10 September 2019

I acknowledge the traditional owners of the land in Canberra, the Ngunnawal people, and the traditional owners of the land in my home of south-west Western Australia, the Noongar people of the Whadjuk nation.

I know there are many dignitaries in the room, too many to mention.

But as a Western Australian, I’d like to acknowledge the Hon Richard Court AC, a former premier of our state and Australia’s Ambassador to Japan.

Our nation’s relationship with Japan is very significant, and Richard’s father, Sir Charles Court, in important acts of reconciliation with former foes, played a pivotal role in establishing what is now a strong friendship between Australia and Japan -- a friendship that Ambassador Court continues.
I stand before you today as a beneficiary of open markets, free trade and foreign investment.

I grew up in the 1970s and 1980s in Western Australia, in Rockingham, a suburb south of Perth, near the busy industrial zone of Kwinana, which faces the Indian Ocean in my electorate of Brand.

When my father first stepped off the boat in Fremantle from the UK in 1956, he found a job at BP’s newly built Kwinana oil refinery – at the time one of the biggest foreign investments ever made in Australia.

Since then the development of the Kwinana industrial area has forged important global trade connections for my local community and for my home state of Western Australia, and for all of Australia.

This area now generates more than $15 billion a year, employing almost 5000 people directly and an additional 26,000 indirectly.

More broadly, Western Australia has developed into an export powerhouse, relying on open markets to sell our highly valued minerals and agricultural produce to the world.

The development of Kwinana in the early 1950s coincided with the beginnings of the era of globalisation and free trade.

It was the start of what we know as the multilateral trading system, which surely ranks as one of the greatest economic achievements of the post-World War II era.

The rules-based multilateral system – which is centred on open, fair and transparent trade -- has fuelled seven decades of economic growth and job creation and has enabled billions of people around the world to ascend from poverty.

It has helped to break down barriers between trading nations, as well as between the people of those nations.

The founders of the post-war global economic architecture understood the importance of multilateralism because they had experienced the enormous cost of unilateralism and protectionism in the l930s.

During the Great Depression, countries raised their tariff barriers, hoping in vain to stimulate economic activity by reducing imports. The result was the volume of world trade shrank and high tariff barriers increased inefficiencies in the global economy.

After the war, multilateral institutions such as the World Trade Organisation and the International Monetary Fund were set up to underpin the smooth functioning of the economic system.

Growth in global trade was spurred by successive rounds of tariff reductions under the General Agreement on Tariffs and Trade (GATT).

By the end of the 20th century, tariffs on manufactured goods among developed countries had fallen from over 40 per cent in the late l940s to an average of less than 5 per cent.

Of course, this era of multilateralism and trade liberalisation has been momentous for Australia.

We are now so deeply integrated with the world’s trading system that one in five of our workers is employed in trade-related activities.

Although we are the 55th biggest country in the world in terms of population, we are the 23rd biggest for exports and 21st for imports.

We are the world’s largest exporter of iron ore, coal, natural gas and wool. We are the second largest exporter of aluminium ores, beef, lentils and cotton. We rank third for international education services and we are the fifth largest exporter of wine – the best of course from Margaret River.

But I stand before you today worried about the future of open trade and multilateralism.

The global rules-based trading system is, at best, in retreat. At worst, it is facing destruction.

The United States, the country that championed the rules in the post-war era, now appears intent on undermining them.

The trade war between the US and China — the world’s two largest economies — is highly damaging to the global economy.

The US is abandoning the WTO and it is blocking appointments to the organisation’s seven-person appellate body.

By December, the panel will be down to a single member and will be unable to adjudicate international trade disputes – a key function of the WTO that Australia’s exporting industries and other around the world have long relied upon.

The US has long had legitimate concerns about China’s misuse of intellectual property and other unfair trading practices. These issues should be ventilated and addressed. But the best way to do that is through multilateral avenues.

I believe Australia must work with its trading partners in calling out bad behaviour, pushing for WTO reform and promoting the need for us to all work multilaterally.

While there is value in pursuing bilateral free-trade deals, we will get far greater benefits for longer from entering into more multilateral agreements.

For this reason, we must play a leadership role in negotiations for a Regional Comprehensive Economic Partnership (RCEP) that aims to create a pan-Asian free trade zone.

This agreement would initially include the 10 ASEAN member states of Southeast Asia as well as Australia, China, India, Japan, South Korea and New Zealand.

These 16 countries account for almost half of the world’s population, over 30 per cent of global GDP and over a quarter of world exports.

As trade experts have noted, finalising RCEP this year would be a significant show of support for the rules-based global trading system and represent a pushback against protectionism.

I believe we must also acknowledge the legitimate concerns that many people in the community have about the perceived negative impacts of free trade.

Not everyone in Australia is affected equally by free trade. An investment banker in Sydney, for example, might feel they have benefited more than a factory worker in Geelong.

Many people in Australia feel their lives have become harder, and some blame free trade and globalisation. But there are plenty of other reasons – including automation and internal domestic conditions – for their discontent.

(I’d maintain that these adverse conditions in the Australian economy are due to current Australian government policies or lack thereof, but I’m not here today to talk about that).

It is only through a productive bipartisan approach to international trade that the parties of government can resist movements that seek to blame free and open trade and demonise it for domestic political purposes.

There is an obligation on the government, on Labor as the alternative government, and on the business community to ensure the wider community does indeed benefit from open trading relationships from the world – to argue that the benefits outweigh any negative impacts.

We must only look to the US to see what happens when domestic politics weaponises international free trade.

Donald Trump revived the “America first” slogan from the 1940s and lambasted his country’s global engagement in the post-war era. He called the Trans-Pacific Partnership a “rape of our country” and described the WTO as a disaster.

Those who voted for Trump were more likely to live in low socio-economic areas and they were more anxious about the economy

But why the discontent? What has caused these people to be left behind?

It is not free trade with the world that is the cause of their distress, yet the blame is often sheeted home to trade.

So what is it? I suspect it is the extraordinary inequality between rich and poor in the US; and that there is no safety net to speak off. There is no health system to help the poor.

And this is a lesson for Australia.

According to a recent Lowy Institute survey, 75 per cent of Australians believe that free trade has been good for their own standard of living – and that’s up eight points since 2017.

I think most Australians do accept the benefits of free and open trade because many of them get to see the benefits of it through the ability of a government to provide the critical social safety net, Medicare and now the NDIS.

They might not think of it that way of course. But it is the case.

It is important these fundamental services in our economy stay strong and are not undermined, lest we see the kind of extraordinary discontent we see now in the US.

We must remain a fair country. If we do that, it will be much easier for all of us to sell the message of free trade

In the last American election, the Republican and Democrats candidates turned to a policy of mutually assured destruction in relation to the TPP specifically, and free trade more broadly.

Now this has moved to the international stage (via a social media platform) and we are witnessing increased global tension and retaliatory moves between the US and China.

And my understanding is that the openly combative stance of the US toward China – particularly in relation to trade – is well received in the American rust belt and among the farmers who are increasingly affected by it.

We often say, and I firmly believe, that no one wins a trade war – but right now, on terms that are important to the current US administration, the 45th president appears to be winning, as he remains popular where it counts.

And making international trade a political tool has worked well from that perspective.

But in the greater scheme of things, beyond the domestic political gains, it’s clear no one is winning this trade war.

The new round of tariffs that began at the start of this month is focused on consumer goods and they are going to affect ordinary Americans.

In coming months, clothes, shoes, sporting goods and other items are going to become more expensive. In the lead-up to Thanksgiving and Christmas, Americans are going to be hit in the hip pocket.

Whether this affects the President’s popularity remains to be seen.

Finally, I’d like to thank each of you here today. Diplomats are at the forefront of our formal and informal relations with the world.

You have all held different posts in different countries representing Australia and you know better than anyone that human interactions - and therefore trade negotiations - will require different approaches depending on where in the world you are.

But every negotiation needs for its base a level of trust built on long-term people-to-people and government-to-government relationships. The heads of Australia’s diplomatic missions across the world undertake this critical role.

And if Australia is to pursue greater activism in international trade relations, we should acknowledge that multilateralism is hard.

It takes patience, it takes an understanding of the cultures of others; an understanding of everyday norms and corporate and governmental modes of behaviours.

And your service is at the heart of that understanding

I want to thank you for the exceptional work that you do.