The Australia-Korea relationship is vibrant and growing, it is already one of Australia’s most important bilateral connections. Together we can keep ‘mainstreaming’ the relationship in both our countries, to secure greater integration and higher awareness amongst our communities.
Corrs Partner and CEO John W. H. Denton spoke at the closing dinner of the Joint Meeting of the Australia Korea and Korea Australia Business Councils in Melbourne recently.
Notable attendees include:
Click 'text version' to read the full transcript.
Just over 15 years ago (1997) Australia published its first ever white paper on foreign affairs and trade.
The white paper was a forward-looking document, projecting 15 years into the future.
And it tried to identify the major trends which would shape the international environment, and the implications of these trends for Australia and the way in which they are pursued.
It got some things wrong – for example, projecting Japan to remain the biggest economy in Asia.
But it was right on the changing influence flowing from the economic rise of East Asia.
And standing here, 15 years into the future, it was right about Korea!
The white paper predicted Korea was likely to become more influential in the economic and security affairs of the region and internationally.
And it concluded that Australia should work to build a fully mature and genuinely rounded relationship with Korea, reflecting its standing as among Australia’s most important regional relationships. Sound advice. Which we gladly followed.
I’ve long been a believer, a supporter and a participant in the Australia-Korea relationship.
I have participated in a number of bilateral discussions with colleagues in Seoul and worked closely with friends such as the Hoh family of LG and with Korean friends such as Younghoon (David) Kim and his sister in the APEC Business Advisory Council in my role as Chair of the Finance and Economic Working Group.
When I attended the Seoul G20 Summit in 2010 as part of the official Australian delegation.
To the Seoul B20 Summit
The Gangnam district of Seoul was relatively unknown outside of Korea, and certainly not in Australia.
Fast forward a couple of years and Psy’s K-pop single has demonstrated the tremendous potential to harness Korean soft culture and to put Seoul firmly on the map as a design capital.
Who can forget Psy’s immortal lyrics – they sort of sum me up!:
“I’m a guy, a guy who seems calm but plays when he plays.
A guy who goes completely crazy when the right time comes
A guy who has bulging ideas rather than muscles.
That kind of guy.”
That really sums me up.
Indeed, President Obama put it best when he told President Park at a bilateral meeting in Washington in May that “Gangnam Style” was an example of how people around the world were being swept up by the Korean wave of culture.
The catchy song went to number one on the Australian music charts (and in 29 other countries around the world), and introduced a new generation of Australians to a new face of Korea – one with an incredible sense of energy and confidence.
It also told us of the need to ensure our thinking about Korea in Australia is contemporary and not anachronistic.
The power of Seoul as a design capital, cinematic centre and a critical interpreter of the enabling power of the internet should remind us of this obligation.
When I think about my friends in Korea and our mutual interests, in many ways its hard to think of two more similar countries, and two more similar peoples.
Both our countries are strong liberal democracies.
We share regional and global interests, through similar approaches to regional security and stability and economic development.
We are strong supporters of the G20, where we work together to promote global financial stability.
We engage closely in APEC, and are both committed to consolidating the East Asian Summit as a key regional institution.
And we both campaigned hard to secure a seat, from the first of January this year, on the United Nations Security Council, the UN body charged with maintaining international peace and security.
Our cooperation on regional security stretches back over 60 years, and has been given a major boost by holding joint foreign and defence minister talks.
Indeed, the US is the only other country to enjoy a similar dialogue with Korea.
And Australia supports Korea’s ‘trust-politik’.
And while our demographics don’t quite match up, our economies are similar in size.
But it was only more recently that I came to truly realise the extent of our complementarities, our mutual friendship, and our long historic bonds.
Two years ago I was asked by the then Prime Minister unusually to join a C/W cabinet sub committee to oversee the development of another white paper – this time on the social, economic, strategic and environmental implications of the Asian century for Australia.
The Asian Century white paper was seen as a national blueprint for a time of national change.
It recognised that how Australia responds to the rapid changes in our region and to the return of the centre of global economic gravity back to East Asia will determine how prosperous Australia will be in the next fifteen years and beyond.
And through travelling the region, meeting people from all walks of life, and working through hundreds of submissions to the white paper, a clear picture emerged.
Sifting through the many stories we heard about Australians and Australian companies working in Asia, the ones who did best were those who had truly integrated with our region.
They did not see their business as Australian, with a few staff or assets overseas.
Rather, they saw their business as a truly regional enterprise, integrated into global and regional supply chains.
And almost without exception, those success stories were built on personal relationships.
Some went back twenty, thirty or forty years – and had progressively built on the foresight of those who built the first bridges into the region.
Much like the links between the Australia-Korea Business Council and the Korea-Australia Business Council, and the foresight of your predecessors who held the first joint meeting in 1978.
Or like the parents of President Park Geun-Hye, who took her on a visit to Australia in the 1960s, when she was a teenager, her first visit abroad.
The strength of our long-standing ties with Korea is clear, and was recognised when we in the Asian Century Advisory Group appropriately placed Korea in the basket of Australia’s five priority relationships.
Even more recently, I undertook a similar forward-looking exercise this time as a board member and chair of global engagement at the Business Council of Australia.
For our Korean friends I should point out that the Business Council represents the CEOs of Australia’s top 100 companies, and I pay recognition to a number of members here tonight.
Three weeks ago we released our own future plan, which identified a set of recommended actions across nine areas that were needed to help secure a prosperous future for Australia.
Many of the recommendations were focused on domestic economic reform.
Getting our fiscal settings right.
Rethinking our approach to regulation and
Increasing transparency of our regulators – indeed, many issues that Korea is also confronting now.
But we also looked at how Australia must better engage with our region.
The Business Council reiterated the need for Australia to improve business-to-business links, and echoed calls to promote a policy environment that was consistent, coherent, stable and predictable.
We focused particularly on policy changes to make Australia a more attractive destination for foreign investment, to maintain a more internationally open labour market, and to reduce regulatory impediments in the services sector.
So based on my recent experiences of projecting into the future, there are three observations I would like to make about the challenges we face in the future of Australia-Korea ties.
Or if you like, three challenges that lay the basis for an Australia-Korea partnership in the Asian Century.
First, government and business have an ongoing role in lifting up the relatively low public profile of the Australia-Korea bilateral relationship.
Why? Because community understanding and trust is often a vital component of advancing trade and investment ties.
Let’s face it, Korea is Australia’s fourth largest trading partner, and Australia is Korea’s 7th largest.
Korea is the third largest source of overseas students in Australia (27000 in 2012), but relatively few Australians study in Korea.
Australia is a reliable and competitive supplier of two-thirds of Korea’s iron ore imports and 40 per cent of its coal.
And some 150 000 people with Korean ancestry live in Australia and contribute to our multicultural society.
Yet, despite the efforts of Psy and Gangnam Style, the synergies between us have not been mainstreamed into our community in the same way that our relationships with other regional partners have.
To use a Korean expression, the relationship is like a prawn between two whales.
The public consultations we undertook during the Asian Century white paper process highlighted the potential to connect communities and develop cultural awareness, in both Australia and Korea.
There are some positive steps underway.
The Government’s delayed but important commitment to increase Korean language studies in schools, as one of five national priority languages, will see Korean taught in years 11 and 12 under the Australian Curriculum. This is welcome and testament to our collective lobbing efforts.
And the Asian Century white paper recognised the need to increase opportunities for Australian students to study in Korean universities.
But we need more Korean graduates from Australian universities finding pathways to work in Australian companies, unlocking productivity gains from cultural diversity.
And we need more community engagement, like the activities promoted under the 2011 Australia-Korea Year of Friendship, supported by the Australia-Korea Foundation.
The Victorian Government has made a strong commitment to boosting Victoria’s relationship with Korea, including through participating in the opening day celebrations of the Yeosu Expo in May last year.
And through leading a trade mission to Korea last year of over 50 companies from the food and beverage, agribusiness, education and auto sectors.
And I acknowledge the presence this evening of the Victorian Deputy Premier, the Hon Peter Ryan.
But we all need to do more to recognise, embrace and lift up the strong political, economic and social ties that we enjoy.
A good step in this direction would be connected to my second observation – that is the need to continue reforming the bilateral economic architecture.
Both the AKBC and the KABC are strong supporters of concluding the FTA negotiations.
And we at the BCA called for these talks to be finalised in our economic action plan.
Both our countries stand to gain from reduced barriers to trade, and increased investment flows.
Australia wants to put our exporters on an equal footing with competitors from the US and the EU who already enjoy improved access to the Korean market through their own FTAs.
And Korea would enjoy lower tariffs in Australia on auto exports, and liberalised foreign investment requirements.
While the bilateral investment relationship has grown in recent years, it is still relatively limited, with only $7.6 billion of Australian investment in Korea, and $12.8 billion of Korean investment in Australia.
Australia welcomes foreign investment, recognising our historic reliance on foreign capital to develop our resources sector and grow our economy.
And the investments made here by POSCO and the Korean Resources Corporation, by KOGAS and by KEPCO and SK Energy are supporting Australia’s growth, and are supporting Korea’s resource security and stability through improved access to reliable and competitive energy and mineral resources.
But Australia needs to do more to improve its standing as a destination for foreign investment.
In the Business Council’s economic action plan, I recommended extending the foreign investment screening threshold that applies to private sector investors to the $1.1 billion limit that currently applies to the US and New Zealand.
And we recommended reviewing Australia’s foreign investment policy for investment by sovereign wealth funds and state-owned enterprises.
A more liberal environment would attract greater levels of Korean investment, and a broader sectoral coverage, for example in the agribusiness sector in Australia.
We all agree on the win-win nature of an FTA.
And I hope we can overcome one of the issues holding us back – whether to include investor-state dispute settlement provisions in the FTA.
We also need to think more creatively and push hard to broaden the scope of the agreement with Korea.
While we should never take our resource ties for granted.
We must also look forward and ‘services’ is one of the keys to our future relationship.
And ‘liberalising the financial services sector in Korea, and restructuring’ “behind the border barriers” to improving services in trade and investment is a creative way of moving forward. Lets face it both economies need to improve productivity and liberalising the services sector must help.
Taking a broader picture, there is no doubt a failure to conclude the negotiations would be a set-back – both politically and economically to us all.
And a lot of wind would be taken out of our sails if we allowed other countries who are also negotiating an FTA, such as New Zealand or Canada, to conclude before we do.
A pragmatic approach from both our sides would help both of us enjoy the net gains from an early conclusion to the FTA.
And that would hopefully lead to my third observation, the need to harness our synergies to work together on third-country, regional and global issues.
We already do this effectively in a number of settings: the UN, the G20, and APEC. We both believe in ‘middle power’ cooperation.
And with the start of negotiations last year on the so called ‘Regional Comprehensive Economic Partnership’, we have an opportunity to advance greater regional economic and financial integration.
Combining Korea’s well-deserved reputation as a global leader in innovation, including on-line systems and internet gaming, with Australia’s high-performance services and research sectors, we could work together in third markets to support commercial and economic growth.
Friends the Australia-Korea relationship is vibrant and growing.
It is already one of Australia’s most important bilateral connections.
Together we can keep ‘mainstreaming’ the relationship in both our countries, to secure greater integration and higher awareness amongst our communities.
And I hope when we gather again for the 50th Joint Meeting of the AKBC/KABC, some 15 years down the track, that the visions for a prosperous and strong Australia-Korea relationship that were made in the Asian Century white paper have been fulfilled.
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