Address at the Japan-Australia Business Cooperation Committee Lunch

Speech
18 Jan 2018
The Prince Park Tower Tokyo, Japan
Prime Minister
E&OE
International and Trade

PRIME MINISTER:

Well, thank you very much Richard.

Yorihiko Kojima Vice Chair of the Japan-Australia Business Cooperation Committee, His Excellency Mr Sumio Kusaka, the Japanese Ambassador to Australia, Richard Court and his wife Jo, distinguished guests, ladies and gentlemen.

What a great honour it is to be welcomed so warmly again by the JABCC on this visit, together with the Australia New Zealand Chamber Commerce in Japan and the other supporters of this event.

It’s a credit to our long-standing commercial ties that the JABCC has been contributing so actively for 55 years. Almost as long as the Tokyo Tower has graced the skies just alongside the hotel. 

And it’s a credit to Australian exporters that we are able to feast on great beef, seafood and wine so economically here today, courtesy of our historic Free Trade Agreement which came into force three years ago this week.

Now, when I last spoke here in Tokyo, I urged our two countries to lead the way in strengthening innovation and the free flow of people, capital and ideas. But I do worry now that you took my message more literally than I intended.

You had already poached our national Rugby coach, Eddie Jones and turned his ideas and innovations against our own Wallabies.

[Laughter]

And then, not only did you defeat our Socceroos in last year’s World Cup qualifier at Saitama Stadium, but our Socceroos coach Ange Postecoglou, has packed his bags to join the J-League, with the Yokohama Marinos and I see that they’ve stolen his assistant, as well!

Now, I believe in a free and open Indo Pacific every bit as much as my very good friend, Prime Minister Shinzo Abe, but we’re going to have to set some boundaries.

[Laughter]

But seriously, who could blame some of the world’s best and brightest being drawn to the world’s biggest and richest city, in the lead up to the Rugby World Cup and the Tokyo Olympic Games, at this moment of national reform and revitalisation.

Over the past five years, Japan has become a beacon of political and economic stability in a world that is not well endowed with either.

Prime Minister Abe is on track to becoming Japan’s longest serving post-war prime minister.

The Japanese economy is growing faster than what many people thought possible; Abenomics is working. 

You have a stock market at 20-year highs, corporate profits at record levels and an unemployment rate so low that I have to confess, I asked to have it double checked. How many countries in the world can boast an unemployment rate with a ‘2’ in front of it, at a time when labour force participation is rapidly expanding?

The economy has been boosted by 2.4 million more women in work in the past five years. That’s a phenomenal achievement and the ranks of women in the workforce will soon be boosted again by more places in childcare, early education and greater workplace flexibility.

If that is what they call stagnation, then I think the rest of the world would like some.

Now the bigger reason I am here today of course, is that your country is leveraging its’ new foundation of political and economic stability to reinforce the international rules-based system, at a time when it is needed most.

This liberal rules-based order - the remarkable system of rules, norms and institutions which requires nations big and small to play by the rules and to respect each other’s sovereignty - has enabled our collective security and prosperity for the entire post-war period.

In our part of the world, it has generated the greatest sustained rise in incomes, innovation and human advancement the world has ever seen.

Our two countries have benefited and contributed in equal measure.

But as we set out recently in our Foreign Policy White Paper, the international system is under greater stress than at any time since its’ inception in the 1940s.

So it was with this in mind that Prime Minister Abe and I spent the day together in Sydney, almost exactly a year ago, when the United States was poised to pull out of the Trans Pacific Partnership and we discussed the need for regional leadership. And we decided that the most important contribution that we could make was to keep the TPP alive.

Now, many said that the Trans Pacific Partnership could not happen without the lure of the US market. But both Prime Minister Abe and I see the agreement as being about much more than market access, notwithstanding its considerable importance for those gains.

The TPP is a down-payment on the sustainability of free and open markets, at a time they are under pressure from the combined forces of populism, protectionism and geo-economics.

The TPP promises greater transparency and stronger rule of law in a world which is too often short of both.

The TPP brings our trading system into the digital world, it levels the playing field for non state-owned companies, it defends and extends the freedom to explore, share and capitalise on new ideas and it creates rules of the road to match the new economic journey upon which we are embarking.

Now in the margins of the APEC meeting in Da Nang last November with Japan in the co-convenors’ chair alongside Vietnam,  most TPP negotiating parties showed they saw the significance of the TPP in the same way that we did. They see this as the most important contribution to the rules-based system that is on offer in the world economy right now. 

Our strong preference is for all 11 countries to join the first wave. But our focus is on bringing the new TPP agreement into force as soon as possible with those who are ready to move.

Prime Minister Abe and I are personally committed to having this deal signed and sealed by March. Crucially, one of the design features of the TPP is its’ flexibility as an open platform. I believe its logic - the logic of cooperation - is so compelling, that others will want to be a part of it once it’s up and running. Indeed, that’s what we are seeing already.

Importantly, we are consciously setting it up to enable and encourage the United States to dock in should it choose to do so in the future.

At the same time we are pursuing several other deals that are designed to be component parts in a larger free trade system that draws the region together.

That’s the vision that is driving Australia's participation in negotiations for a Regional Comprehensive Economic Partnership, the RCEP. A partnership centered in ASEAN that draws in India, China, Japan and the Republic of Korea, a high-quality RCEP agreement would improve governance standards and spur reform in member countries.

Australia and Japan are also working together in APEC to prepare the ground for the longer-term goal of a free trade area of the Asia Pacific.

Our approach - pursuing deals that will transform trade and investment in our region while also moving forward on specific issues with coalitions to develop global trade rules - demonstrates a new way forward for trade negotiations.

Whatever else might be said about the WTO’s negotiating function, it is the bedrock of the global trading system. Its dispute settlement mechanisms are critically important for constraining arbitrary and unfair behaviour by big countries to the disadvantage of small ones. That’s why we continue to provide leadership, creativity and perseverance in order to reinforce it’s authority and inject it with new life.

Now, last month, at an otherwise challenging WTO ministerial meeting in Buenos Aires, Australia, Japan and Singapore adapted our TPP negotiating approach to lead a large group of countries to work together to promote an open, transparent and non-discriminatory regulatory environment for e-commerce. Looking ahead we intend to draw on our TPP negotiating approach to promote high quality global trade outcomes. WTO Director-General Roberto Azevêdo applauded what he called "an outbreak of dynamism".

It is a pity that it had to be described as an “outbreak”, but nonetheless, more dynamism is very positive. And indeed that’s exactly how the US Trade Representative, Robert Lighthizer, described it as a "positive way forward for the WTO".

Now, while there have been flickers of hard-fought progress in the economic arena, the security outlook remains fraught.

We face a more complex and uncertain regional outlook than at any time since the early years of the Cold War.

And there are few places in the world where the existential risks from Kim Jong Un’s rogue regime are more apparent than here in Japan. And brought home that very thing at the Narashino base with Prime Minister Abe today, when we inspected the Bushmaster vehicles and the Patriot Missile batteries.

In September the regime conducted its most powerful nuclear test - probably a hydrogen bomb - and it fired several advanced ballistic missiles including two over Japan.

Tonight I’ll be discussing with Prime Minister Abe what more we can do - together with the United States, China and the Republic of Korea and the whole global community - to enforce and enhance economic sanctions and show this rogue regime that it is utterly isolated in its pursuit of its destabilising and illegal nuclear weapons program.

Our 2016 Defence White Paper and our recent Foreign Policy White Paper clearly set out the growing importance of our Special Strategic Partnership with Japan.

And the strategic logic that is driving our countries to work more closely on defence and security is only getting stronger as the regional environment becomes more dangerous and challenging.

We’re looking to deepen our engagement not reduce it.  So we will continue to seek every opportunity to link with partners who share our interests and commitment to rules-based institutions.

Now the foundations of our great partnership were set in the 1950s, dating back to Prime Minister Abe’s grandfather Kishi and Sir Robert Menzies.

We are all-weather friends. Our six decades of close and trusting collaboration are etched into the skyline of Tokyo and the landscape of the Pilbara - as all in this room know so very well.

But there are many others who may not fully appreciate the importance and extent of our collaboration in the resources sector today.

The importance of trust and reliability of supply cannot be overstated here in Japan where 94 per cent of energy and resources and 61 per cent of food requirements are imported.

Australia supplies a large majority of Japan’s iron ore and coking coal needs. We will supply a majority of the iron ore and metallurgic coal that will go into the high-quality steel being used to build the facilities for the 2019 Rugby World Cup and the 2020 Olympics.

We are Japan’s largest supplier of liquefied natural gas, and Japan is our biggest customer.

And the links are broadening and deepening all the time.

Australians are flocking to Japan in record numbers. It’s not just rugby and soccer coaches but also students, professionals, investors and tourists.

Next year up to a hundred students will commence their new dual degrees with the Australian National University and Ritsumeikan University. 

Our trade relationship is thriving in the wake of our free trade agreement.

Exports of both beef and sugar jumped by a third last year.

Honey and mandarin exports are up by two-thirds and bulk wine by a half.

The fact that more than 97 per cent of Australia’s exports now enter Japan duty free, or under preferential tariff rates, mean there are many more opportunities for Australian businesses and Japanese consumers.

And there are more wins to come, with a fifth round of tariff cuts on 1 April 2018.

As I was saying today in my press conference at the Narashino base, we’re seeing the benefits of our free trade agreement with Japan, and with other countries in our region in strong jobs growth in Australia.

403,000 jobs created in the last year, 403,000 – the equal longest run of monthly job growth in Australia sine 1978. That’s really a remarkable achievement. And we’re seeing – we know that free trade and open markets mean more exports, more opportunities, more investment and that means more jobs both in Australia and of course in Japan.

Now Japanese investments in Australia are again growing, recently overtaking the UK as our second largest source of direct investment.

We’ve moved quickly to address regulatory concerns about skilled labour because your investments are bringing cutting edge technology and raising the productivity of our most vital industries, including the LNG sector.

A few months ago Japanese technology helped Rio Tinto to trial the world’s first fully automated train. At 2.5km, these are the longest and the largest robots in the world.

Australia has as much to learn from Japan’s integration of renewable energy sources as we’ve been discussing at our table during the lunch, including smart-grids and energy storage systems that flatten price spikes, reduce volatility and ensure security.

And I want to note with particular interest how the objective of energy storage has been built into your current Strategic Energy Plan. Energy storage is a very big part of our energy strategy as well.

Japanese investments are diversifying, opening up a plethora of new business opportunities.

How many Australians outside of this room know that some of our most popular life insurance products, and some of our most iconic brands of beer, are brought to us by Japanese firms?

And the flow of capital and know-how is certainly not just one way.

Tomorrow, at the embassy here in Tokyo, the Australian medical device company Resmed will launch a revolutionary new medical device for treating Sleep Apnea Syndrome.

Over the next few months Thales Australia will ship another tranche of four Bushmaster Protected Mobility Vehicles from Bendigo. These are the vehicles of which there are four already in service of the Self Defence Force, Ground Self Defence Force and Prime Minister Abe and I inspected one of them at the Narashino Base today.

This is a great example of Australian technology, of Australia’s defence industry and a great example of exports that technology here to Japan, as indeed its been exported to a number of other countries, many other countries and saving hundreds of lives.

Now our burgeoning defence cooperation will have commercial and technological pay-offs, for both countries and I’ve asked my Minister for Defence Industry, Christopher Pyne, to make sure of it.

After all, it was Japan that pioneered the modern international supply chain - the “flying geese” that helped spread technology and sustained development throughout the region.

Increasingly, I expect our companies will be joining forces to make third country investments - such as we’re seeing with Macquarie and Mitsubishi UFJ Lease as they invest in semiconductor manufacturing equipment in South Korea and elsewhere in the region.

There will be similarly exciting opportunities with collaborative investments in infrastructure.

The regional demand of which is obvious.

Australia will support all infrastructure projects - from all countries - that are transparent and fair, meet the market need. We will firmly back Australian companies engaging in projects that uphold those values, and the principles and institutions of the rules-based system.

If there is one thing that unites our two countries it is our commitment to the free flow of goods, capital and ideas within clear and effective rules.

Even when those rules may seem to work occasionally against us - even when we lose the best coaches from our national sporting teams, we respect the rules-based framework and we always respect the umpire whenever the application of those rules is in dispute.

Together, over many decades, we’ve worked hard to contribute to the liberal rules-based system because we’ve seen how well it has worked for our two countries and indeed the entire region the Indo Pacific.  We’ve seen how it has worked for our businesses. 

The acronyms may not always sound like much - UN, WTO, IMF, OECD, the DAC, BEPS, G20, APEC, ADB – it’s a long list, but Japan and Australia have been instrumental in creating or sustaining all of them.

APEC would not exist without the leadership of our two countries.

The same will be true for the TPP.

Our joint investment in the TPP and regional security shows how Japan’s been raising its level of ambition, just as we have been raising ours. You are a regional power with global interests, and that’s how we see ourselves.

Our joint investment in shaping and sustaining the regional order is an illustration of our shared values and interests but it is also more than that.

It is a product of the constancy and certainty and reliability that we’ve baked into our bilateral relationship - our “special strategic partnership” - through all the geopolitical and economic ups and downs.

By investing in each other’s security and prosperity, we’re also investing in our own.

Together, we are redoubling our commitment to ensure we all continue to benefit from an Indo-Pacific that is secure, that is open and that is prosperous.

Thank you all very much indeed.

[ENDS]