Keating Sharpens Australia's Focus On Asia-Pacific Trade

UNDER the newly reelected Labor government of Prime Minister Paul Keating, Australia can expect a renewed effort to hitch the country's economic wagon to the raring economies of the Asia-Pacific region.

In his March 13 victory speech, Mr. Keating said, "Australia, for the first time in our history, [is] located in the region of the fastest growth in the world, we're set up now as we've never been set up before ... to be in it, to exploit it, to be part of it."

"Being part of it" has been a theme of Keating's since he started his first term 16 months ago. During his trip to Japan in October, Keating said Australia would side with Japan if a trade war developed between Japan and the United States.

Just before the election, Foreign Minister Gareth Evans announced a $60 million package of new measures designed to boost the integration of Australia's economy with the Asia-Pacific region. Among those measures are the proposed formation of the Asian Economic Centre, the first government think tank on the region, and a web of both formal and informal business networks.

In his recent Cabinet reshuffle, Keating established a greater focus on trade issues by moving the minister for trade into the inner Cabinet. And he created a whole new trade-oriented Ministry of Development Cooperation and Pacific Island Affairs.

Observers say there has never been such a trade focus before in Australia's government.

Keating is also helping push the idea for a formal framework within the Asia Pacific Economic Cooperation (APEC) council to build a foundation for an integrated market across the Asia-Pacific region. Trade with Asia is nothing new. Australia's first trade office was not in London, but Shanghai in the 1930s. More than 60 percent of Australian exports go to APEC countries. And despite the recession, manufacturing exports to the region have been increasing 16 percent a year.

"Economically, reality is somewhat ahead of the perception," says Alan Oxley, a trade consultant. "You've got the government saying we've got to become part of Asia-Pacific. The reality is, we're already there."

Some say Keating is a latecomer to the idea. He never visited neighboring economic powerhouse Indonesia during his eight years as treasurer, and he made only three trips to Japan. It was his predecessor, Bob Hawke, who set up APEC. And Foreign Minister Evans gets credit for helping broker the Cambodian peace accord.

Some observers say Keating's reach toward Asia is twinned with his desire to see Australia make its final break from Britain and become a republic. It is driven as much by a desire to forge a new identity for Australia as by the need to join a clear trade bloc.

For whatever reason, the prime minister is geared up now. "Keating is putting it on the agenda, mobilizing the energy of the bureaucracy toward a particular target is very significant," says Tim McDonald, director of the Research Institute for Asia and the Pacific. "There are few elements of the bureaucracy that had any real understanding or commitment toward Asia before," he says. "Now that he's giving them that lead, they're all running around trying to think up initiatives."

The other significant thing, Mr. McDonald says, is the message that is being sent to the rest of the Asian Pacific. "Again, it's the prime minister saying these things; it represents a national commitment to the notion that Australia sees itself as part of that region. That gets play in the press. It strikes a chord with opinion-makers in the region."

But Ross Garnaut, a leader of the Australian National University's Asia-Pacific Economics Group, said at a recent conference that unless Australia quickens its pace of shrinking industry protection and microeconomic reform, and gets a grip on its trade and budget deficits, it will lose the gains it is making. Professor Garnaut says without an "East-Asia growth strategy," Australia could become marginalized in the region.