18 July 2018




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May I begin by acknowledging the Gadigal People of the Eora Nation, the traditional custodians of the land on which we are meeting this morning and pay my respects to their Elders both past and present.

(Acknowledgements omitted)

The calamity that was WW2 in the Pacific provided the setting for one of the most interesting, stable and enduring alliances of the 20th century – the ANZUS alliance between the US, Australia and New Zealand. While it was forged in war, it has matured in peace. What began as a response to a threat to the security of both the US and Australia has evolved into a relationship built around shared strategic objectives underpinned by shared fundamental values.

Our alliance with the US has stood strong for 70 years. But of course our history, our friendship and our co-operation is even greater. The 100 years of mateship we honour this year is a celebration of shared values as much as of military co-operation. It is the expression of these shared values in the work we do together, in our region and beyond, that give our alliance both dynamism and fortitude.

Our alliance is both contemporary – facing up to the current complexities that distinguish the Indo-Pacific area as a critical contributor to global strategic stability – and forward looking – facing up to the emerging shifts in power that underpin the dynamism of Asia.

That Australia and the US maintain close links in the security field, especially through military engagement, is obvious. Whether through our defence planning and operations, defence capability development, joint intelligence arrangements, our high level defence policy discussions and, of course, broader-ranging consultations such as the upcoming Australia-US Ministerial talks, we maintain a strong working alliance.

Our relationship extends far beyond our defence links. We have deep cultural, social, economic and political links that reflect profound alignment around fundamental values.

I have recently returned from Washington DC. It was a compelling few days – the vision of the US President taking NATO allies to task for falling short on defence expenditure, before delivering some rather mixed messages in Britain, then departing for a summit with the Russian President, chatter and discussion about the place and weight of alliances, the continued imposition of US tariffs and quotas on countries ranging from Canada to China, and countermeasures imposed in response, and a former Australian PM declaring that the American legions are leaving.

It is worth reiterating here that alliances matter. Alliances between liberal democracies matter. And its network of alliances remains a critical component of US power.

Of course, I give today’s speech against the backdrop not only of these disparate events, but also a set of far more sustained and structural shifts in the world Australia must navigate.

I have spoken about these disruptive factors over the last 18 months. They include economic and social inequality, greater numbers of displaced persons around the globe, ethnic tensions and the reappearance of nationalism, racism and populism. These are accompanied by changes in the relative economic weight of the US, China and major powers, and by the way in which economic power is being refocused and reorganized.

China’s narrative as to its place in the world, and its increased assertiveness in the prosecution of its interests also contemplate a different role in our region.

We see more competition and less cooperation around us.

And of course there are the particular policy priorities and rhetoric of President Trump.

In an opinion piece published shortly after the US election, I observed that we faced the prospect of a very different world and a very different America.

At the time some, including our Prime Minister, incorrectly accused me of undermining the US Alliance. It was to the government’s credit that, within weeks, it began to face up to the matters I had identified.

It is worth emphasizing the bipartisan history of and support for the Alliance, including its foundation in John Curtin’s historic “turn to America”.

Some 18 months into the Trump Presidency, the possibility to which I alluded – that President Trump might actually do what he said he would do – has been confirmed. The President’s beliefs and inclinations have also become clearer, although how they will mark US foreign policy in the longer term is still uncertain.

The decisions made by the Trump administration including the withdrawal from the Trans Pacific Partnership, the Paris Agreement on climate change, the Iran nuclear deal and the imposition of quotas and tariffs including on allies and partners evinces a rejection, at least in part, of “the rules” and norms to which we have become accustomed.

When this is taken together with a broader questioning of the merit of the existing global order, with the US President declaring that the post-war international order is not “working at all”, then we know the game has changed.

The global community is still coming to terms with this new America. So too, I think it’s fair to say, are many Americans themselves.

The re-configured way the US is setting about conducting itself in the management of global affairs is generating something of a global re-think about how best to work with the US.

We have been accustomed to the resilience of the international rules-based system, and we have been comfortable with the strategic leadership of the US which has played the central normative role in establishing and encouraging the rules-based order as part of the post WW2 settlement.

But the rules-based order itself is being challenged by uncertainties and strategic shifts in the global security environment.

I’ve previously said that it is not enough to declare we take the world as it is, not as we would wish it to be. Rather, we deal with the world as it is, and we seek to change it for the better. To shape it as best we can in accordance with Australian interests and Australian values. And just to be clear, we share these interests and values with many like-minded countries, the US included.

So let us start with the world as it is, and a pragmatic analysis of the key features that condition and shape the character and attributes of our region and consequently American engagement in it.

First, the place of the US.

The US, of course, has a uniquely global dimension to its national power – especially its cultural, economic and military power.

As the world’s only global power, the US has had a foundational role to play in Asia. US presence in the region transformed our own security, and the security of its other allies and partners. The US remains the region’s biggest military partner. And it is Australia’s principal strategic partner and ally.

American primacy has underpinned stability and peace in our region over much of the post war period. Its elements include alliances and security partnerships, economic power, military capability and the strengthening and utilisation of regional and global institutions.

But beyond military and economic power, the US also matters in the region because of its values and what it represents.

Values are central to our national identity: what we stand for defines who we are as a nation. Our values give coherence and strength to all dimensions of public policy, just as they inform both the content and the conduct of our foreign policy. Values and interests go hand in hand.

The basic presumption on which both our democratic systems are founded is that all human beings have worth and dignity simply by virtue of our shared humanity.

This acceptance of the inherent worth and dignity of the individual grounds our shared commitment to the rule of law, and to democratic practices and institutions.

This deep values-alignment is what has lent credibility to the fact that we have been partners-in-arms in every major conflict for over a century. We have consistently resisted challenges to the democratic values that provide the basis of the kind of global order we seek. More than that, we have defended those values against dictators and autocrats who seek to impose themselves on both their own peoples and their neighbours.

Second, the economic context.

To gain a sense of the terrain ahead, I often reference a compelling chart in the Government’s Foreign Policy White Paper – Figure 2.4. It projects GDP on purchasing power parity out to 2030. US GDP rises from US $18.6 trillion in 2016 to US $24 trillion by 2030. China’s GDP rises from US$21.4 trillion to US $42.4 trillion over the same period. So within a decade, the Chinese economy is set to become nearly twice as large as the economies of the US, India ($20.9 trillion) and the EU ($23.3 trillion) and seven times larger than the economy of Japan.

The trajectory outlined by these economic figures represents a fundamental reshaping of the global and regional economy. It is a reshaping with profound implications for the region and for the United States.

Odds are this trajectory is likely to continue. The 2017 PWC report The World in 2050 projects the four largest economies at 2050 to be China, India, US and Indonesia in that order.

Self-evidently economic projections are precisely that, but the trend remains clear. So by mid-century Australians are likely to live in a world where the 4 largest economies are all Indo Pacific powers. Our working assumption should be that the regional relationships and the character of the regional order will shape the global order in the much the same way that Trans-Atlantic relationships did in the post war decades.

This, of course, has significant implications for the way that both the US and Australia work with our regional neighbours to ensure that this global rebalance is properly underpinned by operating rules that support peace, stability and prosperity. The Trump administration’s decision to withdraw from the TPP begs the question of how the US plans to define its economic engagement with the region. We look forward to further elaboration on this point from the US.

Free and open trading rules are a necessary corner-stone to an Indo-Pacific economic architecture that contributes to global economic stability.

Third, Australia’s relationship with China.

China is Australia’s largest trading partner, a position it holds in respect of most of the countries of the region. Our country has benefited greatly from China’s rise, with much of the growth in the real incomes of Australians being driven by China’s own economic growth.

We should recall that China’s rise has enabled the single largest alleviation of poverty in human history. This is an extraordinary and unambiguously positive achievement.

Over this last period, and in particular under the leadership of President Xi, China has evinced increasing assertiveness in pressing its interests. It has also demonstrated its belief as to its right to a greater role in the region.

None of this is particularly surprising. As China’s relative economic weight increased, it is unsurprising that it would seek a greater say in its region. The question is on what terms.

I have spoken elsewhere about our relationship with China. Today I want to make three points. The first to reiterate that we should approach China with respect, not fear.

Second, that the Australian people have a legitimate expectation that any government works to protect the nation’s economic and strategic interests which are, of course, linked. And unlike the US, the size and characteristics of our domestic economy compel us to prioritise trade and engagement with other markets.

Third, the self-evident point that unlike the US and Australia, China is not a democracy nor does it share our commitment to the rule of law.

So given this context, how do the US and Australia, as allies and partners conceptualise and implement a revitalised engagement with the region?

We do need to grapple with the possibility that the playbook of decades past may be of limited utility in dealing with the challenges and opportunities ahead.

Michael Wesley remarks that “reimagining our foreign policy is going to be the hardest thing we’ve ever done – because this is the first time since European settlement that Australia has had to contemplate living in a region not dominated by a culturally similar ally”.

Let’s start with what we want.

Australia wants a region which retains a system of institutions, rules and norms to guide behaviour, to enable collective action and to resolve disputes. A region in which those seeking to make or shape the rules do so through negotiation not imposition. A region with an open trading system and investment transparency maximise opportunity.

In short, a region with an agreed and observed set of operating rules.

Our support for a rules-based order reflects both our interests and our values. A region governed by these principles enables the sovereignty of all nations to be safeguarded and enables the stability that underpins development and prosperity.

As a middle power, we also have an interest in ensuring that rules not power determine actions and outcomes. Asia is a diverse region, and diversity is best respected and managed within a rules-based operating system.

The alternative to a rules- based order is hegemony which neither safeguards sovereignty nor respects difference. This insight, in part, is reflected in the ASEAN operating principle of consensus.

As democracies, we and the US respect the rule of law, the separation of powers and the principle that government and democratic practices enable greater freedom and opportunity than does an imposed system based on ‘might is right’.

So too in the international sphere we support a system which channels and restrains the use of power that is inimical to peace, security and prosperity.

As Canada’s Foreign Minister Freeland said recently in her eloquent defence of the rules-based order, “we’ve built a system that championed freedom and democracy over authoritarianism and oppression”.

The maintenance of a rules-based system in our region requires continued and constructive US engagement. Other factors are necessary including the participation and support of the region’s largest democracies, India and Indonesia, and the maintenance of the centrality and integrity of ASEAN. But without the US, this simply won’t happen. The US remains the indispensable nation in our region.

So how would we envisage a US role in Asia at this time?

I have previously set out Labor’s articulation of Australia’s national interests. One is constructive internationalism – my take on Gareth Evans’s “good international citizenship”. In this period of disruption, middle tier nations such as Australia see a need to act with their neighbours and other likeminded nations in support of common goals. We see strength in agreeing and working towards that common purpose.

This is equally true for great powers. Creating alignment and articulating shared purpose is also important for the economic and strategic success of the US as it is for its allies and friends. Security and prosperity do not arise from a zero sum game, but from the creation of international public goods that benefit all, notwithstanding that the economic, security and political returns may differ in kind and in distribution.

Speaking at the Shangri-La Dialogue in Singapore on 2 June this year, US Defense Secretary Mattis spoke of a US strategy acting “in support of our vision of a safe, secure, prosperous, and free Indo-Pacific based on shared principles”. His views are worth repeating.

Our Indo-Pacific strategy … demonstrate(s) our commitment to allies and partners … who believe their future lies in respect for sovereignty and independence of every nation, no matter its size, and freedom for all nations wishing to transit international waters and airspace, in peaceful dispute resolution without coercion, in free, fair, and reciprocal trade and investment, and in adherence to international rules and norms that have provided this region with relative peace and growing prosperity for the last decades.

The force in Secretary Mattis’ comments is the focus on the nature of the region – on articulating the principles on which the region should operate and working with other nations to buttress these.

As the world’s only current global power, the US has a stabilising role to play in Asia. The Secretary of DFAT drew our attention to this just a month ago when she said that our interest is served by a multipolar region – a region where the US remains deeply and constructively engaged. How the US manages its engagement will, of course, vary over time.

Secretary Mattis’ articulation of both the objective and the means of US engagement in Asia is one Australia should fully support. For the reasons I have outlined earlier, it accords with our interests and our values. Additionally and importantly, it also provides more scope for alignment with other regional partners. A focus on the nature of the region and the individual and collective benefit to many regional players enables greater possibilities for alignment than simply focusing on strategic competition.

This distribution of benefits and the consequent opportunities for collaboration sits well with Secretary Mattis’ observation that “US strategy recognizes no one nation can or should dominate the Indo-Pacific.”

The focus of US efforts, like our own, should be on the nature of the region itself. On supporting, promoting and building the kind of region that operates based on the principles and values that we, the US, Japan, India, and others have all articulated and promote. Such a focus is likely to be more capable of generating alignment, and therefore success, than a singular focus on strategic competition.

And it is clear we and others in the region must work together to ensure that the US recognises that it is integral to the region we collectively seek.

US policy to support the objective of a free and open Indo-Pacific is, to some extent, a work in progress. The themes that Secretary Mattis identifies include a focus on the maritime commons, interoperability with allies and partners, strengthening of the rule of law, civil society and governance and private sector-led economic development.

It is this last element on which I wish to make some remarks.

Geo-economic forces are now defining the strategic landscape of Asia in much the same way that geo-strategic forces, represented by military alliances, shaped the strategic environment in the half century following WW2.

While the geo-strategic power of the US remains unassailable for the foreseeable future, its economic power also remains strong. The challenge lies in deciding how best to liberate the energy that sits at the centre of the economic power of the US and leverage that energy for strategic effect.

Certainly, there remains scope to ensure that the US and its partners, including Australia, maximise consistency with the practical objectives of the leaders in our region where they align with our own interests. Our aim must surely be to better enable the achievement of their economic and social development objectives, in ways that strengthen the prosperity and security of the region collectively.

One obvious need in the region is greater infrastructure investment. The deficit is particularly acute in the Pacific Islands. It was encouraging to see the announcement last November of a memorandum of understanding between the US Government’s Overseas Private Investment Corporation and the Japan Bank for International Cooperation to increase investment in infrastructure throughout the region. Last month we saw the announcement of a new Strategic International Development Fund by New Zealand Foreign Minister, Winston Peters, aimed at increasing the flexibility and responsiveness of New Zealand’s infrastructure funding in the pacific. I welcome these announcements as important steps to addressing the deficit in infrastructure investment in the region. The Australian Government would do well to seriously consider similar initiatives.

During my recent visit to Washington, there was growing anticipation that further development of this aspect of US policy was imminent. It will be an important and valuable signal to Asia.

My friend Gareth Evans recounts some remarks made by former President Clinton after he had left office. President Clinton said that the US could choose to use its great and unrivalled economic and military power to try to stay top dog on the global block in perpetuity, or it could try to create a world in which the US would be comfortable living when it is no longer top dog on the global block.

Whether or not the US remains top dog is perhaps beside the point. What Asia is looking for is less a contest about who should be top dog than a partner of enduring connection and relevance. As their economies develop and prosper, due in no small measure to the economic strength of China, they are looking for the reassurance that comes from an engagement mindset built around creating opportunity and collaboration rather than competition and conflict.

I’ve previously described the election of President Trump as a change point. So too our region is in a period of change. The question is what will the consequence of this change be. What principles and architecture will result. This matters to Australia.

This matters to Asia. And this matters greatly to the US.

Authorised by Noah Carroll, ALP, Canberra.