Australia and Taiwan: Shared Strengths and New Opportunities

Speech by Australian Minister for Trade, Mark Vaile, at the 16th Joint Conference of the Australia-Taiwan and Taiwan-Australia Business Councils, Sanctuary Cove, Gold Coast, Queensland, Australia, 10 September 2000.

Introduction

Thank you Ross Maddock; Vice Minister (for Economic Affairs) Chen, Vice Chairman (of the National Science Council) Wu, Chairman (of the Taiwan-Australia Business Council) Cheng, (ATBC) Chairman Ian Sinclair, Deputy Premier Jim Elder, distinguished guests, ladies and gentlemen.

It gives me great pleasure to participate in this year's joint meeting of the bilateral business councils. Your two business councils have contributed a great deal to Australia-Taiwan relations.

These annual meetings provide a uniquely important forum for exchanging ideas and exploring new opportunities. The strength of the attendance at this dinner suggests to me that you will be having a very productive meeting over the next two days.

I would like to express a special welcome to the new Representative of the Taipei Economic and Cultural Office, Mr Timothy Yang, who is attending this meeting as one of his first duties in Australia. We look forward to working constructively with him to develop stronger economic and people-to-people links between Australia and Taiwan.

I won't speak at length over dinner, but I do want to touch on:

• the common strengths underlying Australia-Taiwan relations;
• the great potential we see to develop a broadly-based partnership; and
• what we need to do to make the most of our opportunities, particularly on the investment front and in the "new economy".

Shared Strengths

No one welcomed the Asian economic crisis, but it did allow well-managed, open economies to shine. It was no accident that Australia and Taiwan were two of the few regional economies to demonstrate exceptional resilience.

The Australian economy continues to grow strongly based on our sound macroeconomic and structural policies and the Australian Government's commitment to improving our international competitiveness.

Taiwan has also continued to lead the region into recovery over the past year, in spite of the devastating earthquake it experienced in 1999. We can attribute this to Taiwan's flexible industrial structure, its healthy economic fundamentals and an increasingly liberalised economy.

Australia and Taiwan have succeeded because we share similar economic philosophies and understand the need to work hard for our future. We are both committed to economic reform and liberalisation, and we both understand what it takes to compete in the global marketplace. We also share similar democratic values, as Taiwan's recent historic transfer of political power attests.

Potential of Australia and Taiwan as Partners

Clearly, what we have in common provides outstanding potential to develop a stable and secure long-term economic partnership.

The trade fundamentals are already sound. Taiwan remained Australia's eighth-largest trading partner last financial year, with two-way trade increasing over 10 percent to A$7.9 billion.

Our merchandise exports to Taiwan rose by almost 12 percent in 1999-2000. The value of imports from Taiwan also increased by about 9 percent.

Predictions are for an even better performance this year, driven by forecasts of healthy growth in Australia of around 4 percent and in Taiwan where growth is tipped to exceed 6.5 percent. Already in the seven months to July 2000, Australia's exports to Taiwan were up 27 percent compared with the same period last year.

We are also working more and more closely on trade issues. Taiwan is a valued partner for us in APEC. At the APEC Trade Ministers' Meeting held in Darwin in June, I had a very good meeting with Taiwan's new Economic Affairs Minister, Lin Hsin-Yi (pron. lin shin ee). I was pleased to confirm to Mr Lin that Australia strongly supports Taiwan's WTO membership. We hope this will take place as soon as possible in the coming year.

WTO accession will signal that Taiwan has come of age in the international trading system. It will open many new areas of Taiwan's economy to Australian exports of goods and services. It will also benefit the bilateral relationship more broadly, by strengthening our partnership on international trade matters, and creating a wealth of new business opportunities.

But, of course, our importance to each other extends further than our strong trade ties.

Around 150,000 Taiwanese visit Australia every year, and thousands of young Taiwanese take advantage of Australia's high-quality education system. There is no doubt that the many Taiwanese who have chosen to settle in Australia have contributed greatly to the development of strong commercial relations between Australia and Taiwan.

Queensland has been a particularly popular destination for migrants from Taiwan. It comes as no surprise that Brisbane and the Gold Coast enjoy sister city arrangements with Taiwan's two largest cities.

The Queensland State Government and the Gold Coast City Council, as the sponsors of this event, are clearly committed to cultivating a special economic and cultural relationship with Taiwan.

Developing the Investment Relationship

With so many aspects of the relationship flourishing, it is a little surprising to see a great deal of undeveloped potential in the area of two-way investment. Quite simply, our investment relationship has not kept pace with bilateral trade, despite the strength of both economies and our economic complementarities.

Taiwan is only ranked 22nd as a source of investment for Australia (A$615m at 30 June 1999), and 22nd as a destination for Australian investment (A$452m at 30 June 1999).

There should be excellent prospects for mutually beneficial investment and trade in a number of sectors. These include minerals and energy, high technology including biotechnology and medical technology, agriculture and aquaculture and tourism infrastructure. I think we have to ask ourselves why our business communities lack confidence in the investment environments in Australia and Taiwan.

Our message is clear - we welcome investment from Taiwan and we want to work together to develop our investment relations to their full potential. I would particularly like to emphasise to our Taiwan guests how tax reform has improved the Australian investment environment.

The Australian Government has delivered to business a streamlined goods and services tax to replace outdated wholesale and other indirect taxes, substantial cuts to company and personal income tax rates, and the halving of the capital gains tax rate.

There are also steps that Australia and Taiwan should take together to kick-start two-way investment. That is why it was particularly appropriate that investment promotion was a major theme of the Australia-Taiwan Bilateral Economic Consultations held in Taipei in July.

I was very pleased to see agreement at that meeting to collaborate on several long-term projects, including:

• Conclusion of an Investment Protection and Promotion Arrangement (a first for Taiwan with any OECD country);
• A series of joint investment seminars; and
• Cooperation on an SME business-matching program.

Last month's Minerals and Energy Consultations in Perth provided a further opportunity to promote mutually beneficial investment. The meeting highlighted the potential for a natural long-term partnership between Australia and Taiwan in LNG. Australia has vast reserves and an established production base, while Taiwan is rapidly developing the infrastructure to meet more of its energy needs from LNG. Of course, the Australian Government strongly supports Australia LNG's bid to supply the Taiwan LNG market.

And the Australian Government would very much welcome investment from Taiwan in oil and gas exploration, and in the development of production facilities in Australia.

Opportunities in the New Economy

Australia and Taiwan also need to work closely on opportunities in the "new economy". Science and technology will be a major growth sector for the trade and investment relationship. Australia is world-renowned as an innovator in many areas of technology, and Taiwan has developed a highly successful IT industry and is a leader in technology commercialisation.

Just a few minutes ago, I witnessed the signing of two important bilateral MOUs by the Representatives of the Australian Commerce and Industry Office and the Taipei Economic and Cultural Office. One of these is designed to facilitate Science and Technology Cooperation, and the other to promote Biotechnology Investment.

Also timed to coincide with this meeting is the release of a Joint Statement on Electronic Commerce to accelerate contacts between the information industries of Australia and Taiwan.

Each of these instruments will be an important channel through which to add even more momentum to the bilateral trade and investment relationship. I am confident they will contribute to a new stage of cooperation on the new economy between Australia and Taiwan. May I congratulate all the people who have contributed to their successful conclusion.

Conclusion

In closing, I would like to emphasise that the Australian Government regards the economic and people-to-people relationship with Taiwan as a valuable asset in its own right.

Over the past year, both sides have demonstrated a resolve to develop a more focused and mutually beneficial partnership to advance our economic and people-to-people ties. The two business councils will continue to play a fundamental role in the pursuit of this goal.

Let me assure you that the Australian Government will continue to work closely with you.