered by its immigration policy.
Australia and Japan in a global and regional context
Today it is very difficult to find two countries in the region, or indeed the world, bound together by such common interests and strong complementarities as Australia and Japan.
We share the values of democracy, rule of law and respect for contractual obligations, and the free market; and we do so not only because we believe they are right but because we know they make our societies stronger.
Currently, the global community faces many uncertainties. The Global Financial Crisis of 2008 inflicted deep scars, and dark clouds still loom over the world economy. In the United States and Europe, economic growth is weak, unemployment remains high, markets are volatile and sovereign debt levels are unsustainable.
If we look at the bigger picture, the issue of economic uncertainty is cropping up against the backdrop of a changing balance of power in the world, and in fact in Asia in particular, and new regional developments.
The rise of China, India and other emerging economies in our region is bearing out the idea that the 21st century will be the Asian century. The positive potential of these changes is huge; but like all changes of this magnitude, they are also creating a vast number of issues.
Under these circumstances, I am convinced that cooperation between Australia and Japan plays an important role in the way the world works. I believe, by working more closely, Japan and Australia can bring about benefits not only to each other, but also the region and the entire world.
At the same time, Japan is still recovering from the Great East Japan Earthquake, and the tsunami and nuclear accident that followed. The recovery will be a mammoth task that will take several decades, and as Prime Minister Julia Gillard said during her visit to Tokyo and Tohoku in April 2011, Australia remains ready to assist in whatever way we can.
Australia was the only country other than the United States that provided strategic aircraft capacity to Japan in the aftermath of the March 11 disasters. An Australian C17 aircraft, working with the U.S. forces and the Japanese Self-Defense Force, delivered more than 500 tonnes of relief supplies and equipment, as well as personnel, around the country in the first two weeks after the disaster.
And when firefighting equipment to assist with the nuclear accident at Fukushima was brought to Japan, two more Australian C17 aircraft were deployed for the transfer.
Despite the many challenges that remain unresolved, I am optimistic about Japan's future and the future of the Australia-Japan relationship. A strong, confident Japan that turns its face outwards to the world and plays a full part in regional affairs is a vital national interest for Australia.
I am certain that Japan will recover from the earthquake and tsunami and emerge a stronger nation.
Trade and investment
Another important aspect of the bilateral relationship between Australia and Japan is our huge trade and investment ties. It is one of the best illustrations of how trade is a win-win activity.
As you know, Japan's energy self-sufficiency stands at around only four per cent. And yet, for the past 50 years, Japan has prospered.
Japan's success – led by its spectacular economic growth – was not achieved by closing its doors to other nations and implementing protective trade measures.
On the contrary, in the last 50 years, Japan has secured reliable sources of supply in large part by widening the definition of "self" in "self-sufficiency" to include its relationships, and investment by its companies, in its large, friendly and reliable partner: Australia.
Australia has for many years been one of Japan's largest suppliers of energy, including coal, natural gas and uranium. And Australia's supply of energy to Japan is set to become even more important over the next few years as new natural gas fields come on stream and other sources of supply decline.
Looking to the future, new areas of mutual interest are already emerging, including rare earths. Australian company Lynas Corporation will start producing rare earths in the near future.
And I am pleased that Lynas, with the support of JBIC, has signed a strategic alliance with Sojitz Corporation to secure additional supplies of rare earths products for the Japanese market.
Trade and investment between Japan and Australia is a two-way street – again, a win-win equation.
When Australians think of our own current economic prosperity, we should think of our reliable partners around the world, including Japan. Many of our strongest industries have been built not only because of Japanese demand, but because of Japanese investment and partnership with Japanese companies.
In recent years, the trade and investment relationship between Japan and Australia has not only revolved around securing stable supplies of resources, energy and food; our economic cooperation is expanding into a wider range of fields.
In fact, recent figures show that a much more diverse range of sectors in Australia are attracting Japanese investment – sectors such as financial services, pharmaceuticals and life sciences. Examples of Japanese companies investing in non-traditional markets in Australia include Sekisui House, Sumitomo Forestry, Nippon Paper, Sony Bank, and the list goes on.
Moreover, many Japanese companies operate through their subsidiaries in Australia, and companies such as Shiseido, Kikkoman and Mizuno – which also have strong connections with the Tokyo Rotary Club – have become familiar brands for Australian consumers.
One of the key lessons of the latest phase of globalisation is that the risk of ventures in any new market is lessened by what we call greater 'adjacency' between the two nations.
Adjacency may be literal, in terms of geography, but more fundamentally, it is about a close relationship fostered through complementing businesses and well-established economic, cultural and social networks.
And rather than remaining complacent about our existing relationship, Australia and Japan can seize new business opportunities that exist between them by making efforts to expand and deepen those existing, well-developed networks.
Japan-Australia Economic Partnership Agreement (EPA/FTA)
It is a major priority for me as Ambassador to do anything I can to encourage such relationships and help them to flourish. That is why I think it is so important that we move quickly to conclude the free trade agreement that we have been negotiating now for five years.
Australia was heartened by the release of the Japanese Government's Basic Policy on Comprehensive Economic Partnerships in late 2010.
The proposed FTA is absolutely critical to expanding the potential of both of our economies.
Agriculture, of course, is one of the key issues to be dealt with in the FTA negotiations between Australia and Japan. I would like to see the debate on agricultural trade between our two countries move past the constant repetition of entrenched positions, to have a more forward-looking discussion about the future.
The Australia-Japan Free Trade Agreement will strengthen Japan's food security.
It will encourage further investment by Japanese companies in Australian agriculture and food processing facilities – and will allow those Japanese companies to be more profitable in exporting back to Japan healthy, safe products that meet Japan's high standards.
It will reduce the costs to Japanese industries, government and consumers. And most importantly, it can strengthen Japan's agricultural sector, as long as the right policy settings are put in place.
Trans-Pacific Partnership (TPP)
Australia is also participating in the Trans-Pacific Partnership negotiations.
We welcomed the announcement by Prime Minister Noda in November last year that Japan would enter into consultations on its participation in the TPP talks with relevant countries.
The announcement was especially encouraging coming so soon after the terrible natural disasters – which caused so much economic damage to Japan – on March 11 last year.
The TPP is a 21st century agreement that will liberalise trade and investment to deliver closer economic integration. The longer term goal of this agreement is to provide the basis for a free trade area of the Asia-Pacific.
The TPP will be more than a traditional trade agreement; it will also deal with behind-the-border impediments to trade and investment.
The inclusion of Japan in the TPP would create a regional market around 40 per cent bigger than the European Union, and allow Japan and other countries involved to reap the benefits of further growth.
The TPP is an ambitious initiative that aims to achieve a high level of trade liberalisation. Last month, the governments of Japan and Australia held their first round of consultations on Japan's entry into the TPP negotiations, and the two governments agreed to continue the discussions.
We believe that Japan can demonstrate its readiness and strong commitment to join the TPP by making significant progress on a high-level and comprehensive free trade agreement with Australia.
But of course, it is for Japan to make the final decision about whether or not it will join the TPP. We will continue to stand by Japan and trust that it will make the best decision for its national interest.
Australia and Japan have built an enduring partnership over the past several decades, in large part thanks to the initiative and support of people such as yourselves.
I look forward to your continued support as we take the next steps in making progress in the Australia-Japan FTA, reinvigorating trade and investment, and promoting people-to-people links.
These efforts will help underpin the security and prosperity of both our nations and of our wider region in the years to come.