Region Holds Key to Our Prosperity

The Australian Financial Review

By John W.H. Denton,
Partner and Chief Executive Officer
Corrs Chambers Westgarth
Chairman, BCA Trade and International Relations Task Force

One of the great challenges facing Australia is the future stability of the Asia–Pacific region. We have a lot at stake. Rapid growth brings with it new challenges. The economic rise of China and India is creating new centres of power.

A major problem for such a diverse region has been the array of aspirations and targets for economic integration, without either a common framework or the robust machinery required to give momentum towards tangible, region-wide outcomes.

For this reason, Prime Minister Kevin Rudd’s proposal to create an Asia–Pacific Community by 2020 is an important and timely idea. Its essence is a renewed impetus to drive the economic agenda of the region.

When it comes to doing business in the Asia Pacific, we need to take regional policymaking, especially that which enables trade and investment, to the next level; first, by encouraging the most powerful nations to be fully engaged in regional institutions, and second by ensuring that this gives them a real stake in shaping the region’s future.

This is best achieved by focusing on greater economic integration, underpinned by sustained growth in both trade and investment.

A priority should be moving the region towards a free-trade area, consistent with the goal set by Asia Pacific Economic Cooperation (APEC) Members in 1994.  Not enough has been done to move the region in this direction.

Another objective must be cooperation on domestic policy reforms. Licensing requirements, project approval processes and the movement of people are all examples of domestic regulations that impede the taking up of new commercial opportunities. These are what are known as “behind the border” barriers. They are the key to sustained economic integration.

A new framework to enable investment in the region is needed. Given the difficulties many nations encounter in attracting and maintaining foreign investment, this could realise major benefits. Success will require improvements in regulatory institutions and governance.

A cooperative effort to build knowledge, understanding and transparency about the different systems and cultures within the region would also be beneficial.

Economic integration could be pursued through robust regional cooperation, without requiring nations to forego political sovereignty.

Revitalising the Asia–Pacific region’s economic agenda through this focus on economic integration is very much in Australia’s interest. Trade with the Asia Pacific accounts for about 70 per cent of Australia’s total trade, and is critical to our economic prospects and living standards.

Ultimately there are two advantages to regional economic integration: greater economic growth and the opportunity for billions of people in Asia Pacific to share in the benefits through higher living standards.

It would also bind the nations of the wider Asia–Pacific region more closely together. As a result, shared economic links and interests would provide a positive counterbalance to current or future political differences that if unchecked could increase the potential for conflict in the region.